NI 43-101 Technical Report of the Rovina

NI 43 -101 Technical Report of the Rovina Exploration Property South Apuseni Mountains, West-Central Romania 23 April 2010

Prepared By: In Collaboration With: CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Contents

1 SUMMARY ...... 1‐1 1.1 Geology ...... 1‐3 1.2 Resource Statement ...... 1‐5 1.3 Geotechnical ...... 1‐6 1.4 Mining ...... 1‐7 1.4.1 Open Pit Mining ...... 1‐8 1.4.2 Underground Mining ...... 1‐9 1.5 Metallurgy and Processing ...... 1‐10 1.5.1 Metallurgy ...... 1‐10 1.5.2 Processing ...... 1‐11 1.6 Transportation and Logistics ...... 1‐12 1.7 Infrastructure and Site Layout ...... 1‐12 1.8 Capital and Operating Costs ...... 1‐12 1.9 Economic Analysis ...... 1‐14 1.10 Markets and Smelter ...... 1‐17 1.11 Environmental and Socioeconomics ...... 1‐17 2 INTRODUCTION AND TERMS OF REFERENCE ...... 2‐1 3 RELIANCE ON OTHER EXPERTS ...... 3‐1 4 PROPERTY DESCRIPTION AND LOCATION ...... 4‐1 4.1 Location ...... 4‐1 4.2 Property and Title in Romania ...... 4‐1 4.3 Land Tenure ...... 4‐4 4.3.1 General...... 4‐4 4.3.2 Agreements ...... 4‐4 4.3.3 Surface Rights ...... 4‐5 4.3.4 Permits ...... 4‐5 5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY...... 5‐1 5.1 Accessibility ...... 5‐1 5.2 Climate ...... 5‐1 5.3 Local Resources and Infrastructure...... 5‐2 5.4 Physiography, Flora, and Fauna ...... 5‐2 6 HISTORY ...... 6‐1 7 GEOLOGICAL SETTING ...... 7‐1 7.1 Regional Geologic and Metallogenic Settings ...... 7‐1 7.2 Rovina Property Geology ...... 7‐2

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7.2.1 Colnic–Rovina‐Ciresata Area ...... 7‐2 7.2.2 Rovina Deposit Geology ...... 7‐5 7.2.3 Colnic Deposit Geology ...... 7‐7 7.2.4 Ciresata Deposit Geology ...... 7‐9 8 DEPOSIT TYPES ...... 8‐1 9 MINERALIZATION ...... 9‐1 9.1 Rovina Deposit Mineralization ...... 9‐1 9.2 Colnic Deposit Mineralization ...... 9‐2 9.3 Ciresata Deposit Mineralization ...... 9‐2 10 EXPLORATION ...... 10‐1 10.1 Coordinates and Datum ...... 10‐1 10.2 Topography ...... 10‐1 10.3 Geological Mapping and Related Studies ...... 10‐1 10.4 Remote Sensing and Satellite Imagery ...... 10‐2 10.5 Geophysics ...... 10‐2 10.6 Geochemistry ...... 10‐3 10.6.1 Stream Sediment Sampling ...... 10‐3 10.6.2 Soil Geochemical Sampling ...... 10‐3 10.6.3 Rock Chip Sampling ...... 10‐3 10.6.4 Mineralogical and Petrographic Studies ...... 10‐4 11 DRILLING ...... 11‐1 11.1 Historical Minexfor Drilling ...... 11‐2 11.1.1 Rovina Deposit ...... 11‐2 11.1.2 Colnic Deposit ...... 11‐2 11.1.3 Ciresata Prospect ...... 11‐2 11.2 Carpathian Drilling ...... 11‐2 11.3 Carpathian Downhole Surveys ...... 11‐3 11.4 Carpathian Dry Bulk Density Measurements ...... 11‐3 12 SAMPLING METHOD AND APPROACH ...... 12‐1 12.1 Introduction ...... 12‐1 12.2 Soil Sampling Procedures ...... 12‐1 12.3 Channel Chip Sampling Procedures ...... 12‐1 12.3.1 Core Sampling Procedures ...... 12‐2 13 SAMPLE PREPARATION, ANALYSES AND SECURITY ...... 13‐1 13.1 Sample Preparation for Soil Samples ...... 13‐1 13.2 Sample Preparation of Rock Chip and Drill Core Samples ...... 13‐1 13.3 Sample Analysis for Soil Samples ...... 13‐2 13.4 Sample Analyses of Rock Chip and Drill Core Samples ...... 13‐2 13.5 QA/QC Program ...... 13‐3 13.6 Security ...... 13‐4

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13.7 Database Content and Integrity ...... 13‐4 13.7.1 Database Management ...... 13‐4 14 DATA VERIFICATION ...... 14‐1 14.1 Site Visit by PEG ...... 14‐1 14.2 Database Validation ...... 14‐1 14.2.1 Collar Coordinate Validation ...... 14‐1 14.2.2 Down‐hole Survey Validation ...... 14‐2 14.2.3 Assay Validation ...... 14‐2 15 ADJACENT PROPERTIES ...... 15‐1 16 METALLURGY AND PROCESSING ...... 16‐1 16.1 Metallurgy ...... 16‐1 16.1.1 General...... 16‐1 16.1.2 Terms of Reference ...... 16‐1 16.1.3 Historical Testwork ...... 16‐2 16.1.4 Current Testwork ...... 16‐8 16.1.5 Ciresata Locked Cycle Test (LCT‐5) ...... 16‐15 16.1.6 Colnic Locked Cycle Test (LCT‐4) ...... 16‐16 16.1.7 Rovina Locked Cycle Test (LCT‐3) ...... 16‐18 16.1.8 Projected Metallurgical Performance ...... 16‐19 16.2 Processing ...... 16‐22 16.2.1 Introduction ...... 16‐22 16.2.2 Primary Crusher and Ore Reclaim System ...... 16‐22 16.2.3 SAG and Ball Mill Grinding ...... 16‐22 16.2.4 Flotation and Concentrate Recovery ...... 16‐23 16.2.5 Process Design Criteria ...... 16‐25 17 MINERAL RESOURCE ESTIMATES ...... 17‐1 17.1 Geological Interpretation ...... 17‐1 17.2 Exploratory Data Analysis ...... 17‐2 17.2.1 Domain Definition ...... 17‐2 17.2.2 Assays ...... 17‐2 17.2.3 Capping ...... 17‐3 17.2.4 Composites ...... 17‐3 17.3 Bulk Density ...... 17‐4 17.4 Spatial Analysis ...... 17‐4 17.5 Resource Block Model ...... 17‐5 17.6 Interpolation Plan ...... 17‐5 17.7 Boundary Treatment ...... 17‐6 17.8 Mineral Resource Classification ...... 17‐6 17.9 Metal Equivalent Formula ...... 17‐7 17.10 Mineral Resource Tabulation ...... 17‐8

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17.10.1 Rovina Mineral Resource ...... 17‐9 17.10.2 Colnic Mineral Resource ...... 17‐10 17.10.3 Ciresata Mineral Resource ...... 17‐10 17.11 Block Model Validation ...... 17‐11 17.11.1 Visual Comparisons ...... 17‐11 17.11.2 Global Comparisons ...... 17‐11 17.11.3 Local Comparisons – Swath Plots ...... 17‐12 18 OPEN PIT AND UNDERGROUND RESOURCES ...... 18‐1 19 GEOTECHNICAL AND MINING ...... 19‐1 19.1 Geotechnical ...... 19‐1 19.1.1 Background and Scope of Work...... 19‐1 19.1.2 Previous Work by Others ...... 19‐1 19.1.3 Data Sources ...... 19‐1 19.1.4 Current Study and Limitations ...... 19‐2 19.1.5 2008 Field Program ...... 19‐2 19.1.6 Engineering Geology ...... 19‐3 19.1.7 Geotechnical Assessments...... 19‐4 19.1.8 General Comments on Rock Mass Quality and Strength ...... 19‐4 19.1.9 Preliminary Open Pit Design Criteria – Rovina and Colnic Deposits ...... 19‐4 19.1.10 Summary and Conclusions ...... 19‐8 19.2 Underground Mining ...... 19‐10 19.2.1 Ciresata Crown Pillar ...... 19‐10 19.2.2 Geology Resource ...... 19‐11 19.2.3 Underground ...... 19‐11 19.3 Open Pit Mining ...... 19‐26 19.3.1 Geologic Model Importation ...... 19‐26 19.3.2 Production Rate Trade‐off Study ...... 19‐27 19.3.3 40,000 t/d Pit Designs and Phasing ...... 19‐34 19.3.4 Mine Scheduling ...... 19‐39 19.3.5 Waste Dump Designs ...... 19‐42 19.3.6 Tailings Management Facility ...... 19‐44 20 TRANSPORTATION AND INFRASTRUCTURE ...... 20‐1 20.1 Transportation and Logistics ...... 20‐1 20.1.1 Overland Transport ...... 20‐1 20.1.2 Marine Transport ...... 20‐1 20.2 Infrastructure and Site Layout ...... 20‐1 20.2.1 Site Buildings ...... 20‐1 20.2.2 Mill Facility ...... 20‐1 20.2.3 Water Balance System ...... 20‐1 20.2.4 Tailings Line ...... 20‐4

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20.2.5 Fuel Storage and Handling ...... 20‐4 20.2.6 Maintenance Facilities ...... 20‐4 20.2.7 Warehouse, Office, and Dry ...... 20‐4 20.2.8 Roads ...... 20‐4 20.2.9 Waste Management ...... 20‐4 20.2.10 Electrical and Backup Power ...... 20‐4 21 MARKETS AND SMELTER ...... 21‐1 21.1 General Considerations ...... 21‐1 21.2 Terms and Conditions Discussion ...... 21‐4 21.2.1 Accountable Metals ...... 21‐4 21.2.2 Smelting and Refining Charges ...... 21‐4 22 ENVIRONMENTAL AND SOCIOECONOMICS ...... 22‐1 22.1.1 Carpathian Background in Romania ...... 22‐2 22.2 Permitting Requirements ...... 22‐2 22.2.1 Exploitation License/Mineral Rights ...... 22‐3 22.2.2 RVP Exploitation License Studies ...... 22‐4 22.2.3 Mine Permitting ...... 22‐5 22.3 Environmental ...... 22‐9 22.3.1 Project Footprint ...... 22‐9 22.3.2 Baseline Studies ...... 22‐10 22.3.3 CSR Guiding Principles for Environmental Management and Project Implementation ...... 22‐14 22.3.4 Environmental Study Key Topics and Closure Considerations ...... 22‐16 22.4 Socioeconomics ...... 22‐21 22.4.1 Introduction ...... 22‐21 22.4.2 Regional Setting ...... 22‐22 22.5 Project Area Social Footprint ...... 22‐23 22.5.1 Social Baseline Study ...... 22‐25 22.5.2 CSR Guiding Principles for Socially Responsible Project Implementation ...... 22‐25 22.5.3 Acquisition of Surface Rights ...... 22‐28 22.6 Stakeholder Engagement Compliance Matrix ...... 22‐28 22.6.1 Methodology ...... 22‐28 22.6.2 Summary ...... 22‐29 23 TAXES AND ROYALTIES ...... 23‐1 23.1 Taxes ...... 23‐1 23.2 Royalties ...... 23‐2 24 CAPITAL AND OPERATING COSTS ...... 24‐1 24.1 Capital Costs ...... 24‐1 24.1.1 Summary ...... 24‐1 24.1.2 Open Pit Mining ...... 24‐2

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24.1.3 Underground Mining Capital ...... 24‐3 24.1.4 Processing ...... 24‐5 24.1.5 Infrastructure and Site Layout ...... 24‐8 24.1.6 Environmental Costs ...... 24‐10 24.1.7 Owners Cost ...... 24‐11 24.1.8 Indirect Costs ...... 24‐11 24.1.9 Contingency ...... 24‐12 24.2 Operating Costs ...... 24‐12 24.2.1 Summary ...... 24‐12 24.2.2 Open Pit Mining ...... 24‐14 24.2.3 Underground Mining ...... 24‐20 24.2.4 Processing ...... 24‐22 24.2.5 General and Administrative ...... 24‐26 24.2.6 Concentrate Transportation ...... 24‐28 24.2.7 Port Charges ...... 24‐28 24.2.8 Shipping ...... 24‐28 25 ECONOMIC ANALYSIS ...... 25‐1 25.1 Discounted Cash Flow Analysis ...... 25‐1 25.2 Sensitivity Analysis ...... 25‐5 26 PROJECT IMPLEMENTATION PLAN ...... 26‐1 27 INTERPRETATIONS AND CONCLUSIONS ...... 27‐1 27.1 Geology ...... 27‐1 27.2 Geotechnical ...... 27‐3 27.3 Mining ...... 27‐4 27.3.1 Open Pit Mining ...... 27‐4 27.3.2 Underground Mining ...... 27‐5 27.4 Metallurgy and Process Design ...... 27‐7 27.4.1 Metallurgy ...... 27‐7 27.4.2 Process Design ...... 27‐9 27.5 Infrastructure and Site Layout ...... 27‐9 28 RECOMMENDATIONS ...... 28‐1 28.1 Geology ...... 28‐1 28.1.1 Infill Resource‐Definition Drilling and Step‐out Drilling ...... 28‐2 28.1.2 Reconnaissance Drilling ...... 28‐2 28.2 Geotechnical ...... 28‐3 28.3 Mining ...... 28‐5 28.3.1 Open Pit Mining ...... 28‐5 28.3.2 Underground Mining ...... 28‐5 28.4 Metallurgy and Processing ...... 28‐6 28.4.1 Metallurgy ...... 28‐6

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28.4.2 Processing ...... 28‐7 28.5 Infrastructure and Site Layout ...... 28‐7 28.6 Environmental and Socioeconomics ...... 28‐8 29 REFERENCES ...... 29‐1 30 CERTIFICATES OF QUALIFIED PERSONS ...... 30‐1 30.1 Certificate of Mario Colantonio, P.Eng...... 30‐1 30.2 Certificate of Pierre Desautels, P.Geo...... 30‐2 30.3 Certificate of Eric Harkonen, P.Eng., MBA ...... 30‐3 30.4 Certificate of Gordon Zurowski, P.Eng...... 30‐4 30.5 Certificate of H. Warren Newcomen, M.S., P.Eng., P.E...... 30‐5 30.6 Certificate of Andy Holloway, P.Eng...... 30‐6 30.7 Certificate of Al Hayden, P.Eng...... 30‐7

Tables

Table 1‐1: Rovina Mineral Resource Base Case at 0.3% CuEq Cutoff ...... 1‐6 Table 1‐2: Colnic Mineral Resource Base Case at 0.45 g/t AuEq Cutoff ...... 1‐6 Table 1‐3: Ciresata Mineral Resource base case at 0.70 g/t AuEq Cutoff ...... 1‐6 Table 1‐4: Metallurgical Prediction – Summary ...... 1‐11 Table 1‐5: Rovina Valley Project Capital Cost Summary ...... 1‐13 Table 1‐6: Project Indirect and Contingency Percentages ...... 1‐13 Table 1‐7: Mine Operating Cost ...... 1‐14 Table 1‐8 Total Operating Costs ‐ Rovina Valley Project ...... 1‐14 Table 1‐9: Final Discounted Cash Flow Results ...... 1‐15 Table 1‐10: Production Statistics and Cash Cost Calculations ...... 1‐16 Table 1‐11: Net Present Value Sensitivity ...... 1‐16 Table 1‐12: IRR Sensitivity ...... 1‐16 Table 4‐1: Rovina Licence Boundary (Stereo70 Grid System) ...... 4‐4 Table 11‐1: Summary of the Drilling on the Property ...... 11‐1 Table 16‐1: Design Documents Provided for Review ...... 16‐1 Table 16‐2: Locked Cycle Flotation Results – 2007 Testing ...... 16‐2 Table 16‐3: Cyanidation Results – 2007 Testing ...... 16‐3 Table 16‐4: Geosol Composites – Head Assays ...... 16‐4 Table 16‐5: Geosol Composites – Grindability Data ...... 16‐4 Table 16‐6: Batch Cleaner Flotation Test Results – Grades ...... 16‐7 Table 16‐7: Batch Cleaner Flotation Test Results – Recoveries ...... 16‐7 Table 16‐8: Cyanidation of Rougher Flotation Tails...... 16‐7 Table 16‐9: Cyanidation of Cleaner Flotation Tails ...... 16‐8 Table 16‐10: 2010 SGS Composites – Reference Head Assays ...... 16‐8 Table 16‐11: LCT Average Reagent Dosages ...... 16‐15 Table 16‐12: Adjusted Data for Ciresata ...... 16‐16 Table 16‐13: Adjusted Data for Colnic ...... 16‐17

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Table 16‐14: Rovina Metallurgical Prediction ...... 16‐19 Table 16‐15: Projected Metallurgical Performance – Rovina Deposit ...... 16‐19 Table 16‐16: Projected Metallurgical Performance – Colnic Deposit ...... 16‐19 Table 16‐17: Projected Metallurgical Performance – Ciresata Deposit ...... 16‐20 Table 16‐18: Flotation Concentrates – Deleterious Element Analysis...... 16‐21 Table 17‐1: Block Model Definition (block edge) ...... 17‐5 Table 17‐2: MV Input Parameters ...... 17‐7 Table 17‐3: Weighted Average Rovina Valley Resource Estimate ...... 17‐9 Table 17‐4: Rovina Mineral Resource Base Case at 0.3% Cu Cutoff ...... 17‐9 Table 17‐5: Colnic Mineral Resource Base Case at 0.45 g/t Au Cutoff ...... 17‐10 Table 17‐6: Ciresata Mineral Resource Base Case at 0.70 g/t Au Cutoff ...... 17‐10 Table 18‐1: Value per Tonne Calculation – Metal Prices, Recoveries, and Concentrate Grades (Engineering Design) ...... 18‐2 Table 18‐2: Value per Tonne Calculation – Smelting and Refining Terms ...... 18‐2 Table 18‐3: Value per Tonne Calculation – Operating Costs ...... 18‐2 Table 18‐4: Equivalent Cutoff Values ...... 18‐4 Table 18‐5: Open Pit Resources by Area ...... 18‐4 Table 18‐6: Underground Resources by Area ...... 18‐4 Table 18‐7: Resource Summary by Classification ...... 18‐5 Table 19‐1: Summary of Rock Mass Rating Parameters from Core Logging ...... 19‐6 Table 19‐2: Summary of Hoek Brown Strength Parameters Used for Design ...... 19‐2 Table 19‐3: Summary of Pit Wall Design Angles ...... 19‐9 Table 19‐4: Underground Production Schedule ...... 19‐21 Table 19‐5: Ciresata Mobile Trackless Equipment ...... 19‐22 Table 19‐6: Preliminary Listing of Equipment for Vent Air Requirement ...... 19‐24 Table 19‐7: Block Model Block Sizes ...... 19‐26 Table 19‐8: Metallurgical Parameters by Deposit ...... 19‐28 Table 19‐9: Smelting, Refining, and Transportation Costs ...... 19‐29 Table 19‐10: Economic Shell Operating Cost Parameters ...... 19‐30 Table 19‐11: Final Production Rate Trade‐off Operating Costs ...... 19‐32 Table 19‐12: Production Rate Trade‐off IRR and Capital Costs ...... 19‐33 Table 19‐13: Updated Economic Shell Parameters ...... 19‐35 Table 19‐14: Final Open Pit Phase Tonnages ...... 19‐36 Table 22‐1: Stakeholder Engagement Commitments and Recommendations ...... 22‐30 Table 24‐1: Rovina Valley Capital Cost Summary ...... 24‐1 Table 24‐2: Indirect and Contingency Percentages by Capital Category ...... 24‐1 Table 24‐3: Major Equipment – Open Pit Capital ...... 24‐2 Table 24‐4: Open Pit Capital by Period ...... 24‐2 Table 24‐5 Underground Equipment Requirements ...... 24‐4 Table 24‐6: Underground Development Capital Unit Rates ...... 24‐5 Table 24‐7: Underground Capital Cost ...... 24‐5 Table 24‐8: Processing Capital Cost Summary ...... 24‐7 Table 24‐9: Process Plant Direct Costs ...... 24‐8 Table 24‐10: Infrastructure Capital Costs ...... 24‐9

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Table 24‐11: Allocation for Environmental Rehabilitation Costs for Closure (US$ M) ...... 24‐11 Table 24‐12: Indirect Percentages Applied ...... 24‐11 Table 24‐13 Contingency Percentages by Capital Cost Category ...... 24‐12 Table 24‐14: Mine Operating Cost per Tonne ...... 24‐14 Table 24‐15: RVP Total Operating Costs ...... 24‐14 Table 24‐16: Open Pit Mine Equipment Requirements (maximum in parenthesis) ...... 24‐16 Table 24‐17: Open Pit Drill Pattern Specifications ...... 24‐17 Table 24‐18: Open Pit Drill Productivity Criteria ...... 24‐18 Table 24‐19: Open Pit Design Powder Factor ...... 24‐18 Table 24‐20: Open Pit Mining Loading Parameters ...... 24‐19 Table 24‐21: Open Pit ‐ Major Equipment Hourly Rates ...... 24‐19 Table 24‐22: Open Pit Mine Operating Unit Costs ...... 24‐20 Table 24‐23 Underground Mining Direct Cost Unit Rates ...... 24‐21 Table 24‐24: Underground Mine Operating Cost Breakdown ...... 24‐22 Table 24‐25: Processing Operating Cost Summary...... 24‐23 Table 24‐26: Processing Staff ...... 24‐24 Table 24‐27: Processing Operating Labour ...... 24‐24 Table 24‐28: Processing Maintenance Supervision ...... 24‐25 Table 24‐29: Processing Maintenance Labour ...... 24‐25 Table 24‐30: Processing Reagent and Consumables Costs ...... 24‐26 Table 24‐31 G&A Cost Calculation (Year 1) ...... 24‐27 Table 25‐1: RVP Production Tonnages and Grades ...... 25‐1 Table 25‐2: DCF Metal Prices ...... 25‐1 Table 25‐3: Metallurgical Assumptions ...... 25‐2 Table 25‐4: RVP Smelter Terms ...... 25‐3 Table 25‐5: Discounted Cash Flow Results ...... 25‐3 Table 25‐6: Metal Revenue ...... 25‐4 Table 25‐7 Metal Production Statistics and Cash Cost Calculation ...... 25‐4 Table 25‐8: Gold Equivalent Ounces Produced Annually ...... 25‐5 Table 25‐9: Sensitivity Analysis – NPV at 8% Discount Rate ...... 25‐6 Table 25‐10 Sensitivity Analysis – IRR ...... 25‐6 Table 25‐11: NPV at 5% Discount Rate ...... 25‐7 Table 25‐12: NPV at 8% Discount Rate ...... 25‐7 Table 25‐13: NPV at 10% Discount Rate ...... 25‐8 Table 25‐14: IRR ...... 25‐8 Table 27‐1: Metallurgical Prediction – Summary ...... 27‐9 Table 28‐1 Recommended Drill Budget ...... 28‐3

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Figures

Figure 1‐1: Location Map ...... 1‐1 Figure 1‐2: RVP Site Layout ...... 1‐2 Figure 3‐1: PEA Organization Chart ...... 3‐2 Figure 4‐1: Location Map ...... 4‐2 Figure 4‐2: Location, Access, and Perimeter of Rovina Exploration License ...... 4‐3 Figure 7‐1: Regional Geology ...... 7‐3 Figure 7‐2: Geology of the Rovina License ...... 7‐4 Figure 7‐3: Rovina Porphyry Surface Geology ...... 7‐6 Figure 7‐4: Surface Geology Map of the Colnic Porphyry ...... 7‐8 Figure 7‐5: Surface Geology of the Ciresata Porphyry ...... 7‐10 Figure 16‐1: Copper Kinetics – MET‐12 to MET‐18 ...... 16‐5 Figure 16‐2: Gold Kinetics – MET‐12 to MET‐18 ...... 16‐5 Figure 16‐3: Batch Cleaner Flowsheet – MET‐17 and MET‐18 ...... 16‐6 Figure 16‐4: Met‐23 Rougher Flotation – Copper Selectivity ...... 16‐9 Figure 16‐5: Met‐23 Rougher Flotation – Gold Selectivity ...... 16‐10 Figure 16‐6: Met‐23 Cleaner Flotation – Unit Au Recovery vs. Cu Upgrade Ratio ...... 16‐11 Figure 16‐7: Rougher Flotation Performance – MET‐23, 24, and 25 Comparisons ...... 16‐12 Figure 16‐8: Rougher Concentrate Gold Recovery vs. Sulphur Grade – MET‐23, 24, and 25 ...... 16‐13 Figure 16‐9: Met‐24 Cleaner Flotation – Copper Grade vs. Gold Recovery ...... 16‐13 Figure 16‐10: Locked Cycle Flowsheet ...... 16‐14 Figure 16‐11: LCT‐5 Cycle Stability Chart ...... 16‐16 Figure 16‐12: LCT‐4 Cycle Stability Chart ...... 16‐17 Figure 16‐13: LCT‐3 Cycle Stability Chart ...... 16‐18 Figure 16‐14: Process Flowsheet ...... 16‐24 Figure 17‐1: Global Comparison – All Lithologies at a 0.00 Cutoff ...... 17‐11 Figure 19‐1: Ciresata Underground Mining Grade Shell View ...... 19‐12 Figure 19‐2: Ciresata Phase View ...... 19‐12 Figure 19‐3 Ciresata Underground Sectional View ...... 19‐13 Figure 19‐4: Ciresata Phase I – 215 Level Plan ...... 19‐15 Figure 19‐5: Cross Section of UG Conveyor Gallery ...... 19‐16 Figure 19‐6: Ciresata – Phase II – Undercut Level ...... 19‐17 Figure 19‐7: Ciresata – Phase II – Extraction Level ...... 19‐18 Figure 19‐8: Ciresata – Phase II – Ventilation Level ...... 19‐18 Figure 19‐9: Ciresata – Phase II – Material Handling Level ...... 19‐19 Figure 19‐10: Ciresata Underground Mining – Isometric of Phase I Year ‐3 through Year 1 ...... 19‐19 Figure 19‐11: Ciresata – Phase I Ventilation Schematic Diagram ...... 19‐25 Figure 19‐12: Ciresata – Phase II Ventilation Schematic Diagram ...... 19‐25 Figure 19‐13: Ciresata – Dewatering Schematic Phase I ...... 19‐26 Figure 19‐14: Ciresata – Dewatering Schematic Phase II ...... 19‐26 Figure 19‐15: NPV Comparison for Trade‐off Study ...... 19‐33

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Figure 19‐16: NSR per Tonne by Area and Phase ...... 19‐36 Figure 19‐17: Rovina East‐West Cross‐Section at Northing 520580 ...... 19‐38 Figure 19‐18: Colnic East West Cross‐Section at Northing 517875 ...... 19‐38 Figure 19‐19: Mill Feed by Year and Area ...... 19‐40 Figure 19‐20: Copper and Gold Feed Grades by Year ...... 19‐41 Figure 19‐21 Waste Tonnage Mined by Year and Area ...... 19‐41 Figure 19‐22: Initial Open Pit Waste Dumps ...... 19‐43 Figure 19‐23: Final Waste Dump Configurations ...... 19‐44 Figure 19‐24: Tailings Management Areas Examined ...... 19‐45 Figure 19‐25: Rovina Valley Tailings Option ...... 19‐46 Figure 19‐26: Baroc Valley Tailings Concept ...... 19‐47 Figure 19‐27: Tailings Design North of Merisor ...... 19‐48 Figure 19‐28: East of Merisor Site...... 19‐49 Figure 19‐29: East of Ciresata Deposit ...... 19‐50 Figure 20‐1: Overland Concentrate Shipping ...... 20‐2 Figure 20‐2: Shipping Route ...... 20‐3 Figure 20‐3: Rovina Valley Site Layout ...... 20‐2 Figure 20‐4: Rovina Valley Site – Process Plant Site Layout...... 20‐3 Figure 22‐1: Estimated Timeline for Permit Acquisition ...... 22‐8 Figure 22‐2: Aerial Perspective of Project Area and Monitoring Stations ...... 22‐12 Figure 22‐3: Carpathian Guiding Policies ...... 22‐16 Figure 22‐4: Realms of Stakeholder Decision Ownership ...... 22‐27 Figure 24‐1: Open Pit Labour Requirements ...... 24‐16 Figure 25‐1: Spider Graph of NPV @ 8% ...... 25‐5 Figure 25‐2: Spider Graph of IRR ...... 25‐6 Figure 26‐1: Project Implementation Plan Schedule ...... 26‐2

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Appendices

APPENDIX A – METALLURGY AND PROCESSING APPENDIX B – DRAWINGS B1‐Geotechnical Drawing 1 ‐ Overview Map Drawing 2a ‐ Regional Geology Drawing 2b ‐ Geology Legend Drawing 3 ‐ Rovina Outcrop Map Drawing 4 ‐ Colnic Outcrop Map Drawing 5 ‐ Ciresata Outcrop Map Drawing 6 ‐ Representative Rovina Cross‐Section Drawing 7 ‐ Representative Colnic Cross‐Section Drawing 8 ‐ Representative Ciresata Cross‐Section Drawing 9 ‐ Design Rock Mass Strength Curves Drawing 10 ‐ Design Chart for Overall Slope Angle Based on Rock Mass Failure Drawing 11 ‐ Stability Chart for Underground Opening Designs in Ciresata Deposit B2‐Infrastructure Site Mill Layout Rovina Site Layout Colnic Site Layout Ciresata Site Layout Tailings Site Layout Ciresata Site Elevation APPENDIX C – GEOTECHNICAL Field Data and Geomechanical Summary Tables Structural Geologic Information and Rock Mass Fabric Stereonets Representative Cross‐Sections Point Load Testing Results Rock Mass Classification Systems and Supplementary Data APPENDIX D – MINING APPENDIX E – CAPITAL AND OPERATING COSTS APPENDIX F – MARKETS AND SMELTER Carpathian Concentrates APPENDIX G – FINANCIAL ANALYSIS

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Glossary

Abbreviations, Symbols, and Acronyms

Absolute Difference ...... ABS Acid Potential ...... AP Acid Rock Drainage ...... ARD Acid Base Accounting ...... ABA ALS Chemex Romania ...... ALS AMEC Americas Limited ...... AMEC Atomic Absorption ...... AA BGC Engineering Inc...... BGC Canadian Institute of Mining ...... CIM Carbon in Leach ...... CIL Carpathian Gold Inc...... Carpathian Certified Reference Material ...... CRM Closure and Remediation Plan ...... CRP Copper Equivalent ...... Cu Eq. Copper ...... Cu Corporate Social Responsibility ...... CSR Discounted Cash Flow Analysis ...... DCF Early Mineral Porphyry ...... EMP EHA Engineering Ltd...... EHA Electromagnetic ...... EM Elevation ...... El. Environmental Impact Assessment Report ...... EIAR Equivalent ...... Eq. European Union ...... EU Factors of Safety ...... FOS Geological Strength Index ...... GSI Global Positioning System ...... GPS Global Reporting Initiative Sustainability Reporting Guidelines ...... GRI SRG Global Reporting Initiative ...... GRI Gold ...... Au Internal Rate of Return ...... IRR International Council on Mining and Metals ...... ICMM In‐the‐Hole ...... ITH Intrusive Magmatic Breccia ...... IMB Life‐of‐Mine ...... LOM Locked Cycle Test ...... LCT Magmatic Breccias Complex ...... IMB Magnetite‐Propylitic with Magnetite, Chlorite, Epidote ...... MACE Methyl Isobutyl Carbinol ...... MIBC Million Years ...... Ma Mining Rock Mass Rating ...... MRMR MSAccess® ...... Access Multi‐Stakeholder Forum ...... MSF National Agency for Mineral Resources ...... NAMR

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National Instrument 43‐101 ...... NI 43‐101 Net Present Value ...... NPV PEG Mining Consultants Inc...... PEG Planul Urbanistic General ...... PUG Planul Urbanistic Zonal ...... PUZ Porcupine Engineering Services Inc...... PES Potassium Isobutyl Xanthate ...... PAX Project Implementation Plan ...... PIP Python Mining Consultants Inc...... Python Qualified Persons ...... QP Quality Assurance/Quality Control ...... QA/QC Rock Mass Rating ...... RMR Rock Quality Designation ...... RQD Rovina Valley Project ...... RVP or Project SAMAX Romania SRL ...... SAMAX Semi‐Autogenous ...... SAG Social Impact Assessment Report ...... SIAR Specific Gravity ...... SG Tailings Management Facility ...... TMF Technical Authorizing Committee ...... TAC Three Dimensional ...... 3D Transitional Phyllic Alteration Zone ...... TRPH Unconfined Compressive Strength ...... UCS Underground ...... UG Urbanization Certificate ...... UC Vertical Crater Retreat ...... VCR

Units of Measure

10,000 parts per million = 1% ...... ppm vs % Billion tonnes ...... Bt Billion ...... B Centimetres ...... cm Degrees Celsius ...... °C Degrees ...... ° Dollars per metre ...... $/m Dry weight tonne ...... dwt Gallons per minute ...... gal/min Grams ...... g Hectares ...... Ha Inches ...... " Kilograms ...... kg Litre ...... L Litres per day ...... L/d Litres per minute ...... l/min Mega pascal ...... MPa Metre ...... m Metres above sea level ...... masl Million cubic metres ...... Mm3 Million pounds ...... Mlb

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Million tonnes ...... Mt Million ...... M Part per billion ...... ppb Parts per million ...... ppm Pounds ...... lb Thousand cubic feet per minute ...... kcfm Tonne ...... t Tonnes per annum ...... t/a Tonnes per day ...... t/d

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

1 SUMMARY

The Rovina Valley Project (RVP or Project) is located in the Golden Quadrilateral Mining District of the South Apuseni Mountains in west‐central Romania, approximately 300 km northwest of the city of Bucharest, the capital city of Romania (Figure 1‐1). The Project consists of three distinct deposits, Rovina, Colnic, and Ciresata. Rovina and Colnic are amenable and economic to mine using conventional open pit mining. For Ciresata the deposit is economic to mine using bulk underground mining techniques. The locations are defining a north‐north east trend. The Rovina Porphyry is the northern‐most with the Colnic Porphyry lying approximately 2.5 km south of the Rovina Porphyry, and the Ciresata Porphyry approximately 4.5 km south of the Colnic Porphyry. A site layout for the property has been prepared to illustrate the infrastructure, mining, and processing functions for the Project (Figure 1‐2).

Carpathian Gold Inc. (Carpathian) owns 100% of the Exploration License, which includes the Project area (through its wholly owned subsidiary SAMAX Romania SRL (SAMAX)) and has retained PEG Mining Consultants Inc. (PEG) to provide a National Instrument (NI) 43‐101 compliant, Preliminary Economic Assessment (PEA) on the Project. PEG led a consortium of specialists assembled for the PEA to consider all the technical and economic merits associated with the Project. The following companies provide expertise to the Project:

PEG Mining Consultants Inc. (PEG) – Project Management, Mining (Open Pit), Financials, Geology, Metallurgy, Markets/Smelter BGC Engineering Inc. (BGC) – Geotechnical (mine design criteria) Python Mining Consultants Inc. (Python) – Underground Mining Porcupine Engineering Services Inc. (PES) – Infrastructure EHA Engineering Ltd. (EHA) – Processing Carpathian Gold Inc. (Carpathian) – Environmental/Socioeconomics, Taxes/Royalties

PEG produced the independent NI 43‐101 compliant resource estimate for use in the PEA. A separate document titled “Technical Report on the Rovina Valley Project, Romania, January 2009,” is filed on SEDAR. The resource methodology and results are summarized in this PEA document. PEG also managed the metallurgical test program that was completed for all deposits at SGS Mineral Services, Lakefield (SGS). This PEA document conforms to the Canadian Institute of Mining, Metallurgy, and Petroleum (CIM) Mineral Resource and Mineral Reserves definitions referred to in NI 43‐101, Standards of Disclosure of Mineral Projects.

PEG conducted the PEA with the geology resource estimate, metal prices (and exchange rates), metal recoveries, underground and open pit mine design and plan, operating and capital costs for all disciplines, and smelter terms. PEG concludes that, using a gold price of US$900/oz and a copper price of US$2.25/lb, the RVP yields a pre‐tax NPV of US$316 million at a discount rate of 8% with an IRR of 15.7%.

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Figure 1‐1: Location Map

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Figure 1‐2: RVP Site Layout

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The RVP has demonstrated economic potential as a series of large tonnage porphyry gold‐ copper deposits amenable to open pit and underground bulk tonnage mining methods.

PEG recommends that the RVP advance to the next level of study, pre‐feasibility, with geology drilling, engineering, and environmental field program to support this level of study. Advanced planning of this prefeasibility study is a critical component to successful execution thus; PEG has provided recommendations by disciplines to ensure design criteria are available to the prefeasibility team.

Carpathian’s exploration success to date, and even since the initiation of this PEA study on the Ciresata deposit, indicate the growth potential for the RVP from increased exploration activity. The Rovina and Colnic Deposits appear to be fairly well defined in their lateral extents but at depth may show an increase in resource. Ciresata has the greatest potential for growth. The existing model has the geology as a flat bottom but current drilling had mineralization at the base of the holes. The likelihood of increasing resources at depth is great, as the final depth of the deposit has not been encountered.

With the current level of information for the Project, PEG does not see any issues regarding resources, technical, economics, or environment, which would inhibit the Project from advancing. Advancement of the Project will require a decision from Carpathian regarding a complete prefeasibility study including the geology, metallurgy, and geotechnical criteria to support it.

1.1 Geology

The Rovina, Colnic, and Ciresata Porphyry deposits are the principal exploration targets on the Property. The RVP consists of one Exploration Licence (the Rovina Exploration Licence, Number 6386/2005 for Au–Ag‐Cu) centered at approximately latitude 46°07'N and longitude 22°54'E or 515,000 N and 340,000 E using the “Stereo70” projection of the Romanian National Geodetic System. Carpathian owns 100% of the Rovina Exploration License through its wholly owned Romania registered subsidiary SAMAX Romania SRL.

Year‐round principle access to the property is on paved two‐lane highway to the historic gold mining town of Brad followed by secondary paved roads eastward for 7 km, which pass through the town of Criscior and onward to the village of Bucureşci within the property.

On a regional level, the majority of the mineral deposits in the Romanian‐Hungarian region are located in the Carpathian Fold Belt; an arcuate orogenic belt which is part of a much larger belt extending westward into Austria and Switzerland and south into Serbia and Bulgaria. These belts developed during the late Cretaceous and Tertiary, following closure of the Tethys Ocean, due to the collision of continental fragments of Gondwana with continental Europe and the related subduction of small, intervening oceanic basins. The development of the Carpathian Fold Belt was accompanied by widespread igneous activity,

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including a suite of late Cretaceous to early Eocene acidic to intermediate intrusive and extrusive rocks, known as “banatites.” These rocks are believed to have formed early stages of subduction and are host to several Cu–Mo–Fe Porphyry and skarn deposits.

The Apuseni Mountains represent a somewhat “isolated massif” with the Carpathian Fold Belt. The southern portion of the Apuseni Mountains, where the property is located, consists of a complex area of Palaeozoic (and older) metamorphic rocks, Mesozoic ophiolites and sedimentary rocks and Tertiary igneous and sedimentary rocks.

On a local level, the property covers a sequence of Neogene‐aged subvolcanic intrusive rocks, which in other parts of the Golden Quadrilateral, host epithermal and porphyry‐style mineralization. Carpathian’s exploration programs have identified Au‐rich porphyry systems (the Rovina, Colnic and Ciresata Deposits) hosted by these Neogene subvolcanic intrusives. The Rovina and Colnic porphyry deposits lie within a northeastern volcanic outlier of the 8– 10 km diameter, Neogene‐aged, Brad–Barza volcanic field. The Brad‐Barza volcanic field is well known for hosting high‐grade gold veins with historic gold production dating back to the Roman period (ca. 2000 years ago). The Ciresata porphyry, 4.5 km south of Colnic, lies within the eastern part of the Brad‐Barza volcanic field.

The main mineralized targets on the Rovina Property are the Rovina Cu–Au porphyry, Colnic Au–Cu porphyry and the Ciresata Au‐Cu porphyry. Porphyry deposits in general are large, low‐ to medium‐grade deposits in which primary (hypogene) sulphide minerals are dominantly structurally controlled at the hand lens scale and disseminated at the scale of felsic to intermediate porphyritic intrusions that are spatially and genetically related to these deposit types.

The mineralized porphyries at Rovina, Colnic, and Ciresata display moderate to intense potassic hydrothermal altered cores, and strong quartz stockwork veining. The Au–Cu mineralization manifests as stockworks and disseminations centred on porphyritic, subvolcanic‐intrusive complexes of hornblende‐plagioclase diorites. These porphyries would classify as gold‐rich, especially Ciresata and Colnic, and contain many of the features common in gold‐rich porphyries, i.e., dioritic, calc‐alkaline stock associated, and abundant magnetite alteration. Weathering oxidation is restricted to the uppermost few metres of the prospect and no significant oxide cap or supergene enriched horizons have been encountered to date.

All routine sample preparation and analyses of the Carpathian samples are performed by ALS Chemex Romania (ALS) Laboratory (lab) in the town of Gura Rosiei about 45 minutes drive northwest of the Project area. A comprehensive Quality Assurance/Quality Control (QA/QC) program involving the use of coarse blanks, standards, and duplicates has been instigated following recommendations by AMEC in 2006 and 2007. The current QA/QC programs meet or exceed standard industry practices.

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Prior to mineral resource estimation, PEG conducted data verification consisting of a site visit and a database audit. The assay data was thoroughly validated covering 16% of the entire database with 27% coverage for the 2007‐2008 data not previously validated by AMEC. PEG found the database to be acceptably accurate and error free to be used in mineral resource estimation.

1.2 Resource Statement

This PEA incorporates Inferred mineral resources that are considered too speculative geologically to have economic considerations applied to them, and that would enable them to be categorized as mineral reserves. Thus inherent in the study is the risk that the value of these Inferred mineral resources may not be realized.

PEG has estimated the Mineral Resource for each of the Colnic, Rovina, and Ciresata porphyry deposits, utilizing approximately 62,700 m of diamond drill hole data from the 2006, 2007, and 2008 drilling campaigns. The Mineral Resource for Colnic and Rovina is constrained by 3‐dimensional alteration and lithology domains; at Ciresata, 3‐dimension lithlogy domains and interpreted grade shells are utilized to constrain the estimate.

The resource estimate for the Rovina Valley was published originally in an earlier report titled “Technical Report for the Rovina Valley Project, Romania dated January 16, 2009,” which incorporated the late 2007 and 2008 drilling results that were available as of April 08th, 2008 for Rovina and as of September 30th, 2008, for Colnic and Ciresata. The content of this report was summarized for inclusion in this PEA report.

The Rovina resource estimate comprises Measured, Indicated, and Inferred resources reported as copper‐gold mineralization with a base case cutoff grade of 0.30% Cu equivalent (CuEq). For Colnic, the resource estimate comprises Measured, Indicated, and Inferred resources reported as gold‐copper mineralization with a base case cutoff grade of 0.45 g/t gold equivalent (AuEq). At Ciresata, the resource comprises Inferred mineralization only with a base case cutoff grade of 0.70 g/t AuEq.

The base case cutoff grades for this mineral resource estimate were chosen prior to the inception of the PEA for each respective deposit. At the time they were determined by giving consideration to the characteristics of each deposit, envisioned mining methods, approximate mining and milling costs derived from internal studies as well as comparable porphyry‐type deposits, results from early metallurgical test work and the reasonableness to be potentially economic.

As of September 30th, 2008, the effective date of the resource estimate, weighted average results indicate the Rovina Valley resources contain 193.1 Mt in the Measured and Indicated categories grading at 0.49 g/t Au and 0.18% Cu. The Inferred category totals 177.7 Mt grading at 0.68 g/t Au and 0.17% Cu using base case cutoffs of 0.45 g/t AuEq for the Colnic

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deposit, 0.70 g/t AuEq for the Ciresata deposit and for 0.30% CuEq for the Rovina deposit. The gold or copper equivalency formula is described in detail in Section 17.9 of this report and uses a gold price of US$675/oz and a copper price of US$1.80/lb with metallurgical recoveries not taken into account.

The following Tables 1‐1, 1‐2, and 1‐3 show a summary of mineral resources for each of the deposits at their respective base‐case cutoff grades. These resources form the basis of the PEA study.

Table 1‐1: Rovina Mineral Resource Base Case at 0.3% CuEq Cutoff

Resource Tonnage Au Cu AuEq* Au Cu AuEq* Category (Mt) (g/t) (%) (g/t) (Moz) (Mlb) (Moz)

Measured 12.6 0.4 0.33 1.01 0.16 92 0.41 Indicated 65.3 0.36 0.28 0.86 0.75 396.5 1.81 Total M+I 77.9 0.37 0.25 0.89 0.92 488.9 2.22 Inferred 35.1 0.33 0.25 0.78 0.37 192 0.88

Table 1‐2: Colnic Mineral Resource Base Case at 0.45 g/t AuEq Cutoff

Resource Tonnage Au Cu AuEq* Au Cu AuEq* Category (Mt) (g/t) (%) (g/t) (Moz) (Mlb) (Moz) Measured 9.4 0.76 0.12 0.98 0.23 25 0.3 Indicated 105.8 0.57 0.11 0.76 1.92 245.1 2.58 Total M+I 115.2 0.58 0.11 0.78 2.15 270.1 2.87 Inferred 41.2 0.44 0.1 0.62 0.58 88.8 0.82

Table 1‐3: Ciresata Mineral Resource base case at 0.70 g/t AuEq Cutoff

Resource Tonnage Au Cu AuEq Au Cu AuEq Category (Mt) (g/t) (%) (g/t) (Moz) (Mlb) (Moz) Inferred 101.3 0.9 0.17 1.22 2.94 382.0. 3.96

1.3 Geotechnical

BGC Engineering Inc. conducted a Preliminary Engineering Geology review for the Rovina, Colnic, and Ciresata Deposits based on information collected in the Fall of 2008 from geotechnical core logging, surficial mapping, point‐load laboratory testwork and geologic model review. Two main geological units are present on the Project site: intrusives hosting mineralization and the sedimentary country rocks. Geotechnical units have been defined based on this division, with the Rovina and Colnic Deposits considered together, and Ciresata separately. Intact rock properties were estimated and conceptual structural geologic models

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were developed for each unit. In the sedimentary units, bedding has been assumed to play a major role in the stability of open pit slopes at Rovina and Colnic.

Design criteria for the Preliminary Economic Assessment have been developed for each of the geotechnical units. These design criteria are based on potential controls which could result from structural and rock mass failure mechanisms.

The proposed Rovina pit will likely intersect the sedimentary unit in the southwest sector of the pit, thus slope angles in the sediments may need to be limited to a maximum interramp angle of 40° to avoid undercutting bedding in that sector. In the intrusive rocks of the proposed Rovina pit, overall slope angles of 49° or greater may be achievable for slope heights less than 500 m, if structural controls do not exist.

Structural controls in the sedimentary units which could be encountered by the proposed Colnic pit could limit the south‐southwest and northeast walls to 33° and 45° interramp angles, respectively. If the northeast wall in the sediments exceeds 300 m in height, shallower angles may be required due to the potential for rock mass controlled failure.

Design criteria were developed assuming that the final walls will be excavated using trim and buffer blasting. Achieving the proposed design criteria at Rovina and Colnic will require partial to complete depressurization of the final pit walls, depending on the actual rock type encountered.

For the proposed underground developments at Ciresata, at this stage of design, the caveability has been estimated as “fair” for both the intrusive and sedimentary units according to Laubscher’s MRMR method. This indicates that block or sublevel caving may be feasible for this deposit.

Future work is required to address uncertainties and risks identified in the preliminary open pit and underground design work. Additional geotechnical data will be required to improve the confidence level associated with the proposed design criteria including geotechnical core logging, laboratory testing, and hydrogeological testing.

1.4 Mining

These open pit and underground mine plans incorporate Inferred mineral resources that are considered too speculative geologically to have economic considerations applied to them, and that would enable them to be categorized as mineral reserves. Thus inherent in the study is the risk that the value of these Inferred mineral resources may not be realized.

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1.4.1 Open Pit Mining

The RVP contains three economic deposits: Rovina, Colnic, and Ciresata. Pit designs are developed for Rovina and Colnic, with Ciresata currently considered economic only as a bulk underground mining operation.

The process plant is designed at a 40,000 t/d production rate. A review of net present values for various production rates indicates the 40,000 t/d rate provides both a reasonable NPV and lower capital requirements than higher production rates.

Open pit mining is accomplished with two 21 m3 electric hydraulic shovels, a 20 m3 front‐end loader and on average eight 180 tonne haulage trucks. Ore is hauled directly from the pits to a primary crusher located in the Baroc Valley. Waste dumps are located in the Rovina Valley and in the Baroc Valley. Approximately 25% of the open pit waste will be backfilled into the Colnic pit as a direct haul from mining Rovina's later phases. All waste for this study is assumed to be non‐ARD, but this will need to be verified in future studies.

Open pit mining commences in Year ‐1 with Rovina and Colnic mining simultaneously. Rovina waste is used to build roads, and fill the Baroc valley to the 450 level for infrastructure such as the primary crusher. While the ore processing rate is 40,000 t/d, the open pits are designed to ensure the plant has sufficient ore to meet that rate. The underground mine with its higher value ore will supply on average 21,600 tonnes of ore daily over the life of the mine and the open pits will supply the remainder.

The starter pit at Rovina will only be mined in the first five years, while Colnic during this time will be the primary open pit feed due to its higher value ore. In addition, by advancing Colnic over Rovina, it allows the partial backfilling of Colnic with Rovina waste. The Colnic open pit will be in operation from Year ‐1 to Year 10 when the pits will be exhausted. Rovina will start pre‐stripping its later phases in Year 7 and will start to supply ore from Year 9 until the end of the Rovina open pit life in Year 18. The final year of ore processing, Year 19, will be completed by reclaiming a low‐grade stockpile developed over the mine life.

A net value per tonne cutoff of $0.01 is used for the open pit to determine the resource to be sent to the mill. This net value per tonne calculation takes into consideration all onsite costs (milling, general, and administrative) as well as off site costs (concentrate haulage, port, shipping, smelting and refining). If the block value is $0.01/t or greater, it is ore. If it is lower, it is waste. For mine scheduling a high‐grade cutoff of $5 is applied. Material with a value per tonne of $5 or greater is sent directly to the mill. If the value is between $0.01 and $5/t, then it is stockpiled for later processing.

The open pit resource mined is 141.1 Mt grading 0.18% Cu and 0.48 g/t Au. Of the open pit material mined, 16% is in the Inferred category. A total of 288.1 Mt of waste must be mined to uncover the ore at an average strip ratio of 2.0 to 1.

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Mine operating costs are estimated at $1.14/t material moved life of mine. The mining cost includes the cost of the open pit operations, pre‐strip in Year ‐1 and low grade stockpile rehandle in the later part of the mine life.

Mine capital costs are estimated at $96.7 million for the life of mine with initial capital (Year ‐3 to Year 1) estimated at $46.8 million. Sustaining capital is $49.9 million over the life of the mine.

1.4.2 Underground Mining

A review of the Ciresata deposit indicates that the most effective method to mine the deposit is by a bulk underground mining method. A conceptual design concept is established for Ciresata that has the deposit mined in two phases. The initial shorter life phase targets the upper higher‐grade section using a modified vertical crater retreat (VCR). The second phase is an induced block cave for the lower portion of the deposit. The ore material from both of this area will be sent to the mill in the Baroc Valley via a 6 km underground conveyor gallery, which is the access to the second phase.

Phase 1 access is developed via a portal in the valley to the west of Ciresata. This will be a normal ramp access to open the upper high‐grade zone.

Once the conveyor has reached the bottom of the deposit in Year ‐1, work on developing the working, ventilation and haulage levels for the second phase commences, as well as developing connecting access between Phase 1 and Phase 2 with an ore pass. The work of development at the base of the induced cave continues until the end of the mine life.

The underground resource mined is 124.4 Mt grading 0.17% Cu and 0.86 g/t Au and is currently defined as an inferred resource. This represents a supply of 21,600 t/d of ore to the process plant until the end of its mine life in Year 16.

The average LOM operating cost is estimated to be $6.62/t of ore produced. Year ‐1 and Year 1 have significantly higher costs per tonne ore due to the development activities and minimal ore tonnage release, but the remainder of the years reflect the average cost or lower.

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Capital costs for the underground mine at Ciresata total $123 million over the life of the mine. The majority of the cost is in the period from Year ‐3 to Year 1 with a total of $94.7 million. The remainder of $28.3 million is sustaining capital.

1.5 Metallurgy and Processing

1.5.1 Metallurgy

Metallurgical testwork has been completed on 16 composite samples from the Rovina, Colnic, and Ciresata deposits. Work included a preliminary evaluation of grindability, mineralogical gold deportment examinations, bench‐scale flotation testwork (batch and locked cycle) and flotation flowsheet development. Mineralogical studies indicate chalcopyrite is the sole Cu‐bearing mineral with rare exceptions, and gold occurs in chalcopyrite, pyrite, and silicate gaunge.

Grindability testwork has produced Bond ball mill work indices ranging from 13.6 kWh/t to 17.3 kWh/t and the composites are therefore thought to be moderately hard.

Flotation testwork has developed a relatively straightforward industry‐standard flowsheet with a simple reagent scheme and a primary grind target of 80% ‐75 µm. Bulk flotation of sulphides with a mixed xanthate/dithiophosphate collector and MIBC frother gave a low‐ sulphur tailing stream and a rougher concentrate with good recoveries of copper, sulphur and gold. Subsequent regrinding of rougher concentrates to ~20 µm and selective flotation to reject pyrite allows production of saleable copper concentrates containing significant gold.

Gold losses consist of that which is locked in silicates in the rougher tailings, and that which is associated with or within pyrite in the cleaner tailings.

Cyanidation testwork of flotation tailings samples was completed on all composites and the results indicate that a significant increment of additional gold recovery may be achievable using this supplementary process. Despite this, current metallurgical predictions make no allowance for cyanide‐recoverable gold and rely instead on the flotation of a lower grade copper concentrate, which include higher concentrations of pyrite‐rich gold.

Table 1‐1 shows a summary of the current metallurgical predictions based on locked‐cycle flotation‐test data.

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Table 1‐4: Metallurgical Prediction – Summary

Head Assay Concentrate Assay Recovery to Concentrate Deposit Cu % Au g/t Cu % Au g/t Cu % Au g/t Rovina 0.25 0.27 24.3 20 93.2 69.9 Colnic 0.11 0.70 13.6 63 91.7 67.9 Ciresata 0.16 0.94 18.7 82 89.4 66.9

Further improvement to the flotation flowsheet is considered probable and further examination of different mixed‐collector regimes is strongly encouraged. This is particularly true of the Ciresata deposit, where gold recoveries could likely be improved through advances in pyrite flotation control.

Minor element analysis of the locked cycle test products highlighted that with the exception of zinc in the concentrate from Colnic, all deleterious elements are within downstream treatment allowances. A high zinc concentration in the Colnic flotation concentrate (1.6%) should be monitored as testwork progresses. In practice, the blending with low zinc concentrates from Rovina and Ciresata would dilute this element to acceptable (sub‐penalty) levels.

Recommendations for further work include the completion of a thorough grindability study, further bench scale optimisation of reagents (primarily collector combinations) and development of head grade vs. recovery relationships for each deposit (i.e., variability testing).

1.5.2 Processing

The processing plant will operate 365 days per year at a rate of 40,000 t/d. Annual mill tonnage is estimated at 14.4 Mt. A gyratory crusher will crush open pit ore, which along with Ciresata underground ore, will feed a mill feed stockpile. Crushed ore will be reduced to flotation feed size in a two stage grinding circuit comprised of a SAG mill and two ball mills.

Copper and gold will be recovered by flotation. Conventional rougher and scavenger flotation will be followed by regrinding of concentrate and three‐stage cleaning by flotation to produce a final saleable copper concentrate with gold credits.

Final concentrate will be thickened and filtered to yield a product suitable for shipment to port. The concentrate will be contained in tote bags and shipped in containers to minimize the losses to the contained gold.

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1.6 Transportation and Logistics

The RVP is located near major roads and railways and no special issues with respect to access to materials and supplies were considered.

The shipment of concentrate from the site will be accomplished using standard shipping containers with concentrate tote bags placed inside. These shipping containers will be hauled by truck from site to Deva, Romania. From there they will be transferred to railcars and railed to the port of Constanta on the Black Sea. The containers will then be transferred to a container vessel for final transport to the various smelters. The assumed final destination for this study was the Freeport smelter in Spain, although other smelters exist in Europe with the same level of gold accountability for similar shipping costs.

1.7 Infrastructure and Site Layout

The mill facility will be constructed between the Rovina and Colnic open pits and will consist of a processing plant and the supporting infrastructure for the mining operations. An anticipated power demand for the entire mine site is about 50 MW. For the basis of this scoping study, the energy will be provided through a single 110 kV tap from the nearby utility transmission line and a main substation. A mobile equipment garage as well as a dry, offices, and warehouse will be located nearby the mill to form the site complex.

A new road will be required to access Rovina from Highway 741, as the Colnic open pit will interrupt the present road.

A tailings pipeline will parallel the new access road to the Bucureşci valley where the tailings management facility will be located. At the tailings facility, a pumphouse will be established to return water to the plant thereby reducing the fresh water requirements for processing. The additional water for processing will be obtained from groundwater wells located near the process plant.

The tailings dam will be built from quarried material initially and added onto each year as the level of tailings rises. A second dam on the south side will ensure tailings do not pass into a neighbouring valley and increase the volume of tailings storage possible within a smaller footprint.

1.8 Capital and Operating Costs

The project is designed as a 40,000 t/d operation including the development of two open pits and one underground mine complete with processing and tailings facilities and associated site buildings.

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The capital cots are illustrated showing three different periods: Year ‐3 to Year ‐1, Year 1, and Year 2 to Year 19. The indirects and contingency vary with each capital cost catergory. Capital costs for the RVP are shown in Table 1‐5, and Indirect and Contingency percentages in Table 1‐6.

Table 1‐5: Rovina Valley Project Capital Cost Summary

Pre‐Production Capital Production Sustaining Total Capital Year – 3 to Year ‐1 Capital Year 1 Capital Year 2+ Capital Category (US$ M) (US$ M) (US$ M) (US$ M) Open Pit Mining 96.7 46.6 0.2 49.9 Underground Mining 123.0 60.2 34.5 28.3 Processing 203.7 148.2 37.0 18.5 Infrastructure 92.6 46.1 2.8 43.7 Environmental 10.0 0.0 0.0 10.0 Indirects 156.4 130.9 24.1 1.5 Contingency 103.9 77.5 19.8 6.6 Total 786.4 509.4 118.4 158.6

Table 1‐6: Project Indirect and Contingency Percentages

Indirects Contingency Capital Category (%) (%) Open Pit Mining 10.0 15.0 Underground Mining 0.0 15.0 Processing 45.4 25.0 Infrastructure 30.0 20.0 Environmental 15.0 15.0

Table 1‐7 shows the operating costs for the open pit mine and underground operations, and Table 1‐8 a summary of the total operating costs for the RVP.

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Table 1‐7: Mine Operating Cost

Total Open Pit Underground Cost Centre (US$ M) ($/t ore) ($/t ore) Open Pit – Ore and Waste 508.8 3.60 ‐ Underground – Ore 822.5 ‐ 6.62

Table 1‐8 Total Operating Costs ‐ Rovina Valley Project

Total Cost Per Tonne Ore Cost per DMT Concentrate Cost Centre (US$ M) ($/t ore) ($/t Conc.) Open Pit – Ore and Waste 508.8 1.92 ‐ Underground – Ore 822.5 3.10 ‐ Milling – Ore 1,178.0 4.44 ‐ G&A 120.7 0.45 ‐ Sub‐total – On‐site Costs 2,630 9.91 ‐ Concentrate Trucking 74.3 ‐ 32.00 Port Cost 37.2 ‐ 16.00 Shipping to Smelter 32.5 ‐ 14.00 Sub‐total – Off‐site Costs 144.0 ‐ 62.00 Total 2,774.0 ‐ ‐

1.9 Economic Analysis

The 40,000 t/d Rovina Valley project yields a project with an NPV of $316 million using an 8% discount rate. The IRR is 15.7%. The currently scheduled mine life is 19 years with a payback of 4.9 years from the start of processing. The detail on the project is shown in Table 1‐9. The gold cash cost for the project is $379/oz with copper credits. Additional cash cost calculations are shown in Table 1‐10.

Sensitivities of both the net present value at 8% and internal rate of return are shown in Tables 1‐10 and 1‐11 for various gold and copper prices.

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Table 1‐9: Final Discounted Cash Flow Results

40,000 Cost Category Unit (t/d) Operating Cost Open Pit Mining (US$ M) 508.8 Underground Mining (US$ M) 822.5 Processing (US$ M) 1,178.0 G&A (US$ M) 120.7 Concentrate Trucking (US$ M) 74.3 Port Costs (US$ M) 37.2 Shipping to Smelter (US$ M) 32.5 Sub‐total Operating Costs (US$ M) 2,774.0 Capital Costs Open Pit Mining (US$ M) 96.7 Underground Mining (US$ M) 123.0 Processing (US$ M) 203.7 Infrastructure (US$ M) 92.6 Environment Costs (US$ M) 10.0 Indirect (US$ M) 156.4 Contingency (US$ M) 103.9 Sub‐total Capital (US$ M) 786.4 Revenue (after smelting, refining, losses) (US$ M) 5,115.9 Royalty (US$ M) 198.9 Net Revenue (US$ M) 4,917 NPV @ 5% (US$ M) 569 NPV @ 8% (US$ M) 316 NPV @ 10% (US$ M) 200 IRR (%) 15.7 Payback Period Years 4.9

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Table 1‐10: Production Statistics and Cash Cost Calculations

Metal Indicator Units Value Gold Average Annual Production oz 196,000 Initial 5 Year Average Annual Production oz 238,000 Total LOM Production Moz 3.72 Copper Average Annual Production Mlb 49.4 Initial 5 Year Average Annual Production Mlb 53.5 Total LOM Production Mlb 938 Cash Costs Gold Cash Cost without Copper Credit $/oz 746 Gold Cash Cost with Copper Credit $/oz 379 Cash Cost as a Co‐product Credit Gold $/oz 483 Copper $/lb 1.05 Gold Cash Cost with Copper Credit and Capital $/oz 471 Cash Cost as a Co‐Product Credit with Capital Gold $/oz 619 Copper $/lb 1.34

Table 1‐11: Net Present Value Sensitivity

Gold Price (US$/oz) $850 $875 $900 $925 $950 $975 $1,000 1.75 66 105 144 182 221 260 299

2.00 152 191 230 269 308 347 386 2.25 239 278 316 355 394 433 472 (US$/lb)

2.50 325 364 403 442 481 520 559 Price 2.75 412 450 489 528 567 606 645 3.00 498 537 576 615 654 692 731 Copper

Table 1‐12: IRR Sensitivity

Gold Price (US$/oz) $850 $875 $900 $925 $950 $975 $1,000 $1.75 9.7% 10.7% 11.7% 12.6% 13.6% 14.5% 15.4%

$2.00 11.9% 12.8% 13.7% 14.6% 15.5% 16.4% 17.3% $2.25 13.9% 14.8% 15.7% 16.5% 17.4% 18.2% 19.1% (US$/lb)

$2.50 15.8% 16.7% 17.5% 18.4% 19.2% 20.0% 20.8% Price $2.75 17.6% 18.5% 19.3% 20.1% 20.9% 21.7% 22.5% $3.00 19.4% 20.2% 21.1% 21.9% 22.6% 23.4% 24.2% Copper

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1.10 Markets and Smelter

Sufficient demand for the product exists in the primary consuming region of the North Atlantic and Baltic Range; however, negotiating leverage, increased awareness, and demand for the product, and the security of a broader range of clients can be enhanced by developing an expanded consumer range.

This product can be consumed in the Asian market and particular effort should be considered for the transport logistics of the high value copper concentrates. Minimizing losses by dusting, spillage, and accounting for dry weights, sampling, and assaying shall be highly sensitive to the net revenue return for the Project. Packaging options for the copper concentrates may be evaluated to reduce handling and accountability losses.

1.11 Environmental and Socioeconomics

The Project lies within the historic mining region of western Romania known as the ‘Golden Quadrilateral’ and includes three proximal porphyry‐type gold‐copper deposits discovered by Carpathian. There are no legacy mining issues at the Project. The present mining plan proposes two open pits and one underground mine to process 40,000 t/d of ore over a 19‐year mine‐life using the flotation method to produce a gold‐copper concentrate for shipment off‐site. Mine waste will include open‐pit waste rock to be deposited in valleys near the pits and ore‐processing plant tailings to be deposited in a valley approximately 6 km southeast of the plant within a designed management facility. At end of mine‐life, the waste dumps will cover 293 ha and the tailings will cover 391 ha.

A survey for designated protected areas and cultural‐heritage sites concludes there are no occurrences within the impact area of the Project. The Project occurs in a rural area within the local jurisdiction of the Commune of Bucureşci, which includes a satellite community near the planned open pit operations. Carpathian has embarked on a corporate social responsibility approach grounded in project level implementation that includes a proactive stakeholder engagement policy and reports strong local community support for project development. State‐owned mines closed in 2006 and local unemployment is high. The proposed Project would directly employ 610 people and likely create three times this number of indirect jobs for services and contracts.

Carpathian has commissioned environmental and social baseline and impact studies for use in application for a Mining License over the Project area. Mine permitting in Romania falls under county, regional, and national jurisdictions of environmental protection and public health and safety. Romania joined the European Union (EU) in January 2007, and has adopted environmental protection legislation compatible with the EU and international standards. Permitting involves environmental and social impact reports, public consultation, and independent technical committee reviews. To obtain a construction permit requires land‐use re‐zoning, environmental and social impact assessment reports, closure planning,

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and public meetings. From inception of required studies, an estimate of three years is required to obtain the construction permit; much of this work can be in parallel with completion of the technical feasibility study. Mine operating permits are issued when construction is complete and the relevant health and safety permits are granted.

Carpathian should build upon the completed environmental and social studies presently underway for the Mining License application to prepare for the environmental impact assessment report required for the land re‐zoning and construction permit. This will involve more thorough baseline and impact studies, along with oversight for compliance with international standards. In addition, Carpathian should continue with its proactive stakeholder engagement program to consult and involve the local community as a partner in the context of long‐term community development.

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2 INTRODUCTION AND TERMS OF REFERENCE

This report describes the results of the PEA study for the RVP owned by Carpathian Gold Inc. (Carpathian) based in Toronto, Ontario, Canada. This engineering and financial analysis was done using NI 43‐101 compliant resources within open pit and underground designs. All monetary amounts are provided in 3Q 2009 United States dollars unless otherwise noted. All units used in this report are metric; grid references are based on the Romanian National Grid (Stereo70) coordinate system unless otherwise stated.

This report is prepared in accordance with disclosure and reporting requirements set forth in National Instrument 43‐101 (NI 43‐101), Companion Policy 43‐101CP, and Form 43‐101F1, and complies with Canadian National Instrument 43‐101 for the ‘Standards of Disclosure for Mineral Projects’ for the Canadian Securities Administration. Mr. Dino Titaro, President and Chief Executive Officer of Carpathian requested its preparation. The following people are listed as leads in each discipline on the PEA project team. Qualified Persons (QP) as set out in NI 43‐101 are also designated by a “QP” and are listed as such in the Certificates of Qualified Persons section. Qualified Personnel did four separate site visits to the RVP. These personnel have a “Site Visit” beside their name with the site visit date.

Eric Harkonen, P.Eng., MBA – Project Manager, PEG (QP, Site Visit: Sept. 22nd‐27th, 2008) Pierre Desautels, P.Geo. – Geology, PEG (QP, Site Visit: Aug. 26th‐30th, 2008) Warren Newcomen, P.Eng. – Geotechnical, BGC (QP) Gheorghe Bonci, PhD. – Geotechnical, BGC (Site Visit: Sept. 16th‐21st, 2008) Gordon Zurowski, P.Eng. – Mining/Financials, PEG (QP, Site Visit: July 2007) Mike Mason – Markets/Smelter, PEG Gordon Bacon, P.Eng., PhD. – Processing/Metallurgy Peer Review, PEG Mario Colantonio, P.Eng. – Infrastructure, PES (QP, Site Visit: Sept.22nd‐27th, 2008) Andy Holloway, P.Eng. – Metallurgy, PEG (QP) Al Hayden, P.Eng. – Processing, EHA (QP) Randy Ruff – Environmental and Socioeconomics, Carpathian.

During the site visit, items such as logistics/transportation, mining site, and port layout of infrastructure, geology, and geotechnical assessment of the drill core, and mine staffing issues were assessed. This satisfies the condition of a site visit performed by independent qualified personnel for NI 43‐101 regulations.

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Information, conclusions, and recommendations contained herein are based on a field examination, including a study of relevant and available technical data including and not limited to the numerous reports listed in the References section. Randy Ruff, Executive Vice President Exploration of Carpathian provided valuable site‐specific information.

Much of the information contained in this report from Sections 4.0 to 15.0, and 17.0 was summarized in part from the PEG report titled “Technical Report on the Rovina Valley Project, Romania, January 2009.” The January 2009 report as well as this PEA report are available on SEDAR for public release.

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3 RELIANCE ON OTHER EXPERTS

PEG has followed standard professional procedures in preparing the content of this report. Data used in this report has been verified where possible and this report is based upon information believed to be accurate at the time of completion. PEG has no reason to believe that the data was not collected in a professional manner. PEG has not verified the legal status or legal title to any claims and the legality of any underlying agreements that may exist concerning the property. It is PEG’s understanding that Carpathian owns 100% of the RVP under its wholly owned subsidiary SAMAX Romania SRL (SAMAX).

The authors have also relied on several sources of information on the property, including digital geological and assay data. Therefore, in writing this report, the qualified persons rely on the truth and accuracy as presented in various sources listed in the references section of this report. Qualified persons as defined by the NI 43‐101 regulations are relied on for each section of this report. The responsibilities of the qualified persons are indicated in Section 30.

The critical areas of information relied on in this report are the geological resource estimation and metallurgy. PEG authored the NI 43‐101 compliant resource report for the Rovina, Colnic, and Ciresata Deposits. As mentioned, a separate report was developed and filed on SEDAR on January 2009. Pierre Desautels, P.Geo., of PEG, has verified the validity of this resource estimate for use in the current PEA study. SGS Lakefield conducted further metallurgy testwork in 2010 under the supervision of PEG. This report is referenced in Section 16 of this PEA report. Andy Holloway, P.Eng., and Gordon Bacon, P.Eng. of PEG, confirmed the validity of this testwork for use in the PEA study. This provided critical information on the processability of all the deposits in the RVP as well as the quality and quantity of copper concentrate produced and gold contained therein.

PEG Mining Consultants Inc. (PEG) based in Barrie, Ontario, Canada managed the Project. PEG collaborated with BGC Engineering Inc. (BGC) based in Vancouver, British Columbia, Canada for Geotechnical, Porcupine Engineering Services Inc. (PES) based in Timmins, Ontario, Canada for Infrastructure, EHA Engineering Ltd. (EHA) based in Richmond Hill, Ontario, Canada for Processing, and Python Mining Consultants Inc. (Python) based in Hamilton, Ontario, Canada for Underground Mine Design, Planning, and Costing. Figure 3‐1 shows the organization chart including leads for each discipline for the study.

The Environmental and Socioeconomics, Section 22, and the Project Implementation Plan (permitting), Section 26, and the Environmental and Owner’s costs, Section 24.1.6 & 24.1.7, and the Taxes and Royalties, Section 23, of this report were done in collaboration with Randy Ruff, Executive Vice President Exploration of Carpathian. Randy manages the RVP office located in the town Criscior, Romania (approximately 2 km from the RVP) through SAMAX (Carpathian’s wholly owned subsidiary). Page | 3‐1 21/05/2010

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Figure 3‐1: PEA Organization Chart

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4 PROPERTY DESCRIPTION AND LOCATION

4.1 Location

The RVP is located in the Golden Quadrilateral Mining District of the South Apuseni Mountains in west‐central Romania, approximately 300 km northwest of the city of Bucharest, the capital city of Romania, and 140 km east–northeast of the city of Timisoara (Figure 4‐1). The Carpathian property comprises the Rovina exploration license and lies in the Judetele (County) Hunedoara, a part of the Development Region of Transylvania. The property is approximately 25 km north of the small city of Deva, and 7 km west of the town of Brad (Figure 4‐2).

The property is centered at approximately latitude 46° 07' N and longitude 22° 54' E or 515,000 N and 340,000 E using the “Stereo70” projection of the Romanian National Geodetic System. Elevations on the property range from 300 masl to 940 masl.

4.2 Property and Title in Romania

The following abstract on property and title in Romania is a summary from an English translation of Mining Law 85/18.03.2003 by the National Agency for Mineral Resources (NAMR) (http://www.namr.ro/legi/engleza/legea_minelor.pdf).

The General Mining Law of Romania came into effect in 1998 and was amended in 2003. The scope of the law is to ensure maximum transparency in mining activities and fair competition without discrimination between operators, depending on the property type and the origin of the capital. Subterranean and aboveground mineral resources located within Romanian territory, within the continental shelf and in Romania’s Black Sea economic area, are part of the state’s public property.

No exploration or mining activity can be legally carried out without an appropriate permit. Under the terms of the 1998 Mining Law, all companies seeking an exploration licence in Romania must approach NAMR.

The rights granted by an exploration or exploitation licence are exclusive to the holder, chargeable, defensible against third parties and are transferable with the consent of NAMR. Applicants are not automatically granted surface rights and these must be acquired from the existing owner through sale, land exchange, rental, expropriation, concession, association, or other process, as allowed by law.

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Figure 4‐1: Location Map

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Figure 4‐2: Location, Access, and Perimeter of Rovina Exploration License

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Foreign operators must create a permanent subsidiary in Romania within 90 days of obtaining any mining license, and the subsidiary needs to be maintained throughout the period of operation. Carpathian operates in Romania through its wholly owned subsidiary SAMAX with registered seat and office in Baia Mare, project office, and technical facilities in Criscior, and an office in Deva, the Huneadora County seat. SAMAX has been operating as an exploration company since 1999 following inception of the modern mining law in 1998.

Permitting for the RVP is described in Section 22.2 of this report.

4.3 Land Tenure

4.3.1 General

The Rovina property consists of one exploration licence (the Rovina Exploration Licence Number 6386/2005 for Au–Ag‐Cu). Table 4‐1 shows the corner coordinates for the Rovina Exploration License. These corner coordinates are designated by the NAMR and are not surveyed in the field. The total area covered by the Rovina property is approximately 9,351 ha.

Table 4‐1: Rovina Licence Boundary (Stereo70 Grid System)

Northing Easting Point (m) (m) 1 335650 521900 2 341750 521900 3 341750 512700 4 347360 512700 5 347360 508960 6 340779 508960 7 340779 510209 8 335650 510209

4.3.2 Agreements

Carpathian owns 100% of SAMAX, which owns 100% of the Rovina exploration license. SAMAX is a duly registered company in Romania at the city of Baia Mare.

Rovina Agreement

Carpathian acquired the Rovina property through their wholly owned subsidiary SAMAX Romania SRL, on 27 April 2004 as a one‐year non‐exclusive prospecting permit covering 102.3 km2. SAMAX applied for an Exploration Licence, and following a public tender and application process, was officially awarded 100% interest in the Rovina license (covering

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9,351 ha) on 29 August 2005 for a period of four years. In August 2009, SAMAX applied for and was granted a further three‐year’s period for the Rovina License covering the previous area (93.51 km‐sq) as per the mining law. The license is in the fifth‐year work program and as such, the Annual Exploration Licence Tax is RON 5,000/km2 (US$1,800).

Carpathian has informed PEG that minimum exploration commitments for August 2005 to August 2009 have been met and exceeded. In August 2009, Carpathian obtained a license extension for three years. Carpathian has informed PEG that there are no underlying payments or encumbrances to third‐person parties relating to the Rovina property beyond the government requirements.

PEG relies on the terms and the land tenure documentation supplied by Carpathian and Carpathian’s lawyers and has not reviewed the mineral titles or agreements to assess the validity of the stated ownership.

4.3.3 Surface Rights

Carpathian does not hold any surface rights on their Rovina property. Romanian law does not vest surface rights with mineral rights

Numerous individual local landowners and the state forestry hold surface rights over the Rovina, Colnic, and Ciresata Deposits. Carpathian has informed PEG that signed Civil Contracts for temporary surface rental are in‐place with all landowners where drilling activity has occurred. These contracts are renewed on a yearly basis. These contracts also contain a rehabilitation promise from Carpathian and are signed by the landowner and notarised when the rehabilitation is complete and has met their approval.

4.3.4 Permits

The Romanian Mining Law requires applicants of exploration licences to submit an appropriate financial guarantee for environmental rehabilitation, as set out in an environmental rehabilitation plan. All exploration activities that cause surface disturbance (i.e., trenching, drilling, and access development) require permitting under an Urbanization Certificate (UC) which serves as a template for various government agency approvals. The UC has been approved for Carpathian’s drill programs.

Carpathian is currently applying for a Mining license for the RVP. Refer to Section 22.2 for a complete description.

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5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

5.1 Accessibility

The principle access to the property is on paved two‐lane highway to the historic gold mining town of Brad followed by secondary paved roads eastward for 7 km, which pass through the town of Criscior and onward to the village of Bucureşci within the property. This road provides the principal access to the Rovina, Colnic, and Ciresata Deposits.

The western boundary of the Rovina Licence is located less than a kilometre east of the town of Criscior (population about 3,000), where Carpathian’s field exploration office is located. The Colnic deposit is about 4 km from the town with road access passing through the center of the mineralized zone. The Rovina deposit is located about 2.5 km to the north–northwest of Colnic, and can be accessed by a 4‐wheel drive track. The turn‐off to the Ciresata deposit is located 1.7 km east of the field office in Criscior. From this turn‐off, a dirt road heads south for 3.3 km leading to the Ciresata deposit.

Access to other portions of the Rovina Licence is via various paved and gravel roads, tracks suitable for 4‐wheel drive vehicles, or along footpaths. Access to the property by road is possible year round; however, short periods of blockage are possible in the winter due to snow, especially in the higher areas of the Apuseni Mountains.

The city of Timisoara has the nearest international airport to the property with most regularly scheduled commercial flights from various European destinations.

5.2 Climate

Springtime temperatures of 5°C to 10°C can start in early April, but patchy snow cover can last until mid‐May in the forested areas. The summer months, from June to September, have temperatures that range from 10°C to 20°C with rare maximum highs near 35°C. The typical annual precipitation is 800 to 1,100 mm.

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5.3 Local Resources and Infrastructure

The Golden Quadrilateral Mining district, where the Rovina property is located, has a long history of mining activity, with developed infrastructure to provide electrical power, highway transport, and rail transport.

The towns of Deva (pop. 80,000) and Brad (pop. 17,000) are the closest major centres to the Rovina Licence and are, respectively, about one hour, and 20 minutes drive from the Colnic deposit. The town of Zlatna (pop. 9,500) is situated approximately 30 km east of the property. Locally the unemployment is high, around 50%. Although the local towns can provide the most basic mining and exploration needs for the early stages of exploration and project development (including accommodation and labour requirements, food, communication services and other supplies), most mining related equipment and services for more advanced projects must be obtained from Timisoara (pop. 340,000) or Bucharest (pop. 2.5 M) or other locations in Europe.

The nearest electrical power source to the Deposits is in the town of Criscior (Gura Barza, adjacent to the Brad–Barza Mine processing plant), located approximately 5 km to the southwest. A 6 MW transformer plant is connected to a regional high‐tension power line and provides electrical power, principally for the Brad–Barza Mine and domestic and small industry use in the vicinity.

Most locations on the property have cellular phone service, except in valleys where signals may be blocked. Most nearby towns have line telephone service, most of which is capable of international calls.

The closest rail line available for use is at the town of Deva located at 41 km by road from Criscior.

The most significant source of surface water in the Rovina Licence near the Colnic, Rovina, and Ciresata Deposits is the Bucureşci River (south of Conic) and its tributaries. Within the property area, smaller year‐round creeks have provided an adequate supply for historic drilling programs.

Refer to Section 20 Transportation and Infrastructure for a complete description

5.4 Physiography, Flora, and Fauna

The property is located in the southern Apuseni Mountains, which are mostly gently rolling with some abrupt slopes and cliff forming rock exposures. The highest peaks near the property are the Duba (969 masl), Coasta Mare (786 masl), and Cornetel (695 masl) peaks.

In the areas of the Rovina, Colnic, and Ciresata Deposits, the terrain is hilly to mountainous with access through relatively gently sloped narrow valleys with moderately steep slopes to

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rounded ridges. The minimum and maximum elevations ranges for each of the Deposits are Colnic 350 m to 540; Rovina 500 m to 680 m; and Ciresata 420 m to 480 m.

The property is mostly forested with deciduous forests (beech and oak) and occasional conifers, particularly at higher elevations.

Wildlife on the property includes deer, fox, and wild pigs. Local streams on the property are not known to have fish.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

6 HISTORY

Mining has played a significant role in the history of the Southern Apuseni Mountains and was traced back to pre‐Roman times (~2,000 years). Initially gold production came from alluvial Deposits and high‐grade veins from various locations, including Rosia Montana, Baia de Aires, Zlatna, Brad, and Sacaramb.

In the 19th century, work by local prospectors and miners was focused on Au–Ag vein‐style mineralization. A total of 17 documented underground galleries were excavated within the Colnic Porphyry alteration halo.

In the 1960s, the Romanian government within the alteration footprint of the Colnic Porphyry completed three additional galleries, Colnic, Ursoi, and Mihai. In addition, many of the previously excavated galleries from the 19th century were re‐opened and sampled.

In the early to mid 1970s, the Romanian Government initiated porphyry exploration in the South Apuseni Mountains. This work included airborne geophysics (magnetics) and surface sampling.

In the mid‐1970s, Minexfor drilled a 650 m deep vertical hole at Colnic targeting a magnetic high anomaly identified from the Romanian Government’s airborne survey.

Starting in 1974, Minexfor initiated a ten‐year diamond‐drilling program totalling 34 holes and 23,119 m, at the Rovina deposit to test the extent of the porphyry‐style mineralization. In addition to the drilling, two levels of underground galleries were excavated in the form of grid patterns through the mineralized porphyry body to provide channel sampling and underground drilling stations

In 1976 and 1977, the Romanian government at Colnic reportedly completed IP/resistivity, natural polarization, and gamma ray geophysical surveys.

In 1982, Minexfor returned to the Colnic deposit area to complete 500 m of trenches and surface pits, 500 m of exploration tunnels, and approximately 3,550 m of core drilling.

In 1983, Minexfor completed additional magnetic and gamma ray geophysical surveys together with a soil geochemistry survey.

From 1986 to 1987, Minexfor briefly explored the Rugina intrusive–sediment contact‐related prospect.

In 1986, after ten years of drilling at the Rovina deposit and development of underground access a non‐compliant NI 43‐101 resource estimate for copper was completed.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

In 1999, Rio Tinto was granted a non‐exclusive prospecting permit by the Romanian government over an area covering approximately 24 km x 30 km. In December of that year, Rio Tinto applied for and was granted an Exploration Licence over this same area.

In 2000, Rio Tinto conducted a detailed exploration program consisting of; regional stream sediment geochemical sampling, grid soil geochemical sampling, rock chip sampling over selected target areas, and helicopter‐borne magnetic/radiometric survey. The license was relinquished after one year.

In 2000, Minexfor returned to the Colnic deposit and completed additional trenching and rock sampling, followed by eight core holes totalling 1,100 m.

In 2002‐2003, Minexfor completed a diamond drill program in Valea Garzii within the Ciresata area. Six vertical drill holes were completed for 1,200 m of drilling.

In 2004, the Rovina property was acquired by Carpathian wholly owned subsidiary, SAMAX Romania SRL, as a one‐year non‐exclusive Prospecting Permit. That year, Carpathian completed property‐wide reconnaissance sampling and mapping with a focus on known prospects.

In 2005, Carpathian applied for an Exploration License and following an open‐public tender and application process, was officially awarded the Rovina License (covering 9,351 ha).

Carpathian completed generative exploration work during 2005‐2006, which included reconnaissance‐style rock chip sampling, geologic mapping, and sampling at 1:5000 scale, soil geochemistry grids and ground magnetometer surveys and IP Resistivity surveys.

In 2006, drilling commenced on the property, 181 diamond drill holes had been completed for over 71,375 m.

In 2007, field programs included geologic mapping and sampling. This was followed‐up with soil geochemistry, ground magnetometer, and IP‐Resistivity surveys. In total approximately 34 km2 of ground magnetometer surveys were completed over the property along with 24.55 line kilometres of IP ground surveys. Over 19 km2 of soil geochemistry surveys have also been completed on the property

In 2007, AMEC Americas Limited (AMEC) generated a mineral resource estimate for the Colnic and Rovina porphyry Deposits. Only the drilling completed during 2006 was incorporated into this mineral resource estimate, which included 49 drill holes (15,714 m) from the Colnic deposit and 17 drill holes (8,435 m) from the Rovina deposit. The results for the Colnic deposit were 68 Mt @ 0.64 g/t Au, and 0.12% Cu (Indicated resource). In addition, there was a reported 160.3 Mt @ 0.33 g/t Au and 0.24% Cu (Inferred resource) at Colnic and Rovina.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Following the 2007 generative exploration programs and drilling, the Ciresata deposit was discovered in early 2008 with Au‐Cu mineralization occurring 50 to 100 m below the surface.

In 2009, PEG completed a NI 43‐101 resource estimate for the Colnic, Rovina, and Ciresata Deposits incorporating the late 2007 and 2008 drilling results that were available as of April 08th, 2008 for Rovina and as of September 30th, 2008 for Colnic and Ciresata. This resource estimate forms the basis of this PEA study.

In early 2010, Carpathian completed a single deep drill hole (RGD16) to assess the continuity of the upper part of the Ciresata deposit as well as the vertical extent of the mineralization. Exploration plans include further deep hole drilling and step‐out holes to test lateral extensions at the Ciresata deposit.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

7 GEOLOGICAL SETTING

7.1 Regional Geologic and Metallogenic Settings

The majority of the mineral deposits in the Romanian‐Hungarian region are located in the Carpathian Fold Belt, an arcuate orogenic belt, which is part of a much larger belt extending westward into Austria and Switzerland and south into Serbia and Bulgaria. These belts developed during the late Cretaceous and Tertiary, following closure of the Tethys Ocean, (Alderton and Fallick, 2000).

The development of the Carpathian Fold Belt was accompanied by widespread igneous activity, including a suite of late Cretaceous to early Eocene acidic to intermediate intrusive and extrusive rocks, known as “banatites.” These rocks are believed to have formed early stages of subduction and are host to several Cu–Mo–Fe Porphyry and skarn deposits. A series of much more extensive Neogene volcanic and subvolcanic rocks exist across the region (Alderton and Fallick, 2000):

The Apuseni Mountains represent a somewhat “isolated massif” with the Carpathian Fold Belt. This setting is typical of most gold (±Cu) porphyry deposits worldwide (i.e., Cajamarca Belt, Perú; Maricunga Belt, Chile; Cordillera Central of Luzon, Philippines; Sillitoe, 2000). The southern portion of the Apuseni Mountains, where the Apuseni‐Rovina property is located, consists of a complex area of Palaeozoic (and older) metamorphic rocks, Mesozoic ophiolites and sedimentary rocks and Tertiary igneous and sedimentary rocks. Magma genesis in this area is interpreted to be associated with extension within a strike slip regime in the Carpatho‐Pannonian realm (Milu et al., 2003), which created pull apart basins. Intersections of these with major east–west and northeast‐trending pre‐Laramian tectono‐magmatic lineaments and northwest‐trending Laramian lineaments are believed to have concentrated areas of increased Tertiary volcanic and metallogenic activity (Balintoni 1994; Rosu et al., 1997, 2000a in Milu et al., 2003).

The first, eruptive, episode at c. 15 Ma, is poorly developed, and is represented by rhyodacite to dacitic tuffs that are interbedded with marls and deep sea pelagic sediments (Cioflica et al., 1996 and Rosu et al., 2000b in Milu et al., 2003). The second episode (14.8 7.4 Ma) is calc‐alkaline intrusive‐related, and represented by dacite, associated with some andesite extrusive activity. The third episode, at c. 1.6 Ma, consists of deposition of trachyandesites (Milu et al., 2003).

The first two volcanic–intrusive episodes are associated with the majority of the metallogenic activity. The first, mid‐Miocene episode resulted in Au–Ag epithermal mineralization, such as that of the Rosia Montana deposit (Manske and Hedenquist, 2006). The second, mid‐to late Miocene episode, is represented by Au–Ag (Te) epithermal mineralization (e.g., Sacaramb, Stanija, Baia de Aries), Pb‐Zn‐Cu (Au‐Ag) mineralization (e.g., Troiuta, Coranda, Hanes) and

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

porphyry Cu (Au‐Mo) mineralization (e.g., Rosia Poieni, Deva, Bolcana and presumably Colnic and Rovina; Milu et al., 2003).

7.2 Rovina Property Geology

The Rovina property occurs within the defined Golden Quadrilateral Mining District located just east of the Brad‐Barza sub‐district, and near the northern end of the Sacarimb‐Brad volcanic belt (Figure 7‐1). The property covers a sequence of Neogene‐aged subvolcanic intrusive rocks, which is known to host epithermal‐ and porphyry‐style mineralization.

7.2.1 Colnic–Rovina‐Ciresata Area

The Rovina and Colnic porphyry deposits lie within a northeastern volcanic outlier of the 8 km to 10 km diameter, Neogene‐aged, Brad–Barza volcanic field. The Ciresata porphyry, 4.5 km south of Colnic, lies within the eastern part of the Brad‐Barza volcanic field.

The basement stratigraphy and volcanic rocks of the Rovina‐Colnic‐Ciresata area is regionally similar to that of the Brad–Barza volcanic field (Figures 7‐1 and 7‐2). The basal sequence comprises an upper Cretaceous flysch, locally termed the “Strate de Piriul Izvorului.” This unit consists of tightly folded siltstones, wackes, and thin interbeds of shale. The regional trend of fold axes is northwest southeast with some folds being overturned, which results in southwest‐dipping axial planes (Romania State Geology Map, 1:50,000 scale).

Unconformably overlying this unit are a series of Neogene‐aged, intermediate composition, subhorizontal volcaniclastics and flows which have limited aerial extent. Common in the area are isolated bodies of massive plagioclase–amphibole ± pyroxene ± biotite andesites (the “Andesite tip Barza”) which are mapped as subvolcanic intrusive (Figure 7‐2).

Lava flows and subvolcanic intrusives from the Rovina–Colnic area cover an arcuate shaped belt that is approximately 7 km long and 2 km to 3 km wide.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Figure 7‐1: Regional Geology

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Figure 7‐2: Geology of the Rovina License

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

7.2.2 Rovina Deposit Geology

Geology Summary

Copper‐gold mineralization at Rovina is hosted in multiple composite plagioclase‐hornblende porphyritic subvolcanic intrusives. This mineralization reaches the surface and is exposed in one location as outcrops in the Baroc valley drainage over approximately 300 m (Figure 7‐3). The remaining sparse and scattered outcrops are phyllic‐altered fragmental volcanics and porphyritic volcanics, which comprise a mapped phyllic alteration halo of 1,000 m x 600 m. The mineralized porphyries are cylindrical and vertical with mineralization extending up to 600 m below surface. At least three mineralized porphyries are recognized, the main porphyry (Rovina Porphyry) intrudes (or is surrounded by) a brecciated porphyritic unit. This breccia unit is locally mineralized and is interpreted as an intrusive magmatic breccia (IMB) carapace to an upper‐level intrusive. The last, post‐mineral stage of intrusive activity is the emplacement of a phreato‐magmatic breccia complex, which cuts earlier porphyry units and is grade destructive.

Multiple inter‐mineral intrusive phases into the Rovina porphyry have been recognized with features such as breccia clasts of intense stockworked porphyry within later, less intense stockwork porphyry. Intense stockwork veining in the Porphyry C contrasts against the moderate stockwork veining in Porphyry B in the upper section of the core. These multiple events lead to complex and overprinting stockwork veining and alteration features and likely resulted in grade enhancements.

Alteration types recognized that are associated with mineralization include an early potassic (biotite ± K‐spar), magnetite (several events), and magnetite‐propylitic (termed MACE, with magnetite, chlorite, epidote). The MACE alteration often overprints the earlier potassic alteration. Phyllic alteration occurs around the margins of the mineralized porphyries.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Figure 7‐3: Rovina Porphyry Surface Geology

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

7.2.3 Colnic Deposit Geology

Geology Summary

Gold‐copper mineralization at Colnic is hosted in multiple composite plagioclase‐hornblende porphyritic subvolcanic intrusive (Figure 7‐4). This mineralization reaches the surface in the Rovina Valley and is exposed in outcrops and road‐cuts in the valley bottom over a distance of approximately 400 m. The remaining sparse and scattered outcrops are phyllic‐altered porphyritic volcanics and Cretaceous sediments, and propylitic altered hornblende andesites. The Colnic deposit has a large phyllic alteration halo covering 2,000 m x 1,700 m. Two mineralized porphyry‐centers comprise the bulk of the Colnic deposit; one occurring in the Rovina Valley (Colnic Porphyry) which partially outcrops, and a second center approximately 200 m southeast on ‘F‐2’ Hill (F‐2 Hill Porphyry). The mineralized porphyries are lobate with a wider horizontal dimension then vertical extent. These bodies intrude mostly older pre‐ mineral intrusive and locally in the northeast Cretaceous flysch sediments. At Colnic, and especially for the F‐2 Hill Porphyry, much of the wall rock is a clastic unit of igneous composition with several facies ranging from flow‐laminated silty textures to zenolithic porphyry, which is interpreted to be an intrusive magmatic breccias complex (IMB) related to the emplacement of the porphyry as a marginal carapace. Locally this unit is altered and mineralized close to its contact with the porphyry, which is shallow‐east dipping on F‐2 Hill.

The Colnic Porphyry is more intensely mineralized than the F‐2 Hill porphyry and is complicated by an interpreted series of northeast‐striking and subvertical inter‐mineral dikes and breccias. These intermineral dikes and breccias may have been important for grade enhancements in this area, and the Rovina Valley Porphyry is interpreted to be older than the F‐2 Hill Porphyry.

At Colnic, overprinting alteration is a very common feature. Phyllic alteration overprint on Au‐Cu mineralized potassic alteration is a prevalent. Alteration types recognized that are associated with mineralization include an early potassic (biotite ±K‐spar), magnetite (several events), and magnetite‐propylitic (termed MACE, with magnetite, chlorite, epidote). Phyllic alteration occurs around the margins of the mineralized porphyries.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Figure 7‐4: Surface Geology Map of the Colnic Porphyry

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

7.2.4 Ciresata Deposit Geology

Geology Summary

Gold‐copper mineralization at Ciresata is hosted equally in a Neogene subvolcanic ‘neck’ and adjacent hornfelsed Cretaceous sediments (Figure 7‐5). The subvolcanic intrusion is relatively coarse‐grained hornblende‐plagioclase porphyry with contacts arching outward toward the surface resulting in a funnel‐shaped intrusion. Mineralization occurs as a broad quartz‐pyrite‐chalcopyrite‐stockwork zone apparently centered on the narrow deep part of the intrusive ‘neck’ and does not reach the present surface, occurring at 50 m to 150 m depth. The subvolcanic intrusive contains minor occurrences of ortho‐magmatic breccias becoming more common upward toward the surface. Four late‐post mineral stage dykes (<40 m wide) cut the deposit often associated with more intense stockwork mineralization along their margins.

Surface mapping recognises a zoned suite of porphyry‐style alteration ranging from magnetite alteration (magnetite stringers) in the core outward to potassic, phyllic, and propylitic in a predominant cover of volcanic rocks. The magnetite alteration zone results in a positive magnetic anomaly. Results from outcrop sampling have weakly anomalous to nil gold and copper mineralization.

Alteration types associated with mineralization include a pervasive early potassic (biotite ±K‐ spar), magnetite (several events) and a much less common magnetite‐propylitic (termed MACE, with magnetite, chlorite, and epidote). This alteration occurs in both the hornblende‐ plagioclase porphyry and in hornfelsed sediment though more prominent in the former. Phyllic alteration occurs as a halo around the mineralized zone (1,000 m x 1,500 m) and overprints the upper part of the deposit (Transitional Phyllic). Typically, quartz‐pyrite‐ chalcopyrite stockwork intensity correlates well with gold‐copper grade.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Figure 7‐5: Surface Geology of the Ciresata Porphyry

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

8 DEPOSIT TYPES

The principal targets on the Rovina property are related to the porphyry copper–gold mineral deposit model. Porphyry deposits in general are large, low‐ to medium‐grade deposits in which primary (hypogene) sulphide minerals are dominantly structurally‐controlled and are spatially and genetically related to felsic to intermediate porphyritic intrusions. The large size and structural control (e.g., veins, vein sets, stockworks, fractures, 'crackled zones' and breccia pipes) serve to distinguish porphyry deposits from a variety of deposits that may be peripherally associated, including skarns, high‐temperature mantos, breccia pipes, peripheral mesothermal veins, and epithermal precious metal deposits. Secondary minerals may be developed in supergene‐enriched zones in porphyry Cu deposits by weathering of primary sulphides.

Porphyry deposits with average gold grades greater than 0.4 g/t to 1 g/t Au or higher can be generalized as “gold‐rich” (Sillitoe, 2000). The Cu/Au ratios classify the Rovina deposit as a copper/gold porphyry, and Colnic and Ciresata as gold‐rich porphyries.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

9 MINERALIZATION

The main mineralized targets on the Rovina property are the Rovina Cu–Au porphyry, Colnic Au–Cu porphyry and the Ciresata Au‐Cu porphyry.

The mineralized porphyries at Rovina, Colnic, and Ciresata display moderate to intense potassic hydrothermal altered cores, and strong quartz stockwork veining. The Au–Cu mineralization manifests as stockworks and disseminations, centered on porphyritic, subvolcanic‐intrusive complexes of hornblende‐plagioclase diorites. These porphyries would classify as gold‐rich, especially Ciresata and Colnic, and contain many of the features common in gold‐rich porphyries (i.e., dioritic, calc‐alkaline stock associated and abundant magnetite alteration) (Sillitoe, 2000). No significant porphyry‐related epithermal or skarn mineralization has been identified with only minor occurrences of gold ± silver, lead, and zinc in narrow epithermal veins within the phyllic alteration halo at Colnic.

9.1 Rovina Deposit Mineralization

The Rovina Porphyry covers approximately 350 m (northwest) x 600 m (northeast) in the main area and 300 m (northeast) in the southwest extension in the Baroc Valley. It is currently defined to a maximum vertical depth of about 600 m in the main zone. The majority of drill holes have intersected varying degrees of porphyry‐style mineralization, ranging in grade from 0.1 to 1.0 g/t Au and 0.01 to 0.7% Cu over down hole lengths ranging from 10 m to 550 m, with typical intersection lengths of 400 m.

Gold‐copper mineralization is associated with pyrite‐chalcopyrite‐magnetite occurring in veinlet stockworks and as finely disseminated grains. Oxidation is restricted to the uppermost few metres with exception a small area in Baroc Valley at the Rovina. In this area, secondary copper minerals malachite and chrysocolla are observed in the weathering zone and minor occurrences of supergene copper minerals (Chalcocite) occur below the weathering zone.

Higher grades of Au–Cu mineralization are best developed and associated with broad zones of intense quartz‐sulphide stockwork veining (up to 70% of rock mass). The earliest copper bearing assemblage is observed in both early magnetite‐bearing veinlets‐stringers and disseminated in the rock mass and consists of magnetite + chalcopyrite + bornite + minor pyrite. Crosscutting veinlets indicated multiple fracturing and hydrothermal pulses. These vein types include hairline magnetite stringers, quartz‐veins, quartz‐magnetite‐sulphide veins, quartz‐sulphide veins, banded quartz‐sulphide veins.

Minor occurrences of late‐stage epithermal breccia fill and veins, commonly at contact zones, contain elevated Zn+Pb ± Cu in minerals sphalerite, galena, and chalcopyrite. These occurrences can contain up to 1% Zn and lesser Pb‐Cu.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

9.2 Colnic Deposit Mineralization

The Colnic Porphyry, covering approximately 700 m (northwest) x 600 m (northeast) with a maximum defined vertical depth of about 400 m. The porphyry‐style mineralization, ranging in grade from 0.3 to 1.3 g/t Au and 0.01 to 0.18% Cu over down hole lengths ranging from 10 m to 350 m, averaging around 140 m.

Gold‐copper mineralization is associated with pyrite‐chalcopyrite‐magnetite occurring in veinlet stockworks and disseminated. Oxidation is restricted to the uppermost few metres of the prospect and no significant oxide cap or supergene enriched horizons have been encountered to date. The mineralization is best developed within K2 and K3 potassic alteration of quartz diorite porphyry, in particular where multidirectional stockwork vein intensity is highest. At Colnic, the gold‐copper mineralization contains anomalous zinc ranging from 150 to 600 ppm with an approximate average of 300 ppm. A zone of elevated zinc + gold mineralization has developed predominantly in or proximal to the transitional phyllic alteration zone (TRPH). Grades in this zone range from approximately 0.1 to 3 g/t Au and 300 to 5,000 ppm Zn. In some cases, the contact zone between the phyllic and mineralized potassic zone grades from pyrite to pyrrhotite to magnetite representing a possible sulphidation front. Proximal to, and within Chubby’s fault/fracture zone, zinc mineralization appears to be related to late‐stage quartz–carbonate veinlets.

9.3 Ciresata Deposit Mineralization

The Ciresata Porphyry is the least advanced and covers approximately 430 m (northwest) x 500 m (northeast) to a maximum defined vertical depth of 450 m below the surface (‐100 m RL) with 50 m to 150 m of barren rock on the surface. Porphyry‐style mineralization, ranging in grade from 0.1 to 5 g/t Au and 0.01 to 0.6% Cu.

Gold‐copper mineralization is associated with magnetite‐pyrite‐chalcopyrite occurring in veinlet stockworks and as finely disseminated grains. Weathering oxidation is restricted to the uppermost tens of metres and thus does not affect the deeper Au‐Cu mineralization.

Higher grades of Au–Cu mineralization in the core of the porphyry body at near contacts with dykes and hornfels are best developed and associated with broad zones of intense quartz‐ magnetite‐pyrite‐chalcopyrite stockwork veining (up to 80% of rock mass). Other important vein types recognized are thick (1 cm to 10 cm) banded quartz‐pyrite‐chalcopyrite veins (commonly associated with higher gold grades) and magnetite‐chalcopyrite stringers.

At Ciresata, Zn is weakly anomalous with assay values ranging from 35 to 2,000 ppm and average 170 ppm in the mineralization. Lead and silver are not significant. Late‐stage epithermal Pb‐Zn mineralization has not been observed as opposed to the limited occurrences at Rovina and Colnic.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

10 EXPLORATION

Three companies have performed most of the exploration on the property: Minexfor between 1974 and 1998, and again in 2001, Rio Tinto from 1999 to 2000, and Carpathian since 2004. Early‐stage exploration focused on property‐wide target generation and was dominated by soil and stream sediment geochemical surveys, and regional airborne geophysical programs, undertaken in conjunction with surface and underground geological mapping, trench sampling, and detailed ground geophysical programs.

Specific details of previous early‐stage programs (Minexfor and Rio Tinto) are not well documented. Carpathian has purchased available documentation for the Minexfor and Rio Tinto work stages.

Various exploration techniques have been utilized during the exploration stages, which are described below.

10.1 Coordinates and Datum

Coordinates used by Carpathian, Rio Tinto and Minexfor are in the “Stereo70” grid system, which is the official coordinate system used in Romania. The exploration licences registered with NAMR are also in this grid system. Carpathian utilises the Stereo70 system, which is compatible with standard GIS software packages. When GPS surveys are used, UTM Datum WGS 84 zone 35 coordinates are converted to Stereo70.

10.2 Topography

The locations and elevations of all geological mapping, channel samples, and drill hole collars are plotted on 1:5000 scale government topographic maps with 10 m elevation contours. Locations of isolated surface samples are obtained through use of hand‐held GPS units with detailed surface samples and drill‐hole collars located utilizing compass and tape surveying. Carpathian has utilized a professional contract survey company (Belevion Geo‐Topo SRL) to complete and regularly update topographic surveys over Rovina, Colnic, and Ciresata using a total‐station instrument.

10.3 Geological Mapping and Related Studies

Geologic mapping completed by previous exploration groups on the property is limited or not well documented.

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Carpathian has completed both regional reconnaissance‐mapping programs at a scale of 1:5,000 over most of the Licence and more detailed mapping at a scale of 1:1,000 over the main prospects.

The geological work carried out by Carpathian geologists and contractors includes the following:

 Colnic/Rovina Deposits: 1:1,000 scale geology covering an area of 3.9 km2 focusing on the immediate Rovina and Colnic target areas  Ciresata deposit: 1,000 scale geology covering an area of 4 km2 in the Ciresata area  Rovina Licence: 1:2,000 scale geology mapping targeting ground magnetic anomalies within a 24 km2 area in the Northern part of the Rovina License  Mapping of drill roads at Rovina and Colnic at 1:1000 scale.

10.4 Remote Sensing and Satellite Imagery

1:100,000 scale Satellite LandSat TM imagery was purchased from HME Partnership Ltd., Kent, U.K., which cover the entire ”Golden Quadrilateral.” The data are integrated into a GIS database and used to aid in the structural interpretation of the property and alteration mapping.

10.5 Geophysics

The Romanian government had reportedly completed IP/resistivity, natural polarization and gamma ray geophysical surveys at Colnic in 1977 to 1978. No additional information is available on these surveys. Minexfor completed Magnetic and gamma ray geophysical surveys during 1983 to 1984.

In 1999, Rio Tinto completed a helicopter‐borne magnetic/radiometric survey (flown by Fugro Airborne Corp. out of Canada) over an area approximately 24 km x 30 km. The area covered by the survey included both the Colnic and Rovina Porphyries. In June 2006, Carpathian completed a ground magnetic survey totalling 480 line kilometres and covering a 24 km2 area over the Colnic and Rovina Deposits. In September 2006, Carpathian completed an IP/resistivity survey over the Rovina, Colnic, and Zdrapti target areas.

In October 2007, Carpathian completed a ground magnetic survey over the Ciresata area. This survey covers 10 km2 at 50 m x 50 m grid spacing.

In May 2008, Carpathian completed an IP resistivity survey over the Ciresata target area following encouraging initial drilling results.

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10.6 Geochemistry

10.6.1 Stream Sediment Sampling

Rio Tinto reportedly completed a program of reconnaissance stream sediment sampling over several drainage basins. No details were provided regarding sample collection methodology, sample size, or preparation.

10.6.2 Soil Geochemical Sampling

Rio Tinto completed a series program of grid soil sampling over three separate grids covering the Ciresata prospect, Colnic and a broad area from Ciresata southward to Hategani (partly outside of Carpathian’s property). In May 2007, Carpathian conducted a soil geochemical survey over the northern part of the Rovina licence. The survey grid covered an area of 20 km2 over the Rovina, Colnic, and Zdrapti prospects. In addition, infill grids were completed in selected areas with the larger grid.

Carpathian conducted a geochemistry re‐survey of the Ciresata area at closer grid spacing than the Rio Tinto survey, to provide better sampling and analytical control.

10.6.3 Rock Chip Sampling

Rio Tinto collected 153 rock chip samples at the Colnic, Cordurea, Valisoara–Porcurea, and Ciresata Prospects.

Carpathian geologists have collected 882 surface rock samples from the Rovina property as part of reconnaissance mapping, prospect mapping, and detailed mapping campaigns. These samples include chip‐channel, chip, float, waste‐dump, and discarded old core as sample types. These samples have not been used in Resource Estimation due to the extensive drilling completed, but do provide surface evidence of the respective porphyry mineralization.

In 2005, Carpathian completed a program of underground channel chip sampling at the Cordurea Prospect. Sampling was in the Petru and Pavel Galleries and included 138 individual channels over 372 m of galleries.

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10.6.4 Mineralogical and Petrographic Studies

Carpathian commissioned a number of petrographic studies in 2006, 2007, and 2008 on hand specimen and drill core samples from Dr Georghe Damian, at North University, Baia Marie, Dr. Robin Armstrong of the Natural History Museum, in London, UK, and from Jim Clarke, Cygnus Consulting Inc. Montreal, Canada. Samples were examined for lithology, alteration, paragenetic sequences, and mineralization. Results of the studies were provided as detailed descriptions and photomicrographs in report format (Damian, 2006 in Ruff, 2006, and Armstrong, 2006 in Ruff, 2007a).

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11 DRILLING

Approximately 101,788 m of drilling has been completed on the property since 1975. Most of the drilling has been concentrated on the Colnic, Rovina, and Ciresata Deposits (34,359 m, 54,823 m, and 8,935 m, respectively). Table 11‐1 shows a summary of all drilling.

Table 11‐1: Summary of the Drilling on the Property

DDH Total Prospect Company Year(s) Holes (m) Rigs Core Diameter Colnic Minexfor 1975 1 650* State owned rigs (diameter unknown) Minexfor 1982 5 2,990* State owned rigs (diameter unknown) Minexfor 2000 8 1,100* State owned rigs (diameter unknown) Carpathian 2006 49 15,714 2 rigs (GNK 850 track mounted and RB‐57); 72% HQ, 28% NQ Carpathian 2007 39 13,635 2 rigs (GNK 850 track mounted and RB‐58); 59% HQ, 41% NQ Carpathian 2008 1 270 Metallurgical Drill hole HQ Total Colnic 103 34,359 Rovina Minexfor 1975–1986 34 23,119 State‐owned rigs (diameter unknown) Carpathian 2006 17 8,435 2 rigs (Warman‐1000 and Longyear 45); 40% HQ, 60% NQ Carpathian 2007 34 15,644 2 rigs (Warman‐1000 and Longyear 45); 40% HQ, 60% NQ Carpathian 2008 16 7,625 2 rigs (Warman‐1000 and Longyear 45); 43% HQ, 57% NQ (includes 1 metallurgical hole HQ) Total Rovina 101 54,823 Ciresata Minexfor 2002‐2003 6 1,200* State‐owned rigs (diameter unknown) Carpathian 2007 2 552 1 rig (RB‐57) 40% HQ, 60% NQ Carpathian 2008 14 7,183 2 rigs (RB‐57 and Longyear 45); 35% HQ, 65% NQ (includes 1 metallurgical hole HQ) Carpathian 2009‐2010 1 1,000 1 rig (NQ) Total Ciresata 18 8,935 Zdrapti Carpathian 2007 11 2,671 1 rig (RB‐57), 41% HQ, 59% NQ Total Property 234 101,788 Note: Historical data may be incomplete.

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11.1 Historical Minexfor Drilling

11.1.1 Rovina Deposit

Few details of the historical drill programs completed by Minexfor at Rovina are available. All core samples from previous campaigns have been dumped in heaps near the Rovina deposit and therefore cannot be re‐sampled.

Minexfor drilled 34 core holes ranging in depth between 515 m and 1,108 m (average depth 680 m) totalling 23,119 m. All holes were collared vertically and nominally spaced between 60 m and 90 m along seven east–northeast‐oriented, 100‐m spaced grid lines.

Collars were reported to be surveyed on 3‐decimal accuracy; however, the survey methodology was not documented.

11.1.2 Colnic Deposit

Between 1975 and 2000, Minexfor drilled 14 holes totalling 4,740 m at the Colnic deposit. Few details were provided to Carpathian regarding this drilling campaign. Ranged in depth from 100 m to 1,200 m and averaged around 340 m. Most holes were very wide spaced (100 m to 500 m) and no specific grid pattern was used for the drilling. Holes were restricted to an area covering approximately 2,000 m x 800 m, targeting geophysical and surface geological targets.

Collars were surveyed based on 3‐decimal accuracy; however, the survey methodology was not documented.

11.1.3 Ciresata Prospect

Between 2002 and 2003, Minexfor drilled six core holes totalling 1,200 m at the Ciresata Prospect, approximately 4.5 km south of Colnic. No specific grid pattern was adhered to for the drilling, and holes were generally wide‐spaced and presumably targeted geophysical anomalies. Hole lengths were all recorded as 200 m.

11.2 Carpathian Drilling

Carpathian commenced drilling in 2006. SC Genfor SRL, a Romanian‐based contractor, undertook core drilling using track‐mounted GNK 850, RB‐57, and RB‐58 drill rigs with depth capabilities of approximately 600 m.

Core diameter is generally HQ (62.3 mm), and some holes continue to depths of 400 m using this diameter core. Holes are reduced to NQ (48 mm) core diameter at depths ranging

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between 95 m and 400 m, as required. Core is removed from the core barrel by the drillers, washed, and placed in galvanized‐steel core boxes.

All boxes are clearly identified with the hole number, metres “from–to,” and box number written with a permanent marker on the front. Individual drill runs are identified with small wooden blocks, where the depth (m) and hole number are recorded. Unsampled core is never left unattended at the rig; boxes are transported to the core logging facility in the town of Criscior (approximately 5 km from the site) several times a day under a geologist’s supervision. Core is transported in open boxes in the back of a truck.

In general, core recoveries obtained by the drilling contractor have been very good, exceeding 97%, except in localized areas of faulting or fracturing.

After completion of each hole, the collars are surveyed by tape and compass method and GPS. Drill holes are left open, a piece of PVC pipe is inserted into the hole, and the hole is marked with a cement monument showing the hole number.

Diamond core from the current drilling campaign is stored in a secure location at the field office in Criscior or surrounding area. Core is split with a diamond saw, and stored in sturdy galvanized steel core boxes on steel racks in an enclosed core shed or outside in a covered core storage yard. The adjacent core‐logging room is large and well lit. There is a facility for two diamond core saws in a room adjoining the core shed.

11.3 Carpathian Downhole Surveys

Downhole surveys are systematically conducted at approximately 50 m intervals along each hole using a single‐shot Kodak instrument or using a Reflex EZ‐Shot system.

Carpathian corrects all azimuth reading by adding 4°E to the magnetic azimuth read by the downhole instrument to account for magnetic declination. Due to the presence of magnetic minerals (magnetite and pyrrhotite) in the alteration, assemblages indicate that the results of the surveys should be interpreted with care.

11.4 Carpathian Dry Bulk Density Measurements

Carpathian has collected 840 specific gravity measurements from drill programs. A total of 412 samples have been collected from Rovina, 368 samples have been collected from Colnic, and 60 samples have been collected from Ciresata. Samples for specific gravity determination are taken at downhole intervals of between 10 m and 50 m. The samples are sent to the ALS Laboratory at Gura Rosiei where all samples are dried, coated in a thin layer of lacquer or shellac before the samples are weighed in air (W1) and in water (W2). The specific gravity is calculated using the following formula:

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W1 (W1‐W2)

The volume of shellac or lacquer is too small to affect significantly the density determination so no correction is required. The rock types found are generally non‐porous and therefore the specific gravity determinations are representative of the in situ bulk density of the rock types, and sufficient for resource estimation purposes.

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12 SAMPLING METHOD AND APPROACH

12.1 Introduction

Carpathian personnel or contractors performed all of the Carpathian sampling.

12.2 Soil Sampling Procedures

A total of 2,536 soil samples were collected and analyzed from five separate programs.

Samples were collected as follows:

 each sample location was determined by GPS reading over a UTM grid  only the B‐horizon (typically 20 cm to 25 cm deep) was sampled; a sample of about 1 kg, free of debris, and with as little pebble and organic matter as possible, was put in canvas bag, labelled with an alphanumeric code, and sent to the sample preparation facility.

12.3 Channel Chip Sampling Procedures

Approximately 1,020 surface rock samples on the main prospects in the property.

Channel samples and channel chip samples were collected as follows:

 The geologist selects the sampling area and marks out the boundaries of the channel sample with spray paint on the outcrop. Channels are usually 10 cm wide and 1 m to 5 m in length. Prior to collection, the samplers are instructed to remove the upper 5 cm of weathered material.  Sampling is undertaken with a chisel and hammer by systematically collecting chips to depths of 2 cm to 3 cm and occasionally down to 5 cm, along the channel length. Both chips and fines are collected in cotton‐cloth bags. A field sample number is assigned and the bag is marked with a permanent marker with the sample number. Samples generally range between 3 kg to 10 kg. An aluminum tag is fixed to the starting point of each sample and if a continuous series of samples are collected, a spray paint line marks the start and end points.  The sample’s grid coordinates are determined with a hand‐held GPS unit and recorded manually along with a geological description, date of sampling, sampler’s name, and other relevant data. These data are transferred into a Microsoft Excel spreadsheet called “Sample Inventory.”  The sample bags are packed into fiberene shipping bags (approximately 60 kg), sealed with wire, and stored in a secure location at the Carpathian field office in Criscior until a

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load is assembled for shipping. A Carpathian employee delivers the shipment directly to the ALS Chemex Laboratory in Gura Rosiei.

12.3.1 Core Sampling Procedures

Carpathian has drilled approximately 71,742 m of core in 183 drill holes. A total of 68,227 half‐core samples have been collected along with 1,927 twin quarter‐core samples as part of the QA/QC program.

Upon arrival at the core shed, the core is subject to the following core logging procedures:

 Quick review  Core photography  Geotechnical logging  Geological logging  Sampling: the geologist marks a cutting line, and marks the sample intervals  Core cutting: is performed with a diamond saw, following the line marked by the geologist. Both halves of the core are returned to the box in their original orientation ready for the geologist to review and to transfer to sample bags.  Sample bagging: half‐core samples are always collected from the left side of the core, properly identified with inner tags and outside marked numbers. Sample bags are immediately sealed and stored in a secure facility in Criscior. Carpathian personnel deliver samples directly to the ALS Chemex Laboratory in Gura Rosiei when a full shipment is ready.  Assay data entry: the assay results are imported directly from the file provided by the laboratory, into the Access database and into the Micromine database, by two different technicians thus creating two independent databases.  Drill log data entry: coded data are introduced into the Access and Micromine database.

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13 SAMPLE PREPARATION, ANALYSES AND SECURITY

Currently all routine sample preparation and analyses of the Carpathian samples are performed by ALS Chemex Romania (ALS) laboratory in the town of Gura Rosiei. ALS Chemex is an internationally recognized organization that operates 38 laboratories in 16 countries worldwide, and has ISO 9002 certification for many of their laboratories.

13.1 Sample Preparation for Soil Samples

Soil samples from Carpathian’s Rovina property soil program were prepared by the laboratory at Gura Rosiei. The samples were logged, weighed, and dried before sieving to ‐80 mesh. Both size fractions were retained. Subsequently the sieved ‐80 mesh fraction was pulverized to 85% passing 75 µm or better. A 100 g portion of the final prepared samples was then shipped to the ALS Chemex laboratory in Vancouver, Canada.

13.2 Sample Preparation of Rock Chip and Drill Core Samples

All rock chip and core samples are prepared and analyzed at the ALS Chemex laboratory.

The preparation protocol for Carpathian samples is as follows:

 an internal laboratory code is assigned to each sample at reception  all samples are weighed  the samples are dried at 105°C for as much as 24 hours  The entire sample is crushed to obtain nominal 85% at 5 mm (from February 2006 to July 2007); from August 2007 to present day, the entire sample is crushed to obtain nominal 85% at 2 mm.  From February 2006 until October 17 2006, the entire sample was pulverized for 6 to 11 minutes to achieve better than 85% passing 75 µm. A 150 to 200 g sample was collected from the pulveriser. From October 23 2006, until July 2007, 1 kg split of the 5 mm crushed samples was pulverised to achieve better than 85% passing 75 µm. From August 2007 to present day, 1 kg split of 2 mm crushed samples is pulverised to achieve better than 85% passing 75 µm.  the coarse rejects, pulps and pulp rejects are stored on site for 30 days and then returned to Carpathian.

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ALS Chemex completes the following QA/QC protocols during the sample preparation:

 pulp blank: 1 inserted every 50 samples  certified reference material (CRM): 2 inserted every 50 samples (5 CRMs in use ranging between 0.76 and 5.12 g/t Au)  pulp duplicates: 1 every 12 samples  pulp re‐assay: four every 40 samples.

All pulps are automatically labelled with the job number, sequence number, and sample number. Duplicate samples are returned to Carpathian along with the other pulps, but are in a different coloured bag (black as opposed to brown).

13.3 Sample Analysis for Soil Samples

During the Carpathian soil‐sampling program in 2007 and 2008, a total of 2536 samples were analysed at ALS Chemex in Vancouver for gold and 35 other elements using the following analytical methods:

 gold analyses by a fire assay method (method Au‐ICP21) followed by an ICP‐AES reading with a 1 ppb detection limit  35 element suite: analyzed by ICP‐AES after aqua regia digestion (method ME‐ICP41).

13.4 Sample Analyses of Rock Chip and Drill Core Samples

ROM Analize was the principal laboratory for all Carpathian exploration and drilling programs. At ROM Analize, for gold analysis approximately 50 g of the pulp was weighed, with automatic digital data capture of the results to a computer. For base metals, approximately 0.40 g of pulp was weighed on a separate scale, with similar automatic data capture to the computer. All samples were assayed for gold by 50 g fire assay with AAS finish (0.01 g/t detection). Base metals, Cu (2 ppm detection), Pb (3 ppm detection), Zn (2 ppm detection), and Ag (1 ppm detection) were analysed by AAS methods using an aqua regia digestion.

During this time, ALS Chemex in Vancouver was the secondary laboratory used for check assays. The samples were assayed for gold by 50 g fire assay with AAS finish (0.001 g/t detection, method code AA24). Base metals were analysed by an AAS method (method code AA45) using an aqua regia digestion.

After ALS took over the operation of the laboratory at Gura Rosiei, the analytical method changed to the ALS methods of AA26 (50 g fire assay for gold) and AA45 for base metals.

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During this period, the OMAC Laboratory was used for check assays. The samples were assayed for gold by 50 g fire assay with AAS finish (0.01 g/t detection), method A4). A 45‐ element suite including base metals was analysed by an ICP‐AES method using an aqua regia digestion.

13.5 QA/QC Program

In May 2006, AMEC reviewed Carpathian QA/QC program and recommended some adjustments be made in order to monitor various essential elements of the sampling‐ assaying sequence, in an effort to control or minimize any possible errors (Cinits, 2006b). Starting in early July 2006 Carpathian adjusted the QAQC protocols and incorporated most of AMEC’s recommendations. AMEC’s review in 2007 of the QA/QC program indicates that a much‐improved program was implemented and continued through the 2007‐2008 drill program.

Carpathian QA/QC program since January 2007 consists of the following:

 pulp duplicate, 3% of the assayed core samples  core twin samples, 3% of all assayed core samples  coarse blank samples, 3% of all assayed core samples  pulp blank samples, 3% of all assayed core samples  coarse rejects, 2.6% of all assayed core samples  gold standard reference material, 3.4% of all assayed core samples  copper standard reference material, 2.2% of all assayed core samples.

AMEC review the QA/QC program results covering the period between 2006 and early 2007 and concluded the following:

 sub‐sampling sampling variance for gold and copper was satisfactory  analytical variance for Au and Cu at ALS Chemex was satisfactory, although some sample mix‐ups appear to have occurred  gold and copper analytical accuracies at ALS Chemex were within the acceptable ranges  no significant cross‐contamination for gold and copper was detected during preparation and assaying at ALS Chemex during the late 2006‐2007 exploration campaign  gold and copper assays of the late 2006‐2007 drilling exploration campaign at Rovina are considered sufficiently precise and accurate for resource and reserve estimation purposes  AMEC recommended at that time, to revise the sample preparation procedure to include a crushing to a finer particle size (85% passing 10 mesh) and splitting the samples after this size reduction rather than at a particle size of 5 mm

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 PEG reviewed the QA/QC program covering the period between 2007 and the 2008 Rovina Apuseni drilling program.

Based on the QA/QC review conducted, PEG concluded that:

 sampling precision for gold and copper during the late 2007‐2008 exploration campaign was satisfactory  gold analytical accuracy at ROM Analize was within the acceptable ranges. Close monitoring of the SRM results need to be implemented with partial batch resubmission for bracketing the samples surrounding a two‐standard deviation failure  gold and copper analytical accuracies at ALS Chemex were within the acceptable ranges throughout the 2007‐2008 exploration program. The pulp duplicate results indicated a slight degradation in precision near the end of the exploration program that should be monitored closely  no significant cross‐contamination for gold and copper was detected during preparation and assaying at ALS Chemex during the 2007‐2008 exploration campaign  gold and copper assays of the 2007‐2008 drilling exploration campaign at Rovina Apuseni are considered sufficiently precise and accurate for resource and reserve estimation purposes.

13.6 Security

PEG visited the Carpathian core storage facility in Criscior during sampling activities, and a secure storage facility was in place. Carpathian staff do all of the sample collection and handling, and carry out core sampling at their sampling and storage facility in Criscior, which is guarded and relatively secure.

13.7 Database Content and Integrity

13.7.1 Database Management

Currently Carpathian is entering all of their geological and geotechnical data (including relevant historical data) into a combination of Excel, MSAccess® (Access), MapInfo and Micromine databases.

Some data is entered manually, while other forms of data are digitally imported directly into the Access database. All data is review by Carpathian and reconciled with section and plan to ensure correct information.

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The databases are duplicated in the Carpathian office in the city of Deva for security. Carpathian dedicates one or two people for the majority of the data entry, including collar data, survey data, drill logs, assay data, etc.

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14 DATA VERIFICATION

14.1 Site Visit by PEG

Mr. Pierre Desautels visited the Rovina property, accompanied by Randy Ruff, Carpathian’s Executive Vice President, Exploration, between August 26 and 30, 2008.

During the 2008 visit, PEG collected three quarter‐core character samples, one for each deposit and retained full custody of the sample from the Rovina Valley to the PEG office in Barrie Ontario where the samples were shipped to Activation Laboratories Ltd. located at 1428 Sandhill Drive, Ancaster, Ontario. The main intent of analysing these samples is to confirm the gold and copper presence on the deposit by an independent laboratory not previously used by Carpathian. From the assay results, PEG concluded that the general range of values returned by the PEG samples correspond well with those reported by Carpathian.

Core handling was found to be very efficient. The core is collected on site daily and brought to the Carpathian office in Criscior where is it immediately laid out on a large table, Measured and marked for sampling and prepared for photograph. Core is cut with a diamond saw and sampled prior to logging.

The insertion of the purchased standard, pulp blank, coarse blank and pulp duplicate in the sampling chain was observed during the core logging facility visit. The gold and copper assay standards observed on‐site originated from the CDN resource Lab number CDN‐CGS16, CDN‐ CGS13, and CDN‐CM3. Other gold standards from Rocklabs and copper standards from Geostats PTY Ltd are also used.

14.2 Database Validation

Following the site visit and prior to the resource evaluation, PEG carried out an internal validation of the drill holes in the Rovina Valley database used in the September 2008 resource estimate. The database was validated previously by AMEC in 2006 and 2007 prior to the completion of the 2007 drill campaign and did not include any of the 2008 drill data. The hole selection for PEG’s validation was heavily weighted on the 2007/2008 drilling with spot checks of the earlier holes verified by AMEC. A total of 46 holes were partially or completely validated amounting to 10,938 individual samples out of a total of 61,329 (17.8%) were either checked against paper copies of the original signed certificate or against the electronic version of the certificate provided by the issuing laboratory.

14.2.1 Collar Coordinate Validation

Collar coordinates were validated with the aid of a hand‐held Garmin GPSmap model 60CSx.

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The overall average difference of the eighteen holes surveyed amounted to 11 m in the X‐Y plane and 22.4 m in the Z‐plane. Elevation difference is normal, as the hand held GPS units are notoriously inaccurate in elevation. The differences seen are well within the accuracy of the hand held GPS unit used.

14.2.2 Down‐hole Survey Validation

The down‐hole survey data was validated by searching for large discrepancies between dip and azimuth reading against the previous reading. A total of 1,515 readings were evaluated. Any measurements with a difference exceeding the 99 percentile was considered suspect and forwarded to Carpathian for review.

14.2.3 Assay Validation

Assay validation proceeded in the following steps:

 The validation against the original signed PDF copies of the certificate consisted of three holes RCD‐1, RCD‐10, and RRD‐2 with 1,083 assays re‐typed in an XLS spreadsheet. No errors were found.  The validation against the electronic version of the certificates consisted of comparing the values on the certificate against the database entry. A total of 13,030 assays results covering 43 drill holes were compiled from the certificates onto an Excel spreadsheet and matched against the sample number in the GEMS database. A total of 9,855 samples number were successfully matched with the remaining samples consisting of QA/QC assays.  Assay validation covers 16% of the entire database with a total of 27% coverage for the 2007‐2008 data not previously validated by AMEC. Error rate was virtually 0%.  The electronic comparison between the database maintained by the IT department against the Micromine database revealed four gold assays and six copper assays in the Micromine database that were inaccurately recorded in the IT database. This validation covers 54,076 assays.  The error rate in the Carpathian drill database was found to be exceptionally low.

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15 ADJACENT PROPERTIES

One deposit within the Golden Quadrilateral area of Romania, in the immediate vicinity of the property (15 km southewast of Colnic) is at an advanced‐stage exploration phase: European Goldfields, Certej is expecting to receive final permit approval for the commencement of construction in 2010. Two other significant deposits are recognized in the area. Figure 7‐1 shows the locations of adjacent deposits.

European Goldfields also holds the Sacaramb deposit (3 km southeast of Certej) has been the subject of historical mining. The Sacaramb deposit was drill‐tested in 2002 and partially sampled seven levels of historic workings as part of an assessment of the open pit potential (Patrick and Jackson, 2004).

The Valea Morii deposit (12 km to the southwest of Colnic) is a known porphyry copper– epithermal gold–silver deposit.

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16 METALLURGY AND PROCESSING

16.1 Metallurgy

16.1.1 General

Ore from the three RVP deposits will be transported to a central processing facility for concurrent treatment by froth flotation. The samples tested to date exhibit metallurgical characteristics that are considered typical of copper porphyry mineralization with almost all copper typically occurring as chalcopyrite. Pyrite is the main sulphide gangue component and is present in concentrations varying from 1% to approximately 7%. Occasional pyrrhotite is noted – mostly within the Colnic deposit. Limited mineralogy has defined a gold population consisting of discrete and fine‐grained particles associated mainly with chalcopyrite and pyrite but also locked within silicate minerals (more so for Ciresata than Rovina and Colnic).

A series of metallurgical test programs have helped to develop preliminary process plant data such as flowsheet configuration, primary circuit grinding targets and reagent addition. The latest work (2010) aimed specifically at providing locked cycle test results suitable for robust metallurgical predictions.

16.1.2 Terms of Reference

The descriptions and analysis given within this section are based on the Project documents summarized in Table 16‐1. Where available, dates and revision numbers are provided.

Table 16‐1: Design Documents Provided for Review

Document Date Report Source Reference An investigation into the recovery of copper and 1 May 2007 11413‐001 SGS gold from a Cu/Au porphyry deposit The mineralogical investigation of three head samples 12 Oct. 2006 11413‐001 SGS A deportment study of gold in composite MET‐10 and 11 15 Sep. 2008 11992‐001 SGS Grinding, flotation and leaching testwork for 28 Feb. 2009 ‐ GEOSOL gold ore samples from Colnic, Rovina, and Ciresata An Investigation into the flotation testing of ores Apr. 2010 12342‐001 SGS from the RVP

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16.1.3 Historical Testwork

Metallurgical and mineralogical testing and characterization has occurred on a series of composite samples from the three Deposits. The following section summarizes metallurgical and mineralogical testwork completed since 2007.

SGS Lakefield – May 2007

Preliminary metallurgical testwork was conducted in 2007 at SGS (Lakefield, Ontario). Initial testing was conducted on two samples from the Colnic deposit and one from the Rovina deposit. At this point in time, the Ciresata deposit had not been drilled. The test program was designed to investigate the recovery of copper and gold from each sample and examined each sample’s sensitivity to grind size, flotation pH, and reagent addition in bulk and sequential flotation flowsheets. Cyanide leaching of gold from the flotation tails was also investigated.

Scoping batch flotation tests were followed by locked cycle flotation tests, which demonstrated that all samples were amenable to flotation and that saleable flotation concentrates were readily achievable using a bulk rougher/selective cleaner approach. Reasonable gold recovery and good copper recovery was noted for all samples. Table 16‐2 shows the locked cycle test results.

Table 16‐2: Locked Cycle Flotation Results – 2007 Testing

Concentrate Grade Recovery (%) Sample Concentrate Mass % Cu % Au g/t Cu Au RCD‐4‐5 1.43 20.3 94.3 90.1 70.2 RCD‐3‐10 0.72 21.9 97.6 84.9 56.3 RRD‐2‐3 0.82 26.8 28.4 92 65.3

These results were achieved with a primary circuit grind of between 80% ‐72 µm (Colnic) and 109 µm (Rovina) and with a rougher concentrate regrind of approximately 80% ‐20 µm.

As the majority of gold losses were found to occur in the cleaner tailings, cyanidation of this stream was investigated as an additional process option. The work suggests that reasonable gold extractions are possible with normal cyanide consumptions. Table 16‐3 shows the results of cyanidation work.

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Table 16‐3: Cyanidation Results – 2007 Testing

Au Extraction: Leaching of Total Au Recovery Sample Cleaner Tail (%) (Flotation + Cyanidation) RCD‐4‐5 7.8 78.0 RCD‐3‐10 13.8 70.1 RRD‐2‐3 14.2 79.5

Gold Deportment Study, SGS Lakefield – September 2008

Preliminary mineralogical characterization of a sample of Colnic mineralization (MET‐11) was compared to a similar sample from the Ciresata deposit (MET‐10). The following comments are noteworthy:

 with gold head grades of 1.14 g/t (MET‐10) and 0.89 g/t (MET‐11), the two samples submitted are both somewhat higher than LOM average grade  pyrite is far more prevalent in MET‐11 than MET‐10  iron oxides consist mainly of magnetite in MET‐10 and hematite in MET‐11  copper mineralization consists almost entirely of chalcopyrite in both samples  gold grains identified and Measured (over 10 for each sample) range in size from 1 to 49 µm. Based on the small population of Measured particles (16 in total), the gold in MET‐10 appears to be slightly coarser than that in MET‐11.  the distribution of gold within the two samples is slightly different: ‐ for MET‐10, 67% of the gold is calculated to be finely disseminated within silicates, magnetite and/or fine sulphides; approximately 8% is liberated at the submitted grind of 80%‐150 µm ‐ for MET‐11, 54% of the gold is calculated to be finely disseminated within silicates and/or fine sulphides; approximately 13% is liberated at the submitted grind of 80%‐ 150 m. Based on these observations, one may conclude that the two samples are somewhat similar in nature. The larger concentration of pyrite relative to chalcopyrite in MET‐11 is likely to have a detrimental effect on the flotation grade vs. recovery relationship for this composite. The greater fraction of fine/sub‐microscopic gold locked in silicate and sulphide minerals noted in MET‐10 suggests that gold recovery by flotation could be as much as 10% lower than for MET‐11.

SGS Geosol (Brazil) – February 2009

A more comprehensive series of metallurgical testing was initiated in 2008 to describe the physical and metallurgical characteristics of several composites. All composites were submitted for rougher kinetics flotation testing, while batch cleaner testing and cyanidation

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of flotation tailings was conducted on the Ciresata composites (MET‐17 and MET‐18) exclusively.

Table 16‐4 shows the composite descriptions and head assays.

Table 16‐4: Geosol Composites – Head Assays

Sample Au ppm Cu % Fe % S % MET‐12 (Colnic) 0.39 0.10 5.74 1.29 MET‐13 (Colnic) 0.61 0.12 5.56 2.12 MET‐14 (Rovina) 0.25 0.25 5.19 2.36 MET‐15 (Rovina) 0.36 0.32 5.05 2.64 MET‐16 (Rovina) 0.19 0.21 4.88 1.52 MET‐17 (Ciresata) 0.91 0.17 5.10 1.27 MET‐18 (Ciresata) 0.56 0.15 5.23 1.28

Preliminary grindability testing was conducted on each composite and Bond Ball Mill Work Index data is shown in Table 16‐5.

Table 16‐5: Geosol Composites – Grindability Data

Sample MET‐12 MET‐13 MET‐14 MET‐15 MET‐16 MET‐17 MET‐18 BWi (kWh/t) 15.3 15.6 14.1 13.6 14.3 16.7 17.3

The work index data suggests an ore of moderate hardness. The two Ciresata samples (MET‐17 and 18) are the hardest, with an average work index of 17 kWh/t.

Rougher flotation testing was conducted on each composite at a grind of 80% passing 75 µm and with the pulp pH maintained at 10.5 (for pyrite depression). Reagents added include a 50:50 mixture of Cytec 3418A and potassium isobutyl xanthate (PAX) as collector and a 20:80 mixture of Flotanol DF25 and MIBC as frother. Collector and frother mixtures were stage‐ dosed to give 30 g/t overall.

Figure 16‐1 and Figure 16‐2 shows a summary of rougher kinetic performance for copper and gold.

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Figure 16‐1: Copper Kinetics – MET‐12 to MET‐18

100

60 %

50 MET 12

Recovery, 40 MET 13 MET 14 30 MET 15

20 MET 16

MET 17 10 MET 18 0 02468101214161820 Time, min.

Copper recovery is relatively consistent between samples, and after 14 minutes of flotation is at least 90% recovered.

Figure 16‐2: Gold Kinetics – MET‐12 to MET‐18

60 % 50

MET 12 40

Recovery, MET13 30 MET14 MET 15 20 MET 16

10 MET 17 MET 18 0 02468101214161820 Time, min.

Gold performance is less consistent between samples than for copper, with a relatively large spread of recovery at the 14‐minute mark (66% to 83%). The average rougher flotation tailing gold grades of the Rovina, Colnic, and Ciresata tests were: 0.06 g/t, 0.12 g/t and 0.24 g/t respectively. The relatively poor gold performance of MET‐18 is clear from these

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results. When comparing the rougher tailings gold assays for each composite, the two Ciresata samples show significantly higher losses, implying a stronger association of gold with pyrite and/or silicates. The higher gold headgrade of MET‐17 (0.91 g/t) lessens the impact, but the mid‐range headgrade of the MET‐18 sample (0.58 g/t) is detrimental to recovery.

In addition to the rougher kinetic tests, batch cleaner testing of the Ciresata composites (MET‐17 and MET‐18) was conducted, with a rougher concentrate regrind to 80% passing 38 µm prior to two‐stage cleaner flotation at pH 11.0 (to further depress pyrite). Figure 16‐3 illustrates the batch test flowsheet.

Figure 16‐3: Batch Cleaner Flowsheet – MET‐17 and MET‐18

Grind Rougher Rougher 75 m 10 min Tailings

Grind 38 m

Cleaner Cleaner 8 min Tailings

Recleaner Recleaner 6 min Tailings

Final Concentrate

Once more, superior metallurgical performance is obtained from the MET‐17 composite, which suffers significantly lower losses of copper and gold to both cleaner tails streams while at the same time providing higher final concentrate grades.

These differences are likely attributable to the location and mineralogy of drill core intervals within the Ciresata deposit as well as gold grade. The MET‐18 composite is lower grade (<0.6 g/t gold) and includes several shallower intervals which exhibit evidence of phyllic alteration which is believed to be detrimental to metallurgy.

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Table 16‐6: Batch Cleaner Flotation Test Results – Grades

Composite MET 17 MET 18 Grades Cu % Au g/t Cu % Au g/t Head Grade 1.18 0.91 0.14 0.58 Concentrate Grade 26.2 88.3 18.6 44.9

Table 16‐7: Batch Cleaner Flotation Test Results – Recoveries

Composite MET‐17 MET‐18 Metal Distribution Cu % Au % Cu % Au % Rougher Tailings Recovery Losses 7.8 27.3 15.4 37.1 Cleaner Tailings Recovery Losses 2.1 9.7 2.4 14.3 Recleaner Tailings Recovery Losses 0.8 1.9 1.2 1.1 Cleaner Concentrate Recovery 89.3 61.1 81.0 47.5

As a result of the relatively high losses of gold to the flotation tailings streams (rougher and cleaner tailings), the amenability of these streams to gold extraction by cyanidation was tested. Tests were scheduled with and without further grinding, and with and without carbon in leach (CIL).

The results of rougher tailings cyanidation tests show a fairly consistent leach residue grade of 0.04 g/t after 72 hours, which indicates a good rate of extraction for all samples. For rougher tails samples, the addition of CIL and finer grinding each have minimal effect on leaching performance. As a unit process, the leaching performance of rougher tails cyanidation is summarized in Table 16‐8.

Table 16‐8: Cyanidation of Rougher Flotation Tails

Au Extraction (%) MET‐17 MET‐18 Rougher Tails, no CIL, no regrind 82 78

Rougher Tails, no CIL, regrind to 45 µm P80 84 77 Rougher Tails, no regrind, CIL 83 81

Rougher Tails, CIL and regrind to 45 µm P80 85 88

A sample of flotation cleaner tailings was extracted from the flotation testwork and submitted for cyanidation without either regrinding or CIL (Table 16‐9). The mineralogical dissimilarity between MET‐17 and MET‐18 is highlighted in this work, as the MET‐17 sample again performed in a far superior manner.

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Table 16‐9: Cyanidation of Cleaner Flotation Tails

Au Extraction, % MET‐17 MET‐18 Cleaner Tails, no CIL, no regrind 95 54

This testwork demonstrates that for certain parts of the Ciresata deposit, the majority of gold lost to flotation tailings streams can be recovered quite effectively by cyanidation. The significantly lower rate of extraction noted from the testing of MET‐18 cleaner tailings suggests that the population of gold locked in silicates could possibly be variable throughout the deposit and should be tested as part of further studies.

16.1.4 Current Testwork

The most current phase of metallurgical testwork on RVP’s samples was initiated in January 2010 at SGS Minerals Services, Lakefield. This flotation program included a brief series of scoping tests (rougher kinetics and batch cleaner), followed by locked cycle testing of each composite. The program objectives were:

 to test an open circuit flowsheet, with hopes of improving locked cycle test stability  to briefly explore the effectiveness of lower reagent additions  to test the effect of less selective sulphide flotation, thereby recovering more pyrite‐ locked gold to final concentrate  to provide locked cycle test results for metallurgical predictions.

Head Grades

In total, four composites were received for this flotation program. Table 16‐10 shows the composite descriptions and reference head assays (Measured from single samples during composite blending). These assays show minor differences from the average reconstituted headgrades (taken from multiple test balances) but this is quite typical with low‐grade precious metal measurements.

Table 16‐10: 2010 SGS Composites – Reference Head Assays

Sample Au ppm Cu % Fe % S % MET‐23 (Ciresata) 0.82 0.16 5.82 0.74 MET‐24 (Colnic) 0.62 0.12 4.87 3.70 MET‐25 (Rovina) 0.17 0.27 4.73 1.67 MET‐26 (Ciresata) 0.98 0.18 5.28 1.35

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Ciresata Batch Flotation Testing

Rougher flotation scoping testwork was conducted on the Ciresata composite MET‐23 to assist development of suitable flowsheet parameters. Several process parameters were examined:

 Rougher flotation pH: addition of lime to the grind and early stages of flotation has a tendency to depress pyrite, thereby increasing the cleaner concentrate grade, but possibly having a detrimental impact on gold recovery (as a significant percentage of gold is locked within pyrite).  Collector type and dosage: combinations of Cytec 3418A (a strong, but selective dithiophosphate, or DTP), together with amyl, isobutyl and isopropyl xanthates were added at different stages of the process.

 Two tests were conducted 100 µm primary grind, to test the sensitivity of copper and gold recovery to liberation.

As a significant percentage of gold in the Ciresata deposit is known to occur with or within pyrite, very selective rougher flotation conditions (i.e., pH > 10.0) were avoided for almost all tests, and rougher tailings sulphur grades were consistently maintained below 0.1%.

Rougher concentrate selectivity data (copper and gold recovery against concentrate mass pull) for the MET‐23 scoping tests is depicted in Figure 16‐4 for copper and Figure 16‐5 for gold.

Figure 16‐4: Met‐23 Rougher Flotation – Copper Selectivity

100

F1 ‐ 100um No Lime 80 F2 ‐ 100um lime 75 F3 ‐ 70um Lime Recovery F4 ‐ 74um Reduced Collector

% 70 F5 ‐ Cleaner Test

65 F6 ‐ Cleaner Test MET 17 (2008) 60 MET 18 (2008)

55 F7 Cleaner Test F8 ‐ Cleaner Test 50 024681012 Mass Pulled to Conc (%)

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Figure 16‐5: Met‐23 Rougher Flotation – Gold Selectivity

F1 ‐ 100um No Lime 65 F2 ‐ 100um lime

F3 ‐ 70um Lime 60 F4 ‐ 74um Reduced Collector Recovery

% F5 55 F6 ‐ Baseline Test

50 MET 17 MET 18

45 F7

F8 40 024681012 Mass Pulled to Conc (%)

A coarse primary grind (80% passing 100 µm) was tested in F1 and F2, and this resulted in lower copper and gold recoveries to the rougher concentrate, when compared to other (finer grind) tests. Comparing Tests F2 and F3, a small increase in gold recovery (1%) and a larger increase in copper recovery (6%) is achieved at the finer grind (70 m).

Initial test observations of brittle, heavy froth suggested over‐collection in the early stages of rougher flotation. As a result, subsequent tests were conducted with significantly lower collector additions, and some (tests F3, F4) were tested with little to no collector in the early stages of flotation. In test F4, chalcopyrite is recovered equally well with only a trace of 3418A added to the mill and with rougher flotation at pH 10; however, this translated into lower mass, pyrite, and gold recovery to the rougher concentrate stream.

Addition of PAX towards the end of these more selective rougher flotation tests was generally able to pick up remaining sulphides, but at a significantly lower concentrate mass pull.

Some other observations regarding rougher flotation are noteworthy:

 Chalcopyrite accounts for all copper within the RVP Deposits. Flotation of chalcopyrite occurs quickly in the roughers, more so when xanthate or DTP collectors are added to the mill. With only 2.5 g/t 3418A added to the mill and no further collector added in the early stages of flotation, the first increment of concentrate (2 min) in Test F4 still achieved 74% Cu recovery.

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 After the first 4 to 6 minutes of rapid chalcopyrite flotation, the remainder of the primary flotation circuit is dedicated to flotation of slower‐floating pyrite and chalcopyrite/non‐ sulphide gangue middlings. The addition of PAX at this point in the flotation process was aimed at improving the recovery rates for these slower particles.  Rougher flotation tailings grades tended towards 0.02% Cu and 0.2 g/t Au for all MET‐23 tests. This implies that approximately 12% of the chalcopyrite and 22% to 24% of the gold is essentially unrecoverable in this composite at the target grind of ~70 µm.

Subsequent batch tests (F5 to F8) included rougher concentrate regrinding and cleaner flotation. With rougher concentrates generally in the 8% to 10% mass range, a concentrate regrind of approximately 80% ‐20 µm and minimal reagent addition gave low grade (but saleable) cleaner concentrates with good gold grades. Cleaner circuit pulp pH was maintained at least at 10.5 for all tests to assist in the rejection of pyrite to a cleaner tailings stream.

Despite high pH and very low reagent dosages in the cleaner flotation circuit, pyrite flotation remained problematic and this was continually detrimental to final concentrate grade, with no test exceeding 20% Cu.

Cleaner circuit performance from tests F5 to F8 is depicted in Figure 16‐6 (cleaner circuit unit gold recovery vs. copper upgrade ratio). In each of these cleaner tests, somewhat different rougher flotation reagent additions provided rougher concentrate mass recoveries of between 7.4% and 10.9%, and subsequent gold recoveries ranging between 75.7% and 79.1%. Plotting unit recovery and upgrade ratio normalizes the difference in rougher performance and allows comparison of the cleaner circuit only. Clearly, cleaner circuit performance proved to be relatively consistent, despite changes in circuit pH and collector addition.

Figure 16‐6: Met‐23 Cleaner Flotation – Unit Au Recovery vs. Cu Upgrade Ratio

100

90 (%)

85 F5 Recovery 80 F6 Unit F7

Au 75 F8 70 0246810 Cu Upgrade Ratio in Cleaners

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Colnic (MET‐24) Batch Flotation Testing

The development work on Ciresata (MET‐23) was used to provide baseline conditions for the MET‐24 (Colnic) Composite. Some significant differences were noted when compared to the Ciresata composite:

 As noted in past work programs, the Colnic composite contains significantly more pyrite than either Rovina or Ciresata. Compared to MET‐23 and MET‐25, pyrite:chalcopyrite ratios were calculated to be an order of magnitude higher for the MET‐24 composite.  This composite also contains small amounts of pyrrhotite.  The rougher tails grade in three batch tests was relatively constant at 0.01% Cu and 0.08 g/t Au – considerably lower than Ciresata. This suggests that a lower percentage of gold is of the “finely disseminated, locked in silicate” variety and that chalcopyrite is perhaps slightly coarser in nature. This supports the conclusions noted in the mineralogical study of 2008 (which compared MET‐11 with MET‐10) and overall circuit gold recovery is expected to be higher than for Ciresata.

Results of a single rougher rate test on MET‐24 are compared to similar tests for MET‐23 and MET‐25 in Figure 16‐7. While the copper selectivity results are reasonably comparable for the three composites, significant differences in gold recovery are noted (between 75% and 90%). It is clear from Figure 16‐7 that rougher flotation gold recovery is related to mass recovery, but it is also worth noting that sulphur grades are higher in the larger masses (Figure 16‐8), implying that pyrite is a significant contributor to the additional mass and to extra gold recovery.

Figure 16‐7: Rougher Flotation Performance – MET‐23, 24, and 25 Comparisons

100

90 (%) 80

70 Recovery

60 Colnic ‐ Cu Colnic ‐ Au Rougher Rovina ‐ Cu Rovina ‐ Au 50 Ciresata ‐ Cu Ciresata ‐ Au

40 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

Mass Recovery (%)

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Figure 16‐8: Rougher Concentrate Gold Recovery vs. Sulphur Grade – MET‐23, 24, and 25

100

90 MET‐24 MET‐25 80 (%) MET‐23 70 Recovery

Au 60

40 0.0 5.0 10.0 15.0 20.0 25.0 Sulphur Grade (%)

Figure 16‐9 shows the cleaner circuit performance for the Colnic (MET‐24) composite, which compares cleaner unit gold recovery vs. copper upgrade ratio for Colnic tests F3 and F4.

Figure 16‐9: Met‐24 Cleaner Flotation – Copper Grade vs. Gold Recovery

100

MET24‐F3 90 MET24‐F2 (%)

80 Recovery

70 Au

Unit 60

40 0 5 10 15 20 25 30 35

Copper Upgrade, Ratio

In a similar fashion to MET‐23, the cleaner flotation gold recovery vs. copper upgrade relationship remains constant despite changing reagent conditions. Higher upgrades and lower unit gold recoveries achieved in test F2 correspond to high cleaner circuit pH and aggressive rejection of pyrite.

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Rovina (MET‐25) Batch Flotation Testing

As with the Colnic composite, the Ciresata development work was used to provide baseline conditions for the Rovina sample (MET‐25). For the MET‐25 composite, a single rougher kinetic test and a single batch cleaner test were carried out. Compared to MET‐23 and MET‐24, the copper headgrade of MET‐25 is approximately double (0.27% vs. 0.12% to 0.16%) although gold grade is considerably lower (0.2 g/t vs. 0.7 g/t to 0.9 g/t).

Rougher flotation data is compared to the other composites as shown in Figure 16‐7.

Unit cleaner performance is similar to that achieved with the Colnic composite (MET‐24), although the higher copper headgrade in MET‐25 helps to achieve high final concentrate grades with relative ease. While a copper grade in excess of 30% was achieved in the MET‐ 25 test, gold recovery was relatively poor. It is to be expected that by increasing mass recovery (to achieve a copper grade of 18% to 20%); gold recovery would also be increased as a result of additional recovery of pyrite.

Locked Cycle Flotation Testing

To test the effect of recirculating water and reagents on metallurgical performance, a composite from each deposit was tested using a locked cycle flowsheet. Figure 16‐10 shows the locked cycle flowsheet.

Figure 16‐10: Locked Cycle Flowsheet

Grind Rougher Scavenger Rougher 75 m 10 min 10 min Tailings

Grind ~20 m

Cleaner Cleaner Cleaner 4 min Scav. 2 min Tailings

2nd Cleaner 2.5 min

3rd Cleaner 1.5 min

Final Concentrate

In all tests, six cycles were required to achieve stability. Reagent addition was varied slightly to suit the individual composites, and average dosages are listed in Table 16‐11.

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Table 16‐11: LCT Average Reagent Dosages

Rougher Cleaner Reagent (g/t) (g/t) Lime 400 350 Frother (MIBC) 15 5 Collector 1 (PAX) 5 0 Collector 2 (3418A) 5 1

Locked cycle testing did highlight the sensitivity of these ores to over‐dosing of collector. In particular, the use of 3418A in locked cycle tests appeared to prevent the effective depression of pyrite in the cleaner circuit across a wide range of pulp pH. An initial locked cycle test (LCT‐1) using the MET‐23 composite suffered from increasingly poor selectivity in the cleaner circuit as concentrations of the (water soluble) dithiophosphate collector (3418A) accumulated in the water. As a result of pyrite dilution, very low final concentrate copper grades were achieved in this test. Subsequent tests with lower collector concentrations allowed far better control of pyrite in the cleaner circuit.

Of the locked cycle tests conducted, three tests (one per composite) were judged to have achieved good stability and concentrate grades close to the desired specification. The results of these tests are discussed in the following sections.

16.1.5 Ciresata Locked Cycle Test (LCT‐5)

Due to the low grade of Ciresata ore, this locked cycle test was conducted using 4‐kg charges, thereby ensuring adequate metals accountability through the cleaner circuit. Reagent additions consisted of 650 g/t lime, 5.5 g/t 3418A, 5.0 g/t PAX, 20 g/t MIBC. Cycle Test raw data is given in Appendix A.

A primary grind of 80% ‐71 µm and a regrind of 80% ‐17 µm were estimated from test product measurements. Cycle stability was judged to be good and the averages of data from cycles C, D, E, and F were used as a basis for the metallurgical predictions.

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Figure 16‐11: LCT‐5 Cycle Stability Chart

110

105

100

90 (%)

Balance 80

70 Wt % Cu Au Fe S 65

60 ABCDEF

Test Cycle

For the purposes of this study, raw test data has been balanced using the SME method (combined products) to reconstitute a head assay. Over and above the calculated mass balance, a small quantity (7 g) of 1st Cleaner scavenger tailings was mathematically combined into the 3rd Cleaner concentrate stream to adjust the grade/recovery operating point to reflect better project targets. Table 16‐12 shows the adjusted data for Ciresata.

Table 16‐12: Adjusted Data for Ciresata

Weight Assays, %, g/t % Distribution Product Dry % Cu Au Fe S Cu Au Fe S 3rd Cu Cleaner Concentrate 30.4 0.77 18.7 82 26.0 27.2 89.4 66.9 3.3 21.5 Cu 1st Cleaner Scavenger Tail 311.7 7.9 0.055 1.21 12.5 9.19 2.7 10.1 16.5 74.3 Cu Rougher Tail 3,597 91.3 0.014 0.24 5.25 0.05 7.9 23.0 80.2 4.2 Combined Tail 3,909 99.2 0.017 0.31 5.80 0.80 10.6 33.1 96.7 78.5 Head (calculated) 3,939 100.0 0.16 0.94 5.98 0.98 100.0 100.0 100.0 100.0

16.1.6 Colnic Locked Cycle Test (LCT‐4)

This locked cycle test was also conducted using 4‐kg charges and six cycles were used once more to achieve stability. Reagent additions consisted of 1,100 g/t lime, 6.5 g/t 3418A, 5.0 g/t PAX, 20 g/t MIBC. Raw test data is included in Appendix A.

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A primary grind of 80% ‐67 µm and a regrind of 80% ‐11 µm were estimated from test product measurements. Cycle stability was good and the average of cycles C, D, E, and F were used as a basis for the metallurgical predictions

Figure 16‐12: LCT‐4 Cycle Stability Chart

120

110

100 (%)

90 Balance 80

70 Wt % Cu Au Fe S

60 ABCDE F

Test Cycle

Raw test data was balanced using the SME method (combined products) to reconstitute a head assay. Over and above the SME calculated mass balance, a small quantity (7 g) of 1st Cleaner scavenger tailings was mathematically combined into the 3rd Cleaner concentrate stream to adjust the grade/recovery operating point to reflect better project targets. Table 16‐13 shows the adjusted data for Colnic.

Table 16‐13: Adjusted Data for Colnic

Weight Assays, %, g/t % Distribution Product Dry % Cu Au Fe S Cu Au Fe S Cu Cleaner Concentrate 30.1 0.78 13.6 63 29.5 32.2 91.7 67.9 4.4 7.3 Cu 1st Cleaner Scavenger Tail 676.3 17.0 0.027 0.90 18.1 17.5 4.1 20.7 60.4 89.4 Cu Rougher Tail 3,270 82.2 0.006 0.10 2.18 0.13 4.2 11.4 35.3 3.3 Combined Tail 3,947 99.2 0.009 0.20 4.90 3.10 8.3 32.1 95.6 92.7 Head (calculated) 3,977 100.0 0.11 0.70 5.09 3.34 100.0 100.0 100.0 100.0

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16.1.7 Rovina Locked Cycle Test (LCT‐3)

This locked cycle test was conducted using 2‐kg charges (copper grades are higher), and six cycles were used to achieve stability. Reagent additions consisted of 720 g/t lime, 5.5 g/t 3418A, 5.0 g/t PAX, 20 g/t MIBC. Raw test data is included in Appendix A.

A primary grind of 80% ‐86 µm and a regrind of 80% ‐20 µm was estimated from test product measurements.

Cycle stability was judged to be good and the averages of data from cycles D, E, and F were used as a basis for the metallurgical predictions.

Figure 16‐13: LCT‐3 Cycle Stability Chart

110

105

100

90 (%)

Balance 80

70 Wt % Cu Au Fe S 65

60 ABCDEF

Test Cycle

Raw test data was balanced using the SME method (combined products) to reconstitute a head assay. No adjustments were made to concentrate grade/recovery, as the point obtained in this test was very close to target.

Table 16‐14 shows Rovina’s metallurgical prediction.

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Table 16‐14: Rovina Metallurgical Prediction

Weight Assays, %, g/t % Distribution Product Dry % Cu Au Fe S Cu Au Fe S Cu Cleaner Concentrate 19.0 0.95 24.3 20 30.7 34.9 93.2 69.9 5.8 23.0 Cu 1st Cleaner Scavenger Tail 137.0 7.0 0.062 0.55 17.1 15.2 1.7 14.2 23.5 72.0 Cu Rougher Tail 1,815 92.1 0.014 0.05 3.88 0.08 5.1 15.9 70.6 5.0 Combined Tail 1,952 99.0 0.017 0.08 4.81 1.14 6.8 30.1 94.2 77.0 Head (calculated) 1,971 100.0 0.25 0.27 5.06 1.46 100.0 100.0 100.0 100.0

16.1.8 Projected Metallurgical Performance

Projected metallurgical performance and concentrate quality for the RVP is based on the results of locked cycle tests LCT 3, LCT 4, and LCT 5 from the 2010 SGS metallurgical test program.

Grade and Recovery

The following tables provide the LOM average projections for each deposit. For each deposit, the Projection is based on the assays and weights of the products from the last three or four cycles of a six‐cycle test (selected to give the minimum balance error for mass, copper and gold).

Table 16‐15: Projected Metallurgical Performance – Rovina Deposit

Assays, %, g/t % Distribution Weight Product % Cu Au Fe S Cu Au Fe S Cleaner Concentrate 0.96 24.3 20 30.7 34.9 93.2 69.9 5.8 23.0 Cleaner Scavenger Tail 7.0 0.062 0.55 17.1 15.2 1.7 14.2 23.5 72.0 Rougher Tail 92.1 0.014 0.05 3.88 0.08 5.1 15.9 70.6 5.0 Combined Tail 99.0 0.017 0.08 4.81 1.14 6.8 30.1 94.2 77.0 Head (calculated) 100.0 0.25 0.27 5.06 1.46 100.0 100.0 100.0 100.0

Table 16‐16: Projected Metallurgical Performance – Colnic Deposit

Assays, %, g/t % Distribution Weight Product % Cu Au Fe S Cu Au Fe S Cleaner Concentrate 0.76 13.6 63 29.5 32.2 91.7 67.9 4.4 7.3 Cleaner Scavenger Tail 17.0 0.027 0.90 18.1 17.5 4.1 20.7 60.4 89.4 Rougher Tail 82.2 0.006 0.10 2.18 0.13 4.2 11.4 35.3 3.3 Combined Tail 99.2 0.009 0.20 4.90 3.10 8.3 32.1 95.6 92.7 Head (calculated) 100.0 0.11 0.70 5.09 3.34 100.0 100.0 100.0 100.0

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Table 16‐17: Projected Metallurgical Performance – Ciresata Deposit

Assays, %, g/t % Distribution Weight Product % Cu Au Fe S Cu Au Fe S Cleaner Concentrate 0.77 18.7 82 26.0 27.2 89.4 66.9 3.3 21.5 Cleaner Scavenger Tail 7.9 0.055 1.21 12.5 9.19 2.7 10.1 16.5 74.3 Rougher Tail 91.3 0.014 0.24 5.25 0.05 7.9 23.0 80.2 4.2 Combined Tail 99.2 0.017 0.31 5.80 0.80 10.6 33.1 96.7 78.5 Head (calculated) 100.0 0.16 0.94 5.98 0.98 100.0 100.0 100.0 100.0

The following comments are provided regarding the metallurgical projections summarized here:

 The Rovina prediction is calculated using the data collected from the final three cycles of LCT‐3, and uses the SME method to calculate a metallurgical balance.  The Colnic prediction is calculated using the data collected from the final four cycles of LCT‐4, and uses the SME method to calculate a metallurgical balance. In addition, a small quantity of cleaner scavenger tailings was mathematically combined into the final concentrate to dilute this stream with additional gold‐bearing pyrite. This adjustment resulted in a slightly lower concentrate grade (‐4.1% Cu, ‐19 g/t Au) and a slight increase in gold recovery (0.3%).  The Ciresata prediction is calculated using the data collected from the final four cycles of LCT‐5, and uses the SME method to calculate a metallurgical balance. In a similar manner to the Colnic test above, a small quantity of cleaner scavenger tailings was mathematically combined into the final concentrate to include additional pyrite. For Ciresata, this adjustment resulted in a lower concentrate grade (‐5.5% Cu, ‐24 g/t Au) and a slight increase in copper and gold recovery (0.1% and 0.2% respectively).  The recalculated head assays for each composite are close to LOM average grades for the Rovina, Colnic, and Ciresata Deposits, and thus do not require further correction.

Given that the mathematical adjustments to LCT‐4 and LCT‐5 use the cleaner tailings stream as a source of pyrite (rather than a higher‐grade middlings stream), the estimates of gold recovery calculated for the reported final concentrate grades for Ciresata and Colnic are both believed to be quite conservative.

Deleterious Elements Analysis

The final flotation concentrates from LCT‐3 (Ciresata), LCT‐4 (Colnic), and LCT‐5 (Rovina) were submitted for 30‐element ICP scans as part of the 2010 test program. Table 16‐18 shows a summary of the analysis results.

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The zinc grade of Colnic concentrate is high at 16,000 g/t (1.6%). However, this deposit will normally make up no greater than 30% of mill feed and thus blending with concentrates from Rovina and Ciresata dramatically reduces the risk of incurring treatment penalties.

Other elements are within downstream treatment allowances.

Table 16‐18: Flotation Concentrates – Deleterious Element Analysis

Sample ID Ciresata Final Concentrate Colnic Final Concentrate Rovina Final Concentrate Ag g/t 50 140 62 Al g/t 9,500 8,300 10,000 As g/t < 50 < 50 < 50 Ba g/t 37 37 56 Be g/t 0.08 0.1 0.2 Bi g/t < 200 < 200 < 200 Ca g/t 6,600 10,000 6,000 Cd g/t 37 120 32 Co g/t 73 62 130 Cr g/t 130 210 56 K g/t 2,100 1,600 2,900 Li g/t < 10 < 10 < 10 Mg g/t 1,900 1,800 2600 Mn g/t 120 190 130 Mo g/t 1,100 2,600 530 Na g/t 2,300 880 2,700 Ni g/t 91 130 140 P g/t < 200 < 200 < 200 Pb g/t 320 1200 450 Sb g/t < 10 < 10 < 10 Se g/t 220 130 65 Sn g/t < 200 < 200 < 200 Sr g/t 39 20 32 Ti g/t 1,200 1,600 1,700 Tl g/t < 30 < 30 < 30 U g/t < 40 < 40 < 40 V g/t 29 20 26 Y g/t 2.7 6 4.9 Zn g/t 4,600 16,000 3,600

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16.2 Processing

16.2.1 Introduction

The process plant described herein is designed to process an average of about 40,000 t/d of ore from the Ciresata, Colnic, and Rovina Deposits. The process includes two stage grinding using semi‐autogenous (SAG) and ball milling with pebble crushing to produce a ground product suitable for rougher flotation of copper and gold. After regrinding of the rougher concentrate, three stages of conventional cleaner flotation followed by liquid/solid separation produce a final concentrate of marketable grades.

16.2.2 Primary Crusher and Ore Reclaim System

ROM ore with a particle size of 100% passing 1,500 mm is fed to a 1,372 by 1,905 gyratory crusher. The crushed product discharges into a pocket with a capacity equivalent to two ore haul trucks. A hydraulic rock breaker is installed at the primary crusher facility to break oversize material.

The crushed product is removed from the discharge pocket by a variable speed apron feeder. A dust suppression system installed at the truck dump pocket minimizes the generation of dust during truck unloading.

The feeder discharges onto a conveyor to transport the ore to a 30,000 tonne conical stockpile. A dust suppression system controls dust generation at ore transfer points. Sufficient headroom and area will be provided to allow spills to be removed with a small loader.

Four variable speed apron feeders extract ore from the stockpile and deliver material to the mill feed conveyor. Two feeders are sufficient to provide 100% of the design feed rate. A dust collector controls dust at the feeders and transfer points in the reclaim system. Sufficient room is provided to permit the floor of the chamber to be cleaned with a small loader such as a Bobcat.

16.2.3 SAG and Ball Mill Grinding

The feeders discharge at an average rate of 1,830 t/h onto the SAG mill feed conveyor. Most of the water added at the SAG mill and elsewhere in the process is reclaim water obtained from the tailing pond, with fresh water used only as makeup. The 10,000 x 5,800 SAG mill discharges to a double deck‐vibrating screen fitted with screen panels of 37 mm and 15 mm openings. The screen oversize is transported by a series of conveyors to a pebble crusher with the crusher discharge returning to SAG mill feed. Magnets and a metal detector will prevent steel from entering the pebble crusher.

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The SAG mill screen undersize product is pumped to two sets of cyclones operating in closed circuit with two 7,920 x 11,600 ball mills. Cyclone overflow flows by gravity to the rougher

flotation conditioner at a nominal product size (P80) of 74 µm.

16.2.4 Flotation and Concentrate Recovery

Reagents comprising potassium amyl xanthate, sodium isopropyl xanthate, methyl isobutyl carbinol (MIBC), and milk of lime for pH control are employed in the flotation process and added as required throughout the circuit. The cyclone overflow from grinding feeds the rougher flotation circuit. Rougher tailings flow to a scavenger flotation circuit prior to discharge to the tailings impoundment area. The scavenger concentrate reports to flotation feed. Rougher concentrate is directed to the regrind circuit cyclone feed pump box.

Rougher concentrate is reground in a tower mill in closed circuit with cyclones. Cyclone overflow is directed to first stage cleaner flotation.

Tailings from first cleaner flotation are scavenged for copper and gold prior to discharge to the tailings impoundment area. Scavenger concentrate reports to the regrind circuit pumpbox. First cleaner concentrate is cleaned in two additional cleaner flotation stages with tailings from each stage moved counter currently to the advancing concentrate.

Final flotation concentrate reports to a thickener and subsequently to a pressure filter for water removal to approximately 6% moisture. Filtered concentrate is stored in tote bags in an enclosed area, and loaded into standard shipping containers then hauled with trucks for shipment.

Figure 16‐14 shows the general schematic flowsheet of the process.

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Figure 16‐14: Process Flowsheet

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16.2.5 Process Design Criteria

References L Metallurgical testwork C Carpathian I Industry experience or assumed M Material balance

Units Value Ref

Production Criteria Operating days per year d/a 365 Plant availability % 91

Ore feed rate Average t/d 40,000 Design t/h 1,830 Annual t/a 14,400,000

Ore grade, average (LOM) Copper % 0.18 Gold g/t 0.66

Overall recovery Copper Rovina % 93.2 Colnic % 91.7 Ciresata % 89.4 Gold Rovina % 69.9 Colnic % 67.9 Ciresata % 66.9

Metal production, average Copper t/a 22,400 L Gold kg/a 6,100 Average Cu Concentrate grade, design % 19.5

Ore Characteristics Ore specific gravity 2.77 L

Ore bulk density Loose t/m3 1.6 I Compacted t/m3 2.0 I Ore moisture content % 3 I

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Units Value Ref

Ore Receiving and Crushing

Operating schedule Days per year 365 Hours per day 24 Crushing circuit feed rate (wet basis) t/h 1,400 Number of crushing stages 1 Crushed ore size (nominal) mm 150 I Crushed ore storage stockpile, live t 30,000 C Ore angle of repose deg 37 I

Grinding

Operating schedule Days per week 7 Shifts per day 2 Hours per shift 12

Ore feed rate, dry Daily, average t/d 40,000 Hourly, design t/h 1,830 Ore moisture content, nominal % 3 I Number of primary SAG grinding mills 1 Number of secondary grinding mills 2

Crushed ore K80 size mm 140

Ground product K80 μ 74 T Ball mill Bond work index (per tonne) kWh/t 17 T Bond abrasion index (assumed) 0.1 I

Pulp densities Ball mill discharge % solids 70 M Cyclone overflow % solids 35 M Cyclone underflow % solids 70 M Ball mill circulating load % 200 I Process water tank nominal retention time h 4 I

Flotation Flotation feed Solids t/h 1,830 Water source process water M

Rougher flotation Conditioning time (batch time) min 1 L Flotation time, (batch time) min 12 L

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Units Value Ref Concentrate % of feed 15 L Scavenger flotation (batch time) min 5 L

Concentrate regrind

Product size, P80 µm 15 L

First cleaner/scavenger flotation Flotation time (batch time) min 6 L Weight recovery to concentrate (ore basis) % 3.5 M

Second cleaner/scavenger flotation Flotation time (batch time) min 3 L Weight recovery to concentrate (ore basis) % 2 M

First cleaner/scavenger flotation Flotation time (batch time) min 2 L Weight recovery to concentrate (ore basis) % 1.4 M

Concentrate Handling

Copper concentrate Weight recovery (ore basis) % 1.4 M Solids t/h 25.6 M Concentrate SG 4.00 I

Copper concentrate thickening Feed rate t/h M Unit area m2.d/t 0.3 I Underflow density % solids 70 I

Copper concentrate filtration Filter type Pressure Unit filtration rate, provisional kg/h.m2 300 I

Cake moisture % H2O 8 I

Reagents and Supplies Consumption Item kg/t t/a Xanthate (PAX and SIX) 0.005 73 MIBC 0.020 292 Lime (CaO) 0.800 11,680 3418A 0.006 88 Flocculant 0.0005 7 Grinding steel (primary) 0.407 5,945 Grinding steel (secondary/regrind) 1.132 16,521

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17 MINERAL RESOURCE ESTIMATES

PEG has completed mineral resource estimates for Carpathian’s Rovina Valley porphyry gold copper property.

This section is summarized from section 17 of the PEG report titled “Technical Report on the Rovina Valley Project, Romania, January 2009.” The January 2009 report is available on SEDAR for public release.

Gemcom software GEMS 6.41™ was used for the resource estimate in combination with Sage 2001 for the variography. The metals of interest at Rovina Valley are copper and gold. Minor amounts of zinc and molybdenum are also present.

Carpathian provided the digital data files as a series of XLS spreadsheets. Rovina and Colnic data was provided in August 2008, and Ciresata was provided in September 2008. The digital data files consisted of drill hole collar, survey, lithology, alteration, and assay tables along with 3D triangulations representing the latest interpretation for the lithological and alteration units. Topographical surfaces were also provided.

The data cutoff date for Rovina was April 08th, and consisted of 53 holes that were used in the resource estimation. For Colnic, all 87 drill holes were used in the resource estimation. Ciresata drilling was in progress in late summer 2008, and a total of 15 holes were included in the resource. None of the holes in the database had pending assays and none of the historical drill holes were incorporated in the drill database.

17.1 Geological Interpretation

For all deposits, Carpathian provided a series of 3D wireframes models consisting of a detailed lithology model and a separate alteration model based on the dominant alteration logged in the drill core.

Carpathian geologists first modeled the deposit on series of cross sections, followed by a series of longitudinal sections and plans. The lithological and alterations boundaries were adjusted to reconcile in all three orientations. The paper sections and plans were then digitized on the computer, tied together, and wireframed in 3D.

PEG validated the completed solids for interpretational consistency. The solids honour the drill hole data and interpreted geology. The solids were used to code the drill hole data prior to final domain definition. .

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17.2 Exploratory Data Analysis

Exploratory data analysis is the application of various statistical tools to characterize the statistical behaviour or grade distributions of the data set in order to understand the population distribution of the grade elements in the various units.

Statistical analysis of the data was performed on each of the lithology and alteration units and also the combination of lithology + alteration units in order to assist in the selection of the statistical domains used in the interpolation.

17.2.1 Domain Definition

For all three deposits, the delineation of the statistical domains was based primarily on field information gathered from the Project geologists along with an examination of the drill core. It also relied heavily on the following statistical tools for confirmation of the field observation:

 mean value statistics  box plots statistics  contact profiles  analysis of variance (ANOVA).

Rovina

For the Rovina deposit, 14 domains are suggested by the statistical analysis work. The lithological characteristics of the deposit mainly controlled the domains by taking into consideration the various alteration types.

Colnic

A similar approach was taken at Colnic; a total of 22 domains were suggested by the statistical analysis work.

Ciresata

At the Ciresata zone, the earlier stage work indicates six domains are present as determined by the statistical analysis work.

For a complete description of the various domains at the Rovina deposit, please refer to the NI 43‐101 document by Pierre Desautels (Desautels, 2009).

17.2.2 Assays

The gold and copper distribution in the Rovina valley can be described as follows:

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 Rovina is a copper/gold deposit with Cu:Au ratio of 3:1  Colnic is a gold rich deposit with minor copper with a Au:Cu ratio of 5.4:1  Ciresata is also gold rich deposit with minor copper with an Au:Cu ratio of 4.8:1.

17.2.3 Capping

In a resource model, high‐grade outliers can contribute excessively to the total metal content of the deposit. The treatment of outliers at Rovina, Colnic, and Ciresata was based on three methodologies, decile analysis, histograms, and grade capping curves.

Each statistical domain was evaluated separately for Gold and Copper. A combination of grade capping and search restriction imposed on a threshold values was used to restrict the influence of the outliers. With a few exceptions, no grade capping was warranted for copper at Colnic and Ciresata due to the near normal distribution observed. In all three deposits, gold required some form of restriction. Due to the higher copper content, Rovina required a search restriction applied to the copper outliers.

The search restriction size was based on a next block diamond pattern with a 25 m radius from the block center at Rovina and 15 m at Colnic and Ciresata. The search restriction size is based on the resource‐model matrix‐size. With a search restriction, all high‐grade samples are used at face value but their range of influence is limited to a localized area.

17.2.4 Composites

Sampling intervals on the Carpathian Rovina Valley property average 1.0 m. The upper third quartile of the sampling length shows a value close to 1.0 m. PEG evaluated composite intervals of 2.5, 5, and 10 m via decile analysis, box plots, and frequency distribution. Results show that the grade distribution is largely unaffected by the change in composite length. The relative frequency distribution reveals the smoothing effect when using a larger composite size.

From this work, PEG elected to use a composite length of 2.5 m generating about four data points per block in the 10 x 10 x 10 m block matrix at Rovina and two data points per block for the 5 x 5 x 5 m block matrix for Colnic and Ciresata. The composite size also allowed grade variations to be represented especially near the contact with the dikes at Colnic and Ciresata while producing a sample of proper support. Assays were length‐weighted averaged and any grade capping was applied to the raw assay data prior to compositing.

The 2.5 m composite intervals were created in a downward fashion from the collar of the holes toward the hole bottoms re‐setting the composite intervals at the lithological boundaries. Composite remnants, which are composites less than 2.5 m in length, are unavoidable with this methodology. Statistical analysis of the composite remnants indicates

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that in general, intervals less than 1 m at Rovina, and Ciresata could be safely eliminated from the dataset without introducing a bias in the remaining composites.

Exceptions to the 2.5 m remnant composite were in limited alteration zones at Colnic, and Ciresata. Statistical analysis indicated a substantial drop in metal content would be occurring if the composite remnant less than 1.0 were eliminated. For these units a threshold of 0.6 m was selected.

17.3 Bulk Density

Carpathian’s database contains a total of 829 specific gravity (SG) measurements. The sampling collection averaged one measurement per 66 m, 80 m, and 99 m of core at Rovina, Colnic, and Ciresata, respectively with all samples sent to the ALS Laboratory at Gura Rosiei

The rock types found at Colnic and Rovina are generally non‐porous and therefore PEG is of the opinion that the specific gravity determinations are representative of the in situ bulk density of the rock types, and sufficient for resource estimation purposes. For Rovina, Colnic and Ciresata the density model was constructed by assigning the average density value of the alteration which ranged between 2.64 to 2.67 g/cm3

17.4 Spatial Analysis

Using Sage 2001 software, directional sample correlograms were calculated for gold and copper in each of the statistical domains along horizontal azimuths of 30 degrees increments. For each azimuth, a series of sample correlograms were also calculated at 30‐degree dip increment and where necessary, at 15 degree dip increment. Lastly, a correlogram was calculated in the vertical direction. Using the complete suite of correlograms, an algorithm determined the best‐fit model. After fitting the variance parameters, the algorithm then fits an ellipsoid to all ranges from the directional models for each structure. The lengths and orientations of the axes of the ellipsoids give the final models of anisotropy.

All anisotropy models generated by SAGE 2001 were visually inspected in Gems to compare output with the expected geological controls on the mineralization. A variogram was considered inconclusive if the anisotropy range and angle did not appear to coincide with any known or expected trend in the mineralization.

In general terms, Rovina indicated a preferred continuity in the 300‐330 degree azimuth with a near vertical dip. Variograms for Colnic were not as consistent as Rovina due, in part, to the sub‐domain subdivisions limiting the number of usable data points for each domain and also due to the circular configuration of some of the weekly drilled, external domains. Ciresata shows the best variograms in the EMP+PH domain; however, when the modelled anisotropy was illustrated in GEMS, the range and angles did not coincide with the expected geological controls and thus the variogram results were deemed inconclusive.

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Please refer to the NI 43‐101 document by Pierre Desautels (Desautels, 2009) for complete description of the variograms for the various deposits.

17.5 Resource Block Model

One block model was constructed in Gemcom’s GEMS version 6.14™ software for each of the deposits. Block sizes for each deposit were determined by the selectivity of the mining method proposed and the details of the information available to allow selective mining.

The block model matrix for all three deposits was defined on the Romanian Dealul Piscului 1970/Stereo70 coordinate reference system with no rotation. Table 17‐1 lists the model upper southeast corner and is defined on the block edge.

Table 17‐1: Block Model Definition (block edge)

Rovina Colnic Ciresata Easting 338,600 338,030 336,920 Northing 519,650 517,130 512,885 Top elevation 850 700 700 Rotation angle 0 0 0 Block size (X, Y, Z) 10 x 10 x 10 5 x 5 x 5 5 x 5 x 5 Number of blocks in the X direction 120 240 161 Number of blocks in the Y direction 120 250 148 Number of blocks in the Z direction 120 182 185

17.6 Interpolation Plan

The interpolation was carried out in a multi‐pass approach with an increasing search dimension interpolating only the blocks that were not interpolated in the earlier pass. Ordinary kriging was performed on all domains in Rovina and Colnic where the variography could be relied upon. For domains where the variography was inconclusive, an inverse distance cubed methodology was employed. Grade interpolation at the domain boundaries relied upon results from the contact profile study.

The search ellipsoids orientation and dip were loosely based on the variography results and manually adjusted to coincide with the geological unit. Generally, the ratio between the major, semi‐minor and minor axes were kept similar to the ratio of the three‐variogram axis. Where variography was inconclusive, the search ellipsoid dimension and orientation was based on the size and shape of the 3D wireframe.

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17.7 Boundary Treatment

As part of the domain definition for the December 2008 resource model, PEG examined the contact relationship between the individual lithology/alteration unit combinations. Gold and copper were treated separately for this study.

Average grades of an element were calculated over distance from a “boundary” between two lithologies, two units/domains, or two indicator values. Contact relationships can be used to determine the inclusion or exclusion of sample data points used in the interpolation of one particular grade domain and to assist in confirming geological interpretations. A gradational contact (or soft boundary) generally allows the interpolation parameters to include a limited number of samples from the adjoining domain while a sharp contact (or hard boundary) will restrict the sample points used in the interpolation to its own domain.

For all three deposits, the most restrictive pass was allowed to include samples from the adjacent domains with units displaying soft or semi‐soft boundaries. For the subsequent Passes 2 and 3, the composite used were restricted to their domains.

17.8 Mineral Resource Classification

Several factors are considered in the definition of a resource classification:

 Canadian Institute of Mining (CIM) requirements and guidelines  experience with similar deposits  spatial continuity  confidence limit analysis  geology.

No environmental, permitting, legal, title, taxation, socioeconomic, marketing or other relevant issues are known to the author that may currently affect the estimate of mineral resources. Mineral reserves can only be estimated based on an economic evaluation that is used in a prefeasibility or feasibility study of a mineral project, thus no reserves have been estimated. As per NI 43‐101, mineral resources, which are not mineral reserves, do not have demonstrated economic viability.

Four confidence categories exist in the model. The usual CIM guidelines of Measured, Indicated and Inferred classes are coded 1, 2, and 3 respectively. A special Code 4 called “potential” mineralization represents mineralization that was considered too far away from the existing drilling to be classified as Inferred resource. As per NI 43‐101 guidelines, the tonnage and grade for the potential mineralization is not included in this report.

A common technique to categorize a model is to base the category on the pass number and distance to the closest sample.

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For the Carpathian deposits, PEG elected to classify the mineral resource primarily using the Pass number from the interpolation plan with assistance from a drill holes density map and the actual position of the drill holes in order to minimize having blocks in the Measured category in close proximity with blocks in the Inferred category.

Based on the criteria used to determine the category, on average, for Rovina and Colnic, 1% of the blocks estimated are classified as Measured, 19% of the blocks are Indicated and 28% of the blocks are Inferred. The remaining blocks are either non‐interpolated or listed as potential mineralization. For Ciresata, due to the early stage exploration, the entire resource was downgraded to Inferred.

17.9 Metal Equivalent Formula

Metal equivalent values were calculated for copper at Rovina and gold at Colnic and Ciresata. Metal equivalent value is calculated as follows:

1. For each element, a factor is calculated:

a) For Copper (expressed in %): Factor = Net Metal Price * Recovery * (Conversion % to pounds * 100) b) For Gold (expressed in g/t): Factor = Net Metal Price * Recovery * Conversion grams to ounces

Recoveries were assumed at 100% until the completion of the ongoing metallurgical test work. 2. For all elements, the value per tonne is calculated in US$: Value/tonnes = grade * factor 3. Total MV is the addition of the Value per tons expressed in US$ for each element: MV = Value/tonnes Cu + Value/tonnes Au.

The copper equivalent for Rovina is calculated by dividing the MV by the copper price and multiplying by the percent to pound conversion factor. The gold equivalent for Colnic and Ciresata is calculated by dividing the MV by the gold price and then dividing by the grams to ounces conversion factor.

Table 17‐2 shows the price and recoveries used in the calculation.

Table 17‐2: MV Input Parameters

Metal in Model Metal Price Unit Metal Price ($) Recovery (%) Copper (%) US$/lb 1.80 100 Gold (g/t) US$/troy oz 675 100

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Conversion factors used are:

 % to pounds per short ton multiply by 22.04622  ppm to % multiply by 0.0001  grams to troy ounces multiply by 0.03215074 or (1/ 31.1034768).

17.10 Mineral Resource Tabulation

Effective September 30th, 2008, PEG has estimated the Mineral Resource for each of the Colnic, Rovina and Ciresata porphyry deposits, utilizing approximately 62,700 m of diamond drill hole data from the 2006, 2007, and 2008 drilling campaigns. The resource estimate takes into account all drilling information for the Rovina up to April 8th, 2008 and on the Colnic and Ciresata deposit up to September 30th, 2008.

The Rovina resource estimate comprises Measured, Indicated and Inferred resources reported as Cu‐Au mineralization with a base case cutoff grade of 0.30% CuEq. For Colnic, resource estimate comprises Measured, Indicated, and Inferred resources reported as Au‐Cu mineralization with a base case cutoff grade of 0.45 g/t AuEq. As stated earlier, at Ciresata the resource comprises Inferred mineralization only with a base case cutoff grade of 0.70 g/t AuEq.

The base case cutoff grades for this resource estimate were chosen for each respective deposit were determined by giving consideration to the characteristics of each deposit, envisioned mining methods, approximate mining and milling costs derived from internal studies as well as comparable porphyry‐type deposits, results from early metallurgical test work and the reasonableness to be potentially economic. The PEA economics and technical criteria were not reflected in the base case cutoff grades as the mineral resource estimate pre‐dated this PEA.

Table 17‐3 shows a summary of the weighted average result of the resource estimate for all three porphyry deposits at the RVP. The total Measured + Indicated Resource is 5.09 Moz AuEq and the total Inferred Resource is 5.66 Moz AuEq.

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Table 17‐3: Weighted Average Rovina Valley Resource Estimate

Resource Tonnage Au Cu AuEq * Au Cu AuEq* Category (Mt) (g/t) (%) (g/t) (Moz) (Mlb) (Moz) Measured 22.0 0.55 0.24 1.00 0.39 117.0 0.70 Indicated 171.1 0.49 0.17 0.80 2.68 642.0 4.39 Total M+I 193.1 0.49 0.18 0.82 3.07 759.1 5.09 Inferred 177.7 0.68 0.17 0.99 3.89 663.1 5.66 Notes: *AuEq determined by using a gold price of US$675/oz and a copper price of US$1.80/lb as defined by PEG. Metallurgical recoveries are not taken into account. Base case cutoffs used in the table are 0.45 g/t AuEq for the Colnic deposit, 0.70 g/t AuEq for the Ciresata deposit and for 0.30% CuEq for the Rovina deposit Rounding of tonnes as required by reporting guidelines may result in apparent differences between tonnes, grade, and contained metal content.

17.10.1 Rovina Mineral Resource

Table 17‐4: Rovina Mineral Resource Base Case at 0.3% Cu Cutoff

Resource CuEq Tonnage Au Cu Au Cu AuEq* Category Cutoff (%) (Mt) (g/t) (%) (Moz) (Mlb) (Moz) Measured > 0.50 7.6 0.486 0.383 0.12 64 0.29 > 0.45 8.9 0.463 0.369 0.13 72.5 0.33 > 0.40 10 0.445 0.358 0.14 79 0.35 > 0.35 11.3 0.422 0.344 0.15 85.8 0.38 > 0.30 12.6 0.4 0.331 0.16 91.9 0.41 > 0.25 13.9 0.377 0.316 0.17 97.3 0.43 > 0.20 15.2 0.358 0.303 0.17 101.2 0.44 > 0.15 15.7 0.35 0.296 0.18 102.6 0.45 Indicated > 0.50 21.9 0.574 0.348 0.4 168.4 0.85 > 0.45 27.9 0.525 0.335 0.47 205.6 1.02 > 0.40 35.8 0.472 0.319 0.54 252 1.22 > 0.35 47.9 0.414 0.299 0.64 316.2 1.48 > 0.30 65.3 0.359 0.276 0.75 396.5 1.81 > 0.25 90 0.305 0.251 0.88 497 2.21 > 0.20 114.7 0.267 0.23 0.99 581.3 2.54 > 0.15 135.7 0.243 0.212 1.06 633.7 2.75 Inferred > 0.50 8.5 0.556 0.313 0.15 59 0.31 > 0.45 11.6 0.507 0.302 0.19 77.3 0.4 > 0.40 15.4 0.451 0.292 0.22 99.4 0.49 > 0.35 21.8 0.393 0.275 0.28 132 0.63 > 0.30 35.1 0.325 0.248 0.37 192 0.88 > 0.25 52.6 0.277 0.224 0.47 259.3 1.16 > 0.20 72.4 0.24 0.202 0.56 323.2 1.42 > 0.15 108.4 0.193 0.174 0.67 415.8 1.78 Measured 12.6 0.4 0.33 1.01 0.16 92 0.41 Indicated 65.3 0.36 0.28 0.86 0.75 396.5 1.81 Total M+I 77.9 0.37 0.25 0.89 0.92 488.9 2.22 Inferred 35.1 0.33 0.25 0.78 0.37 192 0.88 Notes: *AuEq determined using a gold price of US$675/oz and a copper price of US$1.80/lb as defined by PEG. Metallurgical recoveries are not taken into account. Base case cutoffs used in the table is 0.30% CuEq Rounding of tonnes as required by reporting guidelines may result in apparent differences between tonnes, grade, and contained metal content.

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17.10.2 Colnic Mineral Resource

Table 17‐5: Colnic Mineral Resource Base Case at 0.45 g/t Au Cutoff

Resource CuEq Tonnage Au Cu Au Cu AuEq* Category Cutoff (%) (Mt) (g/t) (%) (Moz) (Mlb) (Moz) Measured > 0.70 7.3 0.849 0.134 0.2 21.6 0.26 > 0.65 7.8 0.827 0.131 0.21 22.6 0.27 > 0.60 8.3 0.806 0.128 0.22 23.4 0.28 > 0.55 8.7 0.789 0.125 0.22 24.1 0.29 > 0.50 9.1 0.774 0.123 0.23 24.6 0.29 > 0.45 9.4 0.76 0.121 0.23 25 0.3 > 0.40 9.7 0.747 0.119 0.23 25.4 0.3 > 0.35 10.1 0.728 0.117 0.24 25.9 0.3 Indicated > 0.70 49.5 0.748 0.123 1.19 134.4 1.55 > 0.65 59.6 0.704 0.12 1.35 157 1.77 > 0.60 69.7 0.667 0.116 1.49 178.4 1.97 > 0.55 81.2 0.631 0.112 1.65 200.9 2.18 > 0.50 92 0.6 0.109 1.78 221.1 2.36 > 0.45 105.8 0.565 0.105 1.92 245.1 2.58 > 0.40 122.8 0.527 0.1 2.08 271.8 2.81 > 0.35 138.6 0.496 0.097 2.21 295.4 3 Inferred > 0.70 9.8 0.681 0.115 0.21 24.8 0.28 > 0.65 13.5 0.626 0.112 0.27 33.2 0.36 > 0.60 15.8 0.601 0.109 0.3 38.1 0.41 > 0.55 20.7 0.556 0.105 0.37 47.6 0.5 > 0.50 27.4 0.505 0.101 0.44 61.2 0.61 > 0.45 41.2 0.437 0.098 0.58 88.8 0.82 > 0.40 53.7 0.402 0.093 0.69 109.6 0.99 > 0.35 67.6 0.367 0.09 0.8 133.5 1.15 Measured 9.4 0.76 0.12 0.98 0.23 25 0.3 Indicated 105.8 0.57 0.11 0.76 1.92 245.1 2.58 Total M+I 115.2 0.58 0.11 0.78 2.15 270.1 2.87 Inferred 41.2 0.44 0.1 0.62 0.58 88.8 0.82

17.10.3 Ciresata Mineral Resource

Table 17‐6: Ciresata Mineral Resource Base Case at 0.70 g/t Au Cutoff

Resource AuEq Tonnage Au Cu Au Cu AuEq* Category Cutoff (g/t) (Mt) (g/t) (%) (Moz) (Mlb) (Moz) Inferred > 2.00 3.3 1.914 0.288 0.2 21.1 0.26 > 1.00 67.3 1.052 0.185 2.27 274.9 3.01 > 0.90 82 0.984 0.18 2.59 325.4 3.46 > 0.80 92.2 0.941 0.176 2.79 357.4 3.74 > 0.70 101.3 0.903 0.171 2.94 381.8 3.96 > 0.60 113.7 0.854 0.164 3.12 411.9 4.22 > 0.50 129.7 0.795 0.156 3.32 444.8 4.5 > 0.40 151.2 0.725 0.145 3.53 481.8 4.81 Inferred 101.3 0.9 0.17 1.22 2.94 382.0. 3.96

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17.11 Block Model Validation

The Rovina Valley grade models were validated by three methods:

1. visual comparison of colour‐coded block model grades with composite grades on section plots 2. comparison of the global mean block grades for ordinary kriging, inverse distance, nearest neighbour models, composite grades and raw assay grades 3. comparison using grade profiles or swath plots in the X, Y, and Z directions inspecting the results for local bias in the estimate.

17.11.1 Visual Comparisons

The visual comparisons of block model grades with composite grades show a reasonable correlation between the values. No significant discrepancies were apparent from the sections reviewed.

17.11.2 Global Comparisons

The grade statistics for the raw assay grade, composite grade, ordinary kriging, nearest neighbour, and inverse distance models are displayed in Figure 17‐1. Grade statistics for composite mean grade compared very well to raw assay grade indicating the uniformity of the grade distribution throughout the deposit. The block model mean grade when compared against the composites shows a fairly steep reduction in values for gold and copper primarily due to the wireframe extending at or beyond the limit of the drilling, which introduce a series of un‐interpolated blocks that are taken into consideration when comparing grade globally at a 0.0 cutoff.

Figure 17‐1: Global Comparison – All Lithologies at a 0.00 Cutoff

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Globally, the nearest neighbour, inverse distance and ordinary krige model all compare very well indicating that no global bias was introduce during the kriging process.

17.11.3 Local Comparisons – Swath Plots

PEG verified the models local trends in the grade estimates (grade slice or swath checks). This was done by plotting the mean values from the nearest‐neighbour estimate versus the inverse distance and ordinary kriged results. Swath plots were generated at selected intervals in the X, Y, and Z directions.

In general, the swath plots show good agreement with all three methodologies with no major local bias. At Colnic, the resource model appears to return higher grade in the northeast corner of the deposit than the composite data possibly indicating smearing of the high‐grade values. This trend more than likely results from the presence of the LD dike which would significantly lower the composite average in that region and the reduce data coverage in the newly discovered satellite area of the model. At Ciresata, the southeast corner shows the same behaviour which can be attributed to the low data density.

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18 OPEN PIT AND UNDERGROUND RESOURCES

The resources for the RVP were reported in a NI 43‐101 prepared by PEG dated 16 January 2009 and reproduced above in Section 17. These resources were defined as a global resource with tables indicating various metal cutoffs. The cutoffs used were estimated based on metals prices at that time as well as no assumption for metallurgical recovery or other PEA economic or technical criteria.

The geology resource models for each of the areas were developed in Gemcom and exported as ASCII files for importation into MineSight. MineSight was the software used for all open pit mine planning including design of the pits and economic shell development using the integrated Lerch‐Grossman routine. The model coordinates, block sizes, and grades were transferred directly. These mining models are used in the mining schedule development and resources mined reported here.

The cutoff value in use for each area varied by the mining method employed. The basis for the cutoff was a value per tonne calculation. The calculation was completed on each block to determine if the value per tonne was positive when all costs were considered. This value per tonne was stored in the block and used as the cutoff value in reporting tonnages and grades. This is a reasonable approach given that there are two payable metals with variable grades per block with both having substantial impact on the financial calculation.

Each block in each model (Rovina, Colnic, and Ciresata) had a calculation performed to determine its net value. To accomplish this, the following information was required:

 metal grades  metal prices  metal recoveries  smelting and refining terms  operating costs.

The metal grades were developed as part of the geologic modelling process. These vary by block in accordance with drill assay information, geologic interpretation, and geostatistical analysis. In the MineSight model, these were identical to the geologic model.

Metal prices were set for the Engineering design in discussion between Carpathian Gold and PEG during the course of the study. These prices differed from the ones used to report the NI 43‐101 Geology resource due to rising metal prices on world markets.

Initial metallurgical test work results were used in the PEA block economic calculation. Over the course of the study, these values were refined through test work at SGS Lakefield and included in the final financial cash flow; however the initial value per tonne calculations were not modified.

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Net metal prices were calculated for each metal for use in the value per tonne calculation. The net metal prices are the prices received for each metal less smelting, refining and transportation charges. In this manner, the offsite charges were incorporated into the calculation. Table 18‐1 shows the net metal prices, recoveries, and concentrate grades.

Table 18‐1: Value per Tonne Calculation – Metal Prices, Recoveries, and Concentrate Grades (Engineering Design)

Item Unit Rovina Colnic Ciresata Copper Price $/lb 1.75 1.75 2.00 Net Copper Price $/lb 1.29 1.25 1.41 Copper Recovery % 92.00 87.5 89.50 Copper Concentrate Grade Cu% 27 21 21 Gold Price $/oz 750 750 750 Net Gold Price $/oz 730.75 730.75 730.75 Gold Recovery % 79.50 74.00 58.30 Concentrate Haulage $/t conc. 40.13 40.13 40.13 Port Operation $/t conc. 16.00 16.00 16.00 Ocean Shipping $/t conc. 14.00 14.00 14.00

The smelting terms used in the value per tonne cutoff were initial terms (Table 18‐2).

Table 18‐2: Value per Tonne Calculation – Smelting and Refining Terms

Metal Unit Smelter/Refinery Charge Copper (smelter) US$/t conc. 95 Copper (refinery) US$/lb refining 0.095 Gold US$/oz 8.00

These parameters were used to determine the potential revenue in each block. To determine the net revenue per block, the operating cost estimates were applied. Table 18‐3 shows the operating costs used in the calculation.

Table 18‐3: Value per Tonne Calculation – Operating Costs

Operating Cost Unit Rovina Colnic Ciresata Open Pit Mining Cost Base Cost $/t 1.06 1.02 1.25 Incremental Waste $/t 0.04 0.06 ‐ Incremental Ore $/t 0.03 0.03 ‐ Milling Cost $/t ore 6.13 6.13 7.85 G&A Cost $/t ore 0.57 0.57 0.72

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Incremental waste and ore costs were per 10 m bench below a reference bench level. That elevation was 510 masl for Rovina and 370 masl for Colnic. The values for Ciresata were different as they were calculated much earlier in the study and were used for outlining material for the underground.

The value per tonne calculation for all areas was completed as follows:

(Block Revenue – Milling Cost – G&A Cost) Value per Tonne = Ore Tonnes Where:

Block Revenue = Ore tonnes x Grades x Recovery x Net Price for each metal Milling Cost = Ore tonnes x Milling Cost per tonne G&A Cost = Ore tonnes x G&A Cost per tonne

This calculation is sometimes referred to as the milling cutoff because the mining cost is not considered. The mining cutoff uses a similar calculation but includes the mining cost. The mining cutoff is used to determine the boundary of an economic pit shell and the milling cutoff has been used in this case for the determination of the resource contained within that same shell.

For the resources, the ore value per tonne cutoff was equal to or greater than a value of $0.01/t. If the calculated value per tonne had a value of $0.01, then the block was considered as ore. If the value was less than this, the block was considered as waste.

In the case of the underground mine at Ciresata, the same milling cutoff value applied. Initial development was in high‐grade portions, which tended to be in the centre and bottom of the deposit. Mining commenced in the areas with a value per tonne greater than $20, then worked outwards into the lower grade skins. As significant development was required to reach the higher‐grade zones, the lower‐grade zones were already accessed and due to the nature of the mining method would come out of the drawpoints in any case. As long as this material achieved mill cutoff, it was pulled and sent to the mill. In addition, zones of lower grade would be imbedded within the grade shell that could not be separated in the cave. This results in a higher tonnage and slightly lower grade than the grade shell tonnage and grade due to the geometry of the ore deposit and should be noted when comparing to the tables in Section 17.

The value per tonne calculations essentially refer to a cutoff value. This can be represented as either an equivalent copper or an equivalent gold cutoff. To allow comparison to the geologic resource cutoff tables in Section 17, the value per tonne calculations have been converted to their equivalents, in either copper or gold. These are shown in Table 18‐4.

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Table 18‐4: Equivalent Cutoff Values

Cutoff Type Units Rovina Colnic Ciresata Gold Equivalent g/t 0.36 0.38 0.63 Copper Equivalent % 0.26 0.28 0.31

The resources for the various areas were determined using a VLT>0.01 value and included in the mine schedule. These have been shown by area, mining method, and classification in Tables 18‐5, 18‐6, and 18‐7.

Table 18‐5: Open Pit Resources by Area

Ore Zone (t) Cu % Au g/t Measured Rovina 9,123,000 0.34 0.40 Colnic 8,737,000 0.12 0.77 Total Measured 17,860,000 0.23 0.58 Indicated Rovina 46,083,000 0.26 0.29 Colnic 54,567,000 0.10 0.65 Total Indicated 100,650,000 0.17 0.49 Total Measured + Indicated 118,510,000 0.18 0.50 Inferred Rovina 18,539,000 0.26 0.30 Colnic 4,010,000 0.08 0.65 Total Inferred 22,549,000 0.20 0.35

Table 18‐6: Underground Resources by Area

Ore Zone (t) Cu % Au g/t Inferred Ciresata 124,372,000 0.17 0.86 Total Inferred 124,372,000 0.17 0.86

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Table 18‐7: Resource Summary by Classification

Ore Zone (t) Cu % Au g/t Measured Open Pit 17,860,000 0.23 0.58 Underground ‐ ‐ ‐ Total Measured 17,860,000 0.23 0.58 Indicated Open Pit 100,650,000 0.17 0.49 Underground ‐ ‐ ‐ Total Indicated 100,650,000 0.17 0.49 Total Measured + Indicated 118,510,000 0.18 0.50 Inferred Open Pit 22,549,000 0.20 0.35 Underground 124,372,000 0.17 0.86 Total Inferred 146,921,000 0.17 0.78

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19 GEOTECHNICAL AND MINING

19.1 Geotechnical

PEG retained BGC on behalf of Carpathian to provide preliminary geotechnical evaluations to support the development of mining cost estimates for the Romania Gold/Copper Project. This report summarizes the preliminary engineering assessments for the Rovina, Colnic, and Ciresata properties (Dwg. 1 in Appendix B1. Geotechnical support was provided for preliminary designs of open pit and/or underground mining options.

19.1.1 Background and Scope of Work

At the request of PEG, BGC provided scoping level geotechnical assessments for potential open pits at the Rovina and Colnic properties. The Ciresata property was not considered a likely target for open pit mining, and has therefore only been considered in the context of underground mining (G. Zurowski, pers. comm.).

Based on that request, BGC provided a proposed scope of geotechnical work, dated 25 July 2008. The scope of work included a site visit, geologic and geotechnical mapping, core examination, and inspection of outcrops and surface exposures/workings in the project area.

19.1.2 Previous Work by Others

The majority of the work conducted to date has been focused on the geology and metallurgy of the properties (Dwg. 2 in Appendix B1). It is our understanding that there was not any geotechnical work performed in the project area prior to BGC’s involvement.

19.1.3 Data Sources

The preliminary engineering geology interpretations and geotechnical studies have been developed based on:

 site geology maps and sections provided by Carpathian (Rovina‐Apuseni property, Romania), included in a Technical Report on Resource Estimation on the Colnic and Rovina Deposits; NI 43‐101 Technical Report – AMEC, 2007  core recovery, RQD, lithology and alteration data collected by Carpathian  core photographs taken by Carpathian  a site visit by BGC, which included six days reviewing drill core and conducting discontinuity mapping of weathered outcrops exposed along drill roads for all three properties  point load testing of samples collected during the BGC site visit.

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The reliability of these data for geotechnical design varies; however, they are considered adequate for developing preliminary engineering geology interpretations to support scoping level geotechnical evaluations for preliminary economic assessments.

19.1.4 Current Study and Limitations

The current report summarizes information gathered up to March, 2009 and provides a basis for preliminary geotechnical studies to assist in determining mining costs for the three resource areas. Recommendations for improving the quality of available data and reliability of the engineering geology interpretations for mine design are also provided.

A comprehensive drill hole database compiled by Carpathian and PEG, and partially verified during field work completed by BGC, is the primary source of information. All of the data applicable to geotechnical design could not be verified during the site visit, particularly surface mapping information, and therefore is considered to be of moderate reliability until further fieldwork can be conducted. Where data gaps exist, the engineering geology of the area has been inferred from available data and references. When quantifying material properties of the rock, ranges of values have been estimated. Thus, BGC encourages future assessments by mine planning personnel to incorporate sensitivity analyses using the estimated ranges of key properties controlling the designs, i.e., rock mass strength and structural discontinuity orientations.

The engineering geology interpretations presented should be considered preliminary. Where appropriate, geological features are identified for verification and validation with additional fieldwork and interpretation. Data used to provide initial quantitative estimates of the rock mass properties have primarily been collected within the ore zone since the current geological drilling has concentrated on the mineralized horizon. These data may not accurately reflect the rock mass of final open pit walls or excavations extending outside of the area of the drill hole database. The geomechanical properties of the rocks outside the ore zone could control the final excavation geometry and have a significant impact on mining economics.

19.1.5 2008 Field Program

Dr. Gheorghe Bonci of BGC visited the site from 16 September to 21 September 2008. During that period, Dr. Bonci conducted the following tasks:

 rock mass characterization of outcrops  rock mass characterization of core from all three deposits (Appendix C)  collection and review of local and regional geologic maps  collection of appropriate core samples (saw cut) for transport to Vancouver for review and testing

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 review of rock and alteration types with Carpathian geologists.

In total, 650 m of core from the Rovina deposit area, 700 m of core from the Colnic deposit area, and 580 m of core from the Ciresata deposit area were examined. Two outcrops were mapped at each of the deposits for their geotechnical/geomechanical characteristics. The locations of the drill holes logged, and the surface outcrops mapped in the Rovina, Colnic and Ciresata deposit areas are given in Dwgs. 3, 4, and 5 (Appendix B1), respectively.

19.1.6 Engineering Geology

General Comments on Lithology and Alteration

For the purposes of this study, the main lithologies of the deposits have been grouped into intrusive and sedimentary rocks. It was initially assumed that rocks within these groupings would generally have the same geotechnical properties. However, preliminary investigations into the variation in RQD values by alteration type within the intrusive rock have indicated that alteration could play a role in the behaviour of the intrusive rocks (Appendix C). This warrants additional investigations in the next phase of work; however, it is beyond the current scope of work.

Hydrothermal alteration associated with gold‐copper porphyry deposits is common. Alteration facies observed at Rovina, Colnic, and Ciresata include argillic, phyllic, potassic, propylitic, and siliceous. Carpathian has provided a 3D alteration model to BGC. This model only addresses potassic alteration and is of limited use at this stage of design. Based on preliminary interpretations between geotechnical parameters and alteration types, it appears that phyllic and argillic alteration may have detrimental effects on the quality of the rock. Conversely, potassic, propylitc, and siliceous alteration appear to improve the average rock quality of the intrusive rocks. Further work should be conducted to confirm these relationships

The specific rock types located in each of the three deposit areas are summarized below. Pertinent characteristics (i.e., mineralogy, alteration, etc.) of the various lithologies, as they pertain to their geotechnical properties, are outlined in the following sections.

Rovina

It can be seen from Dwg. 6 in Appendix B1 that the majority of the rock types are anticipated to consist of various porphyries and intrusives. However, the geology of the outer limits of the potential pit area is not well defined due to the lack of drilling and the regional geology map indicates that sediments could be encountered in the north‐eastern, north‐western, and south‐eastern portions of the deposit (Dwg. 2, Appendix B1). As a result, caution is warranted in assigning angles to the pit walls until the rock types that might be encountered in the ultimate pit walls are better defined by drilling in these areas.

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Colnic

It can be seen from Dwg. 7 in Appendix B1 that sediments (SED) have been identified in the northeastern extent of the open pit area; however, the majority of the rock types are anticipated to consist of various porphyries and intrusives. The geology of the potential pit area appears to be reasonably well defined, and suggests that the majority of the rock that would be encountered by an open pit in this area would be intrusive rock. If the pit deepens and expands to the east, sedimentary rocks may also be encountered; however, the sedimentary rocks do not appear to be within the boundaries of the economic pit currently being evaluated.

Ciresata

It can be seen from Dwg. 8 in Appendix B1 that the early mineral porphyry (EMP) is surrounded by sediments. It is our understanding that the majority of the resource is included in the EMP. Development work may be required in the sedimentary rocks, depending on the type of underground mining proposed.

19.1.7 Geotechnical Assessments

Geotechnical Database

A geotechnical database has been compiled which includes data from work completed by Carpathian Gold, regional geology mapping, and work undertaken by BGC. This database has been used to estimate geomechanical design parameters for the proposed open pits and underground developments. Based on the available data, the rock mass models have been divided into geotechnical units for design purposes. At this preliminary stage of the Project, the geotechnical units have been grouped according to general lithological rock type, i.e., intrusive and sedimentary rocks. As indicated in the previous section, there are preliminary indications that alteration may play a role in the geotechnical characteristics of the intrusive rocks; however, further evaluations are required before this can be used to assist in open pit and underground designs.

Core Logging

The geotechnical database for Carpathian consists of 167 exploration core holes (Dwg. 2 in Appendix B1) from the three deposits, including 65 at Rovina, 87 at Colnic, and 15 at Ciresata. The geotechnical database includes rock quality designation (RQD) for 68,195 m of core, including 31,372 m, 29,133 m, and 7,690 m from Rovina, Colnic, and Ciresata, respectively. RQD data was collected by Carpathian personnelfor all of the drill holes. BGC logged additional geotechnical parameters on selected intervals of split (sawn) core during the site visit. A summary of geomechanical and geotechnical information collected from the drill core by BGC is included in Appendix C Cumulative frequency plots of RQD data are also

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included in Appendix C showing the distribution of RQD by rock type, with a further breakdown by alteration type.

Outcrop Mapping

Carpathian provided surface maps with outcrop locations within the three properties during the site visit. Although the maps indicated that numerous outcrops exist within the three areas, surface weathering and changes to road access limited BGC’s ability to conduct a comprehensive mapping program during the site visit. However, two outcrops were mapped for their geomechanical and structural geologic features in each of the resource areas during the site visit. Between 20 m and 40 m (length in plan) of outcrop were mapped in each of the three areas. The results of geotechnical mapping are included in Appendix C.

Rock Mass Model

Intact Rock Characterization

Properties of the intact rock for each of the main rock types have been estimated from field observations and point load testing. Intact rock strengths were estimated in the field using field index tests (ISRM, 1978) (Appendix C). UCS values for the various rock types in the resource areas have been estimated from field hardness, and are summarized in Table 19‐1, along with a summary of other pertinent rock mass rating parameters.

BGC did not have an opportunity to examine any core from the sedimentary unit in the Rovina area, but it has been assumed that these are similar to the sediments in Colnic based on the proximity of the two sites and a comparison of the supplementary RQD data included in Appendix C. It is evident from the field investigations that the sedimentary rocks in Ciresata are harder than the sedimentary rocks in Colnic. This also appears to be reflected in the RQD values calculated for the three areas (Appendix C), which indicate that the sediments in Ciresata are more competent than those in Rovina and Colnic. Based on RQD data, the sedimentary rocks in the Ciresata deposit also appear to be more competent than the intrusive rocks in that deposit. As a result, mean UCS values were calculated separately for the two areas to facilitate more accurate rock mass strength estimates.

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Table 19‐1: Summary of Rock Mass Rating Parameters from Core Logging

RQD Fracture Intercept (m) UCS Joint Condition Total Length Observed Location Lithology (m)+ Mean St. Dev. Mean St. Dev. Mean St. Dev. Mean St. Dev. RMR'76 Rovina and Colnic Intrusives 1,271.7 60.4 21.2 0.45 0.4 36.2 15.3 17 5 63 Sediments4 74.9 75.4 7.3 0.49 0.15 15.0 6.3 12 4 56 Ciresata Intrusives 213.5 57.9 19.8 0.84 0.41 23.8 8.5 19 3 63 Sediments 246.2 78.6 14.4 1.35 0.74 38.8 11.4 20 0 73 Notes: 1. Rock Mass Rating (RMR) has been estimated according to Bieniawski (1976). 2. See Dwg. 2 in Appendix B1 for location of the three properties. 3. For details on core logging intervals see Appendix C. 4. RQD values for Sediments in Rovina and Colnic areas are based on observations from a limited segment of one drill hole (RCD‐25) and appear to be unrepresentatively high of sediments typical for these areas.

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Point load testing was completed on samples of split (saw‐cut) core collected by BGC (Appendix C). A total of 22 tests were performed. There were insufficient tests to break down the point load testing by resource area, as was done for the field hardness tests.

However, a mean normalized point load index value (Is50) has been estimated for each rock type, as follows:

Intrusives ...... Mean Is50 = 7.9 MPa

Sediments ...... Mean Is50 = 6.7 MPa

The point‐load strength‐test provides an index number that is useful for evaluating the relative strength of rocks. The results of the test may also be used to predict other strength parameters (e.g., uniaxial compressive strength, uniaxial tensile strength), once correlations have been established.

Based on empirical data, point load index values can be converted to UCS using a multiplier (k) of between 15 and 25. Assuming k = 15, the estimated unconfined compressive strengths are 120 MPa and 100 MPa for the intrusive and the sedimentary rocks, respectively. It can be seen that the UCS estimates from point load testing are significantly higher than the UCS values estimated from the field hardness (Table 19‐1), suggesting that the assumed range of values for k is either too high, or that the samples selected for point load testing are not representative of the rock core logged. To assess this, the value of k needs to be determined by carrying out additional point load testing, conducting UCS testing on core samples located close to the point‐load test‐samples, and establishing a relationship between field hardness estimates, point load testing and unconfined compressive strength. This should be considered during the next phase of work. It is also noteworthy that intact core is required to conduct UCS tests, and therefore the current practice of sawing the core may have to be postponed for selected intervals, to conduct a proper geotechnical‐testing program..

Until an appropriate multiplier can be determined to convert point load index to UCS, the field hardness grades (ISRM, 1978) (Appendix C) have been used as the primary means to estimate the intact rock strength. However, to incorporate the significantly higher UCS values predicted from the point load testing, the field harndesses have been upgraded by a half grade (e.g., R2 has been upgraded to R 2.5). Table 19‐2 shows a summary of the resultant design unconfined compressive strengths for the geotechnical units.

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Table 19‐2: Summary of Hoek Brown Strength Parameters Used for Design

UCS3 (MPa) c φ Location Lithology1 GSI2 Field Design mb s a (MPa) (o) Rovina and Colnic Sediments 56 15 25 0.518 0.0007 0.504 0.332 26 Intrusive 63 34 50 1.423 0.0021 0.502 1.064 50.5 Ciresata Sediments 73 39 50 1.744 0.0111 0.501 1.793 49.5 Intrusive 63 24 38 1.423 0.0021 0.502 0.666 42.2 Notes: 1. Lithology based on interpretations provided by Carpathian. 2. GSI estimated from Rock Mass Rating (Bieniawski, 1976). 3. Unconfined Compressive Strength (UCS) estimated from field index testing ws upgraded to incorporate results of point load testing. 4. Rock mass cohesion (c) and friction angle (φ) estimated for stress range up to 2.0 MPa.

Rock Mass Strength

To determine design properties for each geotechnical unit, the intact rock characteristics for each lithology are scaled according to the density of the discontinuities and the character of the rock mass fabric. The scaling is accomplished using the geological strength index (GSI) determined from outcrop mapping (Marinos, et. al., 2005), or a rock mass rating (RMR) determined from geotechnical core logging (Bieniawski, 1976). The design shear strength and deformation modulus of each geotechnical unit have been estimated according to well‐ established empirical methods (Hoek et al., 2002), which utilizes:

 GSI  UCS of the intact rock

 Material constant (mi) of the intact rock (estimated from published values)  Estimate of disturbance (“D”) of the rock mass due to excavation.

UCS values for the lithologic units have been previously discussed and have been estimated.

The Hoek‐Brown material constant (mi) reflects the indurations, grain or crystal interlocking,

and mineralogy of the intact rock sample. Values of mi for each rock type have been assumed based on published values (Hoek, 2007), and engineering judgement, as follows:

 mi for the intrusive rocks = 20

 mi for the sedimentary rocks = 12.

The disturbance factor (D) has been applied to the rock mass to represent the effects of mining. Blast damage, stress relief, and mining induced relaxation will affect the structural fabric of the geotechnical units, causing dilation of geologic structures and occasionally inducing additional fracturing of the rock mass. D has been assumed to be 1.0, equivalent to the disturbance resulting from traditional drill and blast methods, for both the intrusive and sedimentary rock types.

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Using all these factors and the results of the statistical evaluations of the geomechanical parameters (Appendix C), rock mass strength envelopes were developed for the intrusive and sedimentary rocks. The rock mass strength curves (Dwg. 9 in Appendix B1) have been broken into two groups to differentiate between the variations in the strengths between the Rovina/Colnic and Ciresata areas.

Structural Geologic Model

A relatively limited amount of structural data has been collected from outcrop mapping conducted by BGC and regional geologic mapping. This data has been plotted on equal angle, lower hemisphere stereonets for each of the deposits (Dwg. 2 in Appendix B1) using the commercially available software DIPS (RocScience, 2008). The structural discontinuity data has been sorted by rock type.

It can be seen from the stereonets that the quantity of structural data is limited, particularly in the intrusive rocks. Structural data from the sediments is more abundant and assumed to be more reliable and predictable due to regional mapping efforts undertaken in the area. The structural mapping carried out by Carpathian Gold Inc., presented on Dwgs. 3, 4, and 5 (Appendix B1), generally confirms the structural trends indicated on the regional maps. It should be pointed out; however, that no sub‐surface structural data has been collected and therefore the orientation of the discontinuity fabric sets has been assumed to be consistent with depth for these geotechnical design studies.

Based on the structural geologic information available (Appendix C), the following can be stated:

 Bedding orientation measurements (Dwg. B1 in Appendix C) in the sediments in the Rovina deposit area dip primarily towards the southwest (247°) at an average angle of about 43°. The bedding discontinuities would likely be the primary structural control on interramp slopes in the upper northeast wall of the Rovina pit, should the ultimate pit walls intersect the sediments.  Bedding orientation measurements (Dwg. B3 in Appendix C) in the sediments in the Colnic deposit area show strong evidence of folding, with the bedding fold axis trending to the northwest (290° to 330°). Bedding dip angles ranging from 36° to 63° to the northeast, and from 48° to 74° to the southwest . Another common bedding orientation is a northeast strike, with dips ranging from 25° to 58° towards the northwest. Site geologists (R. Ruff, pers. comm.) have confirmed this variability. The variable bedding orientations could have an impact on bench face angles for several of the pit walls of Colnic, should the sediments be intersected by the open pit in this area.  Structural discontinuity orientations in the intrusive rocks for all deposits are poorly defined and show a wide range of possible orientations for the joint sets mapped in all areas. Due to the limited data in these rocks, kinematic control on the bench scale or interramp slope scale cannot be commented on at this point in time.

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19.1.8 General Comments on Rock Mass Quality and Strength

Based on the core logging information available to date and a review of the engineering geology of the three deposits, it is possible to make the following general comments to assist in mine design:

 Sedimentary rocks in the Rovina and Colnic areas are of similar quality and therefore can be grouped together for geotechnical design purposes.  Intrusive rocks in the Rovina and Colnic areas are of similar quality and therefore can be grouped together for geotechnical design purposes.  Sedimentary rocks in the Rovina and Colnic deposit areas are generally of significantly poorer quality than the intrusive rocks in those areas and therefore different design parameters should be applied to the two units.  Structural discontinuity orientations are better defined in the sediments than in the intrusive rocks in the vicinity of the Rovina and Colnic Deposits.  The intrusive rocks in the Rovina and Colnic areas appear to be of slightly higher quality than the intrusive rocks in Ciresata.  Sedimentary rocks in the Ciresata deposit are of slightly better quality than the intrusive rocks in that area.  Based on structural geologic information obtained from the regional geology map (Dwg. 2a in Appendix B), pit walls which intersect the sediments are likely to be subject to structural control due to the strong presence of bedding/foliation in the sediments.  Alteration types may also play a role in the strength of the rocks, with argillic and phyllic alterations generally resulting in a lower quality rock mass than rocks with potassic, propyllitic and phyllic alterations (Appendix C). The relationship between alteration type and rock quality indicates that it may be worthwhile to evaluate further the role of alteration in pit slope design angles.

19.1.9 Preliminary Open Pit Design Criteria – Rovina and Colnic Deposits

General

There are two main controls on achievable open pit slope design angles. The first control is the potential for structural instabilities, whereby discontinuities in the rock mass (joints, bedding planes, faults, etc.) intersect the excavation such that it becomes “kinematically possible” for failure to occur (i.e., the discontinuity daylights into the slope). Achievable slope angles are therefore, limited by the orientations and the shear strengths of the discontinuities. Structurally controlled slope failures can occur at any scale, i.e., at the bench, interramp, and the overall slope scales.

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The second control on achievable pit slope angles is the strength of the rock mass. This is dictated by the amount of fracturing within the rock mass, the characteristics of the discontinuities, and the intact rock strength. Rock mass stability generally includes large‐ scale, deep‐seated failures and slope‐scale failures through weak geological units.

Structurally Controlled Instability

The structural geologic model in the Rovina and Colnic deposit areas is still being developed, and relatively limited information on the structural geologic discontinuities in these areas is available, particularly in the intrusive rocks. As a result, only a cursory evaluation of the potential for structural controls to dictate pit wall stability could be undertaken.

As discussed in Section 19.1.7, structural controls at the interramp scale will likely exist in the Rovina area for southwest facing slopes excavated in the sedimentary host rocks. In order to avoid undercutting bedding in the sediments, it is recommended that interramp slope angles in the Rovina pit be limited to 40° in the northeast wall (approximate dip azimuth 220° and 270°) (Dwg. 10 in Appendix B) in the sediments, if they are encountered in the open pit. Depending on the strength of the bedding, bench scale failures may still occur for these pit wall orientations, and occasional wide berms may need to be left in place to contain the failures; however, until additional information on the continuity and spacing of is available bench designs cannot be finalized. At this stage of design; however, interramp slope heights should be limited to about 400 m in the sediments due to the potential for rock mass instability. If higher interramp slopes are required, angles flatter than 40° may be required. This is discussed further in the following section on rock mass stability.

For the Colnic pit, structural controls due to bedding orientations could limit interramp slope angles in the sediments to 33° for the south‐southwest wall (approximate dip azimuth 355° to 045°), as shown in Dwg. 10 in Appendix B1. The northeast wall (approximate dip azimuth 215° to 265°) could also be limited to 45° interramp angles by the geologic structure (Dwg. 10 in Appendix B1); however, at this preliminary stage of design, this angle should only be applied to slope heights less than 300 m. If interramp slope heights greater than 300 m are being considered, interramp slope angles shallower than 45° may be required in the sediments due to the potential for rock mass failure. This is discussed further in the following section on rock mass stability.

In Colnic, the variability of the bedding orientations needs to be further evaluated to determine if this has an overall positive or negative effect on the achievable interramp and overall slope angles, should a proposed pit intersect the sedimentary rocks.

Rock Mass Stability

To assist with pit slope designs for walls that do not appear to have any structural controls, generic stability analyses were carried out for slope heights ranging from 300 m to 500 m, and for overall pit wall angles ranging from 30° to 60°. The rock mass strength parameters

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assigned to the two primary geological units (sedimentary and intrusive rocks) are summarized in Table 19‐2 and discussed in Section 19.1.7. The rocks comprising the pit walls were assumed to be either homogeneous sedimentary or intrusive rocks (i.e., the site specific geology was not incorporated in the cross‐sections) to simplify the stability analyses. The results of the generic stability analyses can be used to provide broad guidance to mine planners on achievable overall slope angles within the two primary rock types.

Hydrogeologic conditions for the Rovina and Colnic Deposits are unknown, as there does not appear to be any piezometric data collected for these areas. It is reasonable, however, to assume at a preliminary economic assessment stage that the slopes may not be totally dewatered. Therefore, the generic rock mass stability analyses have been conducted assuming a Ru pore pressure coefficient equivalent to partially (50%) saturated conditions.

The factor of safety (FOS) was calculated for various slope heights and angles using the limit‐ equilibrium method of slices in SLIDE (RocScience, 2008). Slope height/slope angle combinations resulting in a FOS between 1.2 and 1.3 have been plotted to show the acceptable slope angle for a given slope height in the sediments and Intrusives under both dry and partially saturated conditions (Dwg. 10 in Appendix B1).

Based on rock mass strength estimates for the Intrusives, relatively steep (49° to 58°) overall pit wall angles may be feasible, even under “partially saturated” conditions for pit wall heights between 300 m and 500 m (Dwg. 10 in Appendix B1). These design parameters can be applied to the intrusive rocks in both in the Rovina and Colnic deposit areas. Note that these achievable overall slope angles assume that there is no structural control on the potential failures and therefore are strongly qualified. The absence of unfavourably oriented geologic structure in the intrusive rocks must be confirmed by additional structural geologic investigations in order to gain greater confidence in these recommended wall angles.

Based on rock mass strength in the sedimentary rocks, and assuming “dry” conditions, pit wall angles ranging from 35° to 45° can be achieved for the range of slope heights evaluated (300 m to 500 m). Partially saturated conditions were also modelled; however, considerably shallower pit wall angles were indicated. Therefore, to achieve reasonable slope angles in the sediments, a high degree of depressurization will likely be required and groundwater pressures in the sediments will need to be more accurately quantified before greater confidence can be gained in the design angles for these materials.

Underground Stability and Caveability

Several areas within the Rovina, Colnic, and Ciresata Deposits were selected for rock mass classification. The areas chosen were mainly selected based on access and outcrop quality, and as such, the results have to be used with caution. Each area was classified according to the RMR system developed by Bieniawski (1976). Estimates of RMR were converted to the Tunnelling Quality Index (Q) developed by Barton, et al., 1974, according to the following formula:

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RMR = 9 ln Q’+44 [1]

Table 19‐1 shows a summary of the results of rock mass classifications. As noted previously, the results from Rovina and Colnic have been grouped together and the results of the Ciresata area have been kept separate, to reflect different rock mass characteristics for the intrusive and sedimentary rocks for these areas.

The results of rock mass classification carried out in the Ciresata deposit area were used to calculate a stability number (N’) for potential underground developments, as proposed by Potvin (1988). Different hydraulic radii of the proposed developments have been considered for both the walls and backs of the proposed openings. Potential unsupported opening dimensions, based on the rock mass classification results for the sedimentary and intrusive rocks of the Ciresata deposit are presented in Dwg. 11 in Appendix B1. Note that even though the rock mass quality is good, and indications are that maximum unsupported spans of greater than 6 m to 7 m are possible, local ground support consisting of resin rebar anchors, split set friction stabilizers, or other means of support will likely be required. The actual support requirements will be site specific and can only be determined once the ground has been exposed. Experience in similar rocks in the area in exploration or bulk sample adits may be directly applicable to proposed development work at Ciresata.

The graph shown in Dwg. 11 in Appendix B1 can be used in preliminary underground mine planning to determine if ground support will be required for development work, or alternatively to design access that will require little to no support. This graph is useful to determine where to locate development access, as this is usually the portion of the underground workings that requires the most stability, and generally is required to have the longest service life.

Subsequent to undertaking the fieldwork, during a teleconference on 7 October 2008 with Messrs. G. Zurowski of PEG and Mr. Martin Drennan of the Python Group, it was requested that BGC provide guidance on whether or not bulk‐caving methods are feasible for the Ciresata deposit. Preliminary evaluations were conducted and are outlined below.

Based on the rock mass rating results presented in Table 19‐1, the Mining Rock Mass Rating (MRMR) proposed by Laubscher (1990) was estimated for the two primary rock types. This was done by applying adjustment factors to the RMR values for the two rock types. Adjustments were made for weathering (fresh), joint orientation (using stereonet data) and blasting (assumed good, conventional blasting) to determine the adjustment factor. The total adjustment factor was MRMR = 0.658 x RMR for both units. The resulting MRMR values are as follows:

Intrusives – MRMR = 42 Sediments – MRMR = 48

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Adjustments were not made for mining induced stresses, as no information was available on the stress regime for this area. Based on the relatively shallow depths, in situ stress is not considered a factor in the design.

Based on these ratings, the rock mass in the Intrusives has a cavability of “fair.” The rock mass in the sediments also indicates fair cavability, although the quality of the sediments is clearly higher than the Intrusives. These results indicate that sub‐level caving or block caving may be feasible in the Ciresata deposit (Appendix C).

19.1.10 Summary and Conclusions

The preliminary engineering geology of the Rovina, Colnic, and Ciresata Deposits has been summarized to provide a basis for scoping level mine planning and preliminary economic assessments. BGC has developed a basic description of the expected geotechnical units of the resource area from available maps, geologic descriptions by Carpathian, core hole data, and field review. The two preliminary geotechnical units for mine design are the Sediments and Intrusives. The rock mass rating and strengths determined for the sediments of the Rovina and Colnic Deposits are very similar. The ratings and strengths are also similar for the intrusive rocks in these two areas. The intrusive rocks and the sedimentary rocks from the Ciresata deposit; however, are notably different from those at the other deposits and have been evaluated separately.

Relatively limited data is available regarding the rock mass strength and the geologic structure in the Rovina, Colnic, and Ciresata Deposits. The main limitations to the data were as follows:

 core available for inspection has already been cut in half; in order to conduct accurate geotechnical investigations the core should be left intact or additional holes should be drilled specifically for geotechnical purposes  in general, the geomechanical properties of the sedimentary rocks in the Rovina and Colnic Deposits are not well defined, as relatively few drill holes have encountered the sediments in these areas  limited geomechanical core logging data was available for the three areas, and only a small amount of surface mapping information could be collected due to the poor quality of the outcrops and restricted access to the outcrops  structural geologic information was sparse for the three resource areas.

In spite of these limitations, sufficient data has been compiled regarding geotechnical strengths of the primary rock types (i.e., sedimentary and igneous rocks) to provide a range of potential pit wall angles for a preliminary economic assessment.

In order to develop the slope design angles presented in this report, numerous assumptions had to be made about the potential primary controls on slope stability, the geology, the

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strength of the rock mass, the groundwater pressures and the potential failure mechanism as follows:

 interramp slope angles could be affected by structurally controlled failures, particularly in the sedimentary rocks  anistropy of the rock mass was not considered in the generic (i.e., rock mass) stability analyses conducted  groundwater pressures were assumed to be a function of the lithostatic stress.

Design Criteria Conclusions

Structural controls at the interramp scale will likely exist in the Rovina area for southwest dipping slopes in the sedimentary host rocks (Table 19‐3). In order to avoid undercutting bedding in the sediments, it is recommended that interramp slope angles be limited to 40° in the northeast walls of potential open pits developed in the sedimentary rocks. Overall slope heights greater than about 400 m may be limited by rock mass strengths, and therefore may require wall angles flatter than 40°. Aggressive depressurization of the sedimentary rocks will be required, should pore pressures exist in these rocks.

For the Colnic Area, structural controls due to bedding orientations and the potential presence of northeast dipping faults in the sediments could limit interramp slope angles to 33° for the south‐southwest wall. Interramp slope angles for the northeast wall should be limited to 45° for slope heights less than 300 m. If slope heights of greater than 300 m are being considered in the sediments, slope angles flatter than 45° may be required due to the potential for rock mass failure in these materials.

Table 19‐3: Summary of Pit Wall Design Angles

Pit Slope Controlling Angle Geotechnical Unit Interramp Overall Comments Intrusives ‐ 49‐58 For Wall heights 300 ‐ 500 m based on rock mass failure, assuming no structural control Sediments – Colnic SW 33 ‐ Based on bedding and fault measurements in the flysch rocks from regional mapping Sediments – Colnic NE 45 ‐ Based on a cluster of discontinuities collected from regional mapping and BGC’s fieldwork. Angle applies up to a height of 300 m. See Dwg. 10 for limiting angles at heights greater than 300 m. Sediments – Rovina NE 40 Based on bedding measurements in the flysch rocks from regional mapping. Angle applies up to a height of about 400 m. See Dwg. 10 for limiting angles at heights greater than 400 m Notes: 1. See Section 19.19 for a discussion of the analysis method used to estimate rock mass stability. 2. Interramp slope angle recommendations are based on the limited structural database complied be BGC and need to be confirmed.

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Based on rock mass strength estimates, relatively steep (49° to 58°) overall pit wall angles appear to be feasible in the intrusive rocks under “partially saturated” conditions for pit wall heights between 300 m and 500 m (Dwg. 10 in Appendix B1). These design slope angles can be applied to the Rovina and Colnic deposit areas. However, the potentially achievable overall slope angles assume that there is no structural control on the potential failures.

For planning of underground developments at Ciresata, the caveability of the rocks is designated as “Fair” under Laubscher’s MRMR classification. This indicates that block or sub‐ level cave mining methods may be feasible. However, a substantial amount of additional geotechnical information is required to confirm the feasibility of these mining methods.

19.2 Underground Mining

Based on the current diamond drill data at Ciresata a good understanding of the deposit has been defined above the ‐200 elevation. Below this area, future drilling will provide a better understanding of the ore body.

The mining method considered in the present PEA of the Ciresata Project is a vertical crater retreat (VCR) method in the upper mine and an “induced” block cave approach in the lower mine. The “induced” block cave method is not a standard approach to block cave; however, this approach has been taken as it is a similar design strategy as the open VCR concept. No backfill will be used in this approach.

For the next stage, in order to improve the economics for the underground aspects, the following trade‐off studies should be taken into consideration:

 detailed sublevel caving method versus an induced block cave versus a standard block cave stoping arrangement  detailed top down mining versus bottom up only versus a combination approach (as per this study)  other potential low cost bulk mining methods limited in bottom infrastructure, (e.g., Goldex massive bulk shrinkage).

These studies frequently improve the economics for any given property and define the approach to a feasibility stage.

19.2.1 Ciresata Crown Pillar

An estimated crown pillar thickness of 70 m vertical distance from the overburden surface is considered. The overburden surface was assumed to be 10 m below the topography surface resulting in a 40 m total vertical crown pillar thickness.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

There are no known resources in the crown pillar. However, due to block cave mining a breach of the crown pillar is anticipated. As such, remedial steps are required to mediate long‐term implications.

19.2.2 Geology Resource

The existing PEG geology resource model for Ciresata was used as the basis for underground design work. The geology model was converted to a MineSight mining model. From this, economic calculations were completed on the blocks to assign a value per tonne. Gradeshells of various values per tonne ranges were generated and used for detailed design of the underground workings.

The resource tonnage mined was 124.4 Mt grading 0.17% Cu and 0.86 g/t Au. Recovery at Ciresata was considered to be 100% of all mined tonnes. Dilution was considered internal only as reported from queries of the outlined mined ore shapes against the block model due to the massive nature of the deposit. This level of recovery and dilution was considered as being achievable and in accordance with the mining strategies employed and the level of study undertaken.

19.2.3 Underground

According to NI 43‐101 standards and guidelines, Inferred Mineral Resources are considered too speculative geologically to have the economic parameters applied to them and there is no certainty that the actual Preliminary Assessment will be realized. Ciresata Inferred Resources were included in the cost calculations and underground mining production schedule.

Underground mining methods will be employed for the Ciresata orebody in its entirety. A two phased approach will be used with the upper portion of the orebody accessed from a portal and the lower portion accessed from a portal and conveyor ramp arrangement. The Ciresata deposit does not outcrop on surface. Based on an initial evaluation of open pit potential it was decided to proceed with mining of Ciresata on an underground only approach. To assist in rapid release of higher‐grade material it was decided to split the orebody into an upper early extraction area and a lower mass extraction area. The current mine plan set the upper early extraction area at elevation +115 (115 level) or 275 m below the portal collar at surface. As shown in Figures 19‐1 and 19‐2, this early mining will be referred to as Phase I and will cover the region between the portal and the 115 level.

The region between Levels +115 and ‐200 will be mined in the lower phase, which involves 6.0 km conveyor ramp as the primary access. Activities in the upper phase will continue to completion and Phase II will “cave” into the open Phase I area. Figure 19‐3 shows the overall sectional layout.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Figure 19‐1: Ciresata Underground Mining Grade Shell View

Figure 19‐2: Ciresata Phase View

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Figure 19‐3 Ciresata Underground Sectional View

The Zoom area of Figure 19‐3 is the area highlighted in Figure 19‐2.

BGC Engineering Inc. has completed a geotechnical review of Ciresata deposit in this report. The ground conditions for sublevel cave are rated good and block cave is rated as fair. As such, an “induced” block cave approach was taken to ensure a cave would be effective.

Ciresata Phase I Mining

Mobile trackless equipment will be used to access and mine Ciresata Phase I. The massive characteristic of the orebody allows the use of an open stoping bulk mining method. The selected method for Phase I is to initially use a VCR style method but without backfill.

Access

A ramp from surface will be driven from a north portal location in the footwall and will be sized for main access, haulage, and ventilation airway.

A ventilation raise will be driven to surface about a kilometre from the portal. This will be initially an exhaust raise and later converted to a fresh air raise when tied in with Phase II. This raise will provide a multi‐function of being a service raise, a second egress, and a ventilation airway.

Development

The development program will use a panel configuration with development of a central high‐ grade (value per tonne > $20) area initially. Development will continue around the perimeter of the high grade while stoping is ongoing. Development of the +115 and +215 will be concurrent.

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The ramp will be driven to the bottom level, +115 m level, with safety stations cut at 30 m intervals.

When the ramp reaches Level +215, a crew will be added to develop this level, which will become the first drilling level at the production mode for Phase I. As a typical level, lateral development includes a footwall/perimeter drift and a series of stope crosscuts to go through the orebody. These crosscuts will be used as drill drifts. Drill drifts are on 25 m centres and are aligned in the north and east directions to minimize fan drilling.

The ramp will continue to Level +115. Lateral development similar to Level +215 will be completed. The crosscuts on this level will be used as draw drifts during Phase I production stage.

Mining Method

The mining method is initially a VCR without backfill and then left inactive once the maximum minable dimensions have been reached. After this point, Phase II mining will be used to recover remaining ore in the upper portion of the mine. The mining method used in this study is an open stope concept. Holes will be drilled down from Level 215 to Level 115 for a vertical length of 95 m using 165 mm diameter holes. Holes will be drilled downward from Level +115 as a “helper” arrangement to ensure caving from Phase II extends to Phase I. The holes will be in areas accessible on Level +115 upon the completion of VCR mining.

Upholes drilled on Level 115 will be limited to 114 mm diameter due to explosive loading limitations. Drill hole limitations range from 30 m to 50 m for explosives loading and are generally related to rock quality as to blockages during either drilling or loading. In a more advanced study, additional detail will be required to correlate the geomechanical and mining requirements on all production drilling.

A vertical VCR drop slot raise will be created in a central area of Phase I with a dead end portion above Level +115 and immediately below this between Levels +115 and +215. For the portion below Level +115 the slot raise should be blasted in approximately five blasts to ensure void is available for broken material. The portion above Level +115 can likely be blasted with an inverse drop raise. More likely, a mechanical system such as an Alimak raise will be required for a 50 m raise. Slot raises should have additional holes drilled as a precaution regarding loss of holes while staged/decked blasting.

No pillars are anticipated at this time with this approach. Temporary pillars may be needed to maintain access; however, upon mining advance, these pillars would be extracted either by blasting or by caving.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Figure 19‐4: Ciresata Phase I – 215 Level Plan

Ciresata Phase II Mining

Mobile trackless equipment will be used to access and mine Ciresata Phase II. The massive characteristic of the orebody allows the use of an open stoping bulk mining method. The selected method for Phase II is to initially use a VCR style method but again without backfill.

Access

A conveyor gallery will be developed from the Baroc valley to the base of the Ciresata deposit. This gallery will have two portals in its development. The first will be located approximately mid‐way along the length of the conveyor drift, and just to the north of the town of Bucureşci. A ramp down to the conveyor alignment will be completed and then the conveyor gallery advanced towards the bottom of the Ciresata deposit. The second portal will be the exit in the Baroc valley by the primary crusher. This will be driven along the conveyor gallery alignment until it meets with the initial development that had started in the middle. The first ramp and portal will act as a secondary access and ventilation way when the gallery is completed.

Ventilation raises will be driven to surface in a leapfrog manner as the ramp reaches a level. This raise will provide a multi‐function of being a service raise, a second egress, and ventilation airway.

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The conveyor gallery ramp is 6.0 km long and will be equipped with a conveyor upon completion; the crushed ore will be transported directly to the mill. Figure 19‐5 shows the gallery alignment.

Figure 19‐5: Cross Section of UG Conveyor Gallery

Development

The development program will address a conventional block cave stoping sequence. Four levels are required at the bottom of the mine:

1. Undercut Level 2. Extraction Level 3. Ventilation Level 4. Material handling Level.

Undercut Level

The undercut is located 20 m floor to floor above the extraction level. The undercut level is located at Level ‐200. There is a perimeter drift with crosscuts spaced at 25 m centres.

A pair of north‐south oriented drill drifts is located above each series of draw bells, providing good access for undercutting over the draw bells and the major apex.

Drilling over the major apex can be inclined to increase pillar size without affecting development requirements. Undercut drill drifts are 5 m high x 5 m wide.

Quantity take‐offs include a crossover drift above each minor apex; provide a void for undercut muck to swell into.

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Figure 19‐6: Ciresata – Phase II – Undercut Level

Extraction Level

The extraction level design is based on a typical draw point pattern without economic analysis or consideration using computer software analysis. For future studies, PC‐BC is recommended as analysis tool for establishing the proper draw point pattern model.

The Ciresata extraction level is at ‐220 El. The resulting grid of draw points is orthogonal, so alternating pairs of draw point columns are shifted 5 m to the north to support preparation of an offset herringbone layout.

Panel drifts are extended sufficient distance beyond the last economic draw point to allow for construction of a minimum of two additional draw points (or an orepass, waste pass, miscellaneous cutouts, etc.). This is done to avoid sterilizing resources or having to mine through peripheral openings in the event future footprint expansion is warranted.

Panel drift ends are joined in a manner that regularizes the perimeter drift somewhat, but avoids generating directional changes at every panel. Some panel drift lengths are increased to connect to the perimeter drift. The intent is to find a balance between an efficient perimeter travel way and minimize panel drift development.

Extraction level drifts are designed at 5 m high x 5 m wide in this study. This drift size should be scrutinized in future studies to make a more balanced size with more consideration for equipment and ventilation.

Perimeter drifts are assumed to be 5 m high x 5 m wide, providing additional travel way width and ventilation capacity.

Orepass locations are estimated by the effective distance over which a LHD can effectively muck in a given period.

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Figure 19‐7: Ciresata – Phase II – Extraction Level

Ventilation Level

The ventilation level is located 20 m below the extraction level (sill to sill). The ventilation level is at Level ‐240.

The ventilation level consists of two key components: an intake system and an exhaust system. The intake system provides fresh air to a series of raises that connect to the extraction and material handling level peripheries. The exhaust system draws air from a centrally located manifold into drifts leading back to surface.

Total airflow requirements are estimated at approximately 860 m3/s based on projected equipment. Preliminary calculations indicate this air can be delivered and removed with a three intake and three exhaust drifts each 5 m high x 5 m wide.

Figure 19‐8: Ciresata – Phase II – Ventilation Level

Material Handling Level

The material handling level is located 40 m below the extraction level at ‐260 El.

Centrally located orepasses are protected by grizzlies and pedestal‐mounted rock Breakers. Rock breakers are sized to allow for transport on heavy‐duty belt conveyors.

Orepasses are 3.5 m in diameter. A total estimate of 46 orepasses results in an average throughput of approximately 2.5 Mt per orepass.

Apron feeders transfer muck from orepasses to gathering conveyors, which typically run east‐west or perpendicular to the panel orientation. There are two gathering conveyors feeding the underground crusher. After crushing, an apron feeder discharges onto a series of conveyors that feed to the mill.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Figure 19‐9: Ciresata – Phase II – Material Handling Level

Mining Method

The mining method is a modified approach to block cave stoping. The method used in this study is an open stope concept, which has no known application. The system would use large diameter holes in the range of 165 mm.

The addition of a mid‐blasting ‐35 level is to ensure material for the draw bells. Generally, block cave has only an induced level called an undercut level at its bottom level and the cave extends upward. The concept of breaching open spans and the rock naturally failing to an unsupportable arch creates broken material. Due to the geotechnical rating of “fair” for block cave at Ciresata, a limited confidence in a conventional block cave was adopted. To overcome this confidence issue, an “induced” concept that mated a VCR style bulk mining method without backfill, which minimized mining costs while ensuring broken material by either blasting or cave at draw bells.

Holes will be drilled from numerous locations to ensure caving specifically from the undercut level (sill at ‐200) to 50 m above the back of this drift. Down holes and upholes will be drilled from Level ‐35. These holes will be sequenced to ensure blasted material feeds down to the drawbells. The upholes from Level ‐35 will be used to bring the total drill distance from Level 115 to 95 m downholes.

Figure 19‐10: Ciresata Underground Mining – Isometric of Phase I Year ‐3 through Year 1

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Development and Production Rate

Development will be initiated in Year ‐3 for lead up development specifically for the 6.0 km conveyor system to be excavated and installed. Work in the Phase I area will provide initial development and ore production; see “VCR Stope” in Table 19‐4 for details. Phase I was completed in Year 1 and has provided some initial high‐grade ore to offset capital costs early in the Project life.

The subsequent development and primary production will be from the Phase II area of the mine, “Induced Block Cave” in Table 19‐4 for details. Phase II is near full production by Year 2 with annual production from the induced block cave area at nearly 8 Mt/a.

The initial production year (Year 1) provides approximately 4,400,000 tonnes of ore excluding the pre‐production development ore. An average production rate of 3,500 t/d is realized with all Ciresata ore on surface during Year1. This rate will be sustained for approximately 12 months. The rate will be increased to 22,000 t/d once Phase II development and production drilling/blasting has advanced beyond pre‐production in Year 2. The production rate reaches its target of 23,000 t/d and is maintained at this level to project completion in Year 16.

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Table 19‐4: Underground Production Schedule

Total Total Total Total Total Total Total Total Total Total Total Total Total Total Total Total Total Total Total Period Year ‐3 Year ‐2 Year ‐1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16

Summary Units Op Days 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 Capital Development Primary Waste Development ‐ m advance 3,958 847 1,062 291 1,634 123 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 5.0 x 5.0 Ramp Primary Waste Development ‐ m advance 6,015 792 3,283 1,940 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 5.0 x 5.0 Conveyor Primary Waste Development ‐ m advance 2,120 ‐ 206 344 679 680 211 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Ventilation Raise 4.0 x 4.0 Secondary Waste Development ‐ m advance 13,770 ‐ 310 511 5,354 3,812 2,298 677 579 100 11 10 10 24 10 61 ‐ ‐ ‐ ‐ Muck Bays and Infrastructure Subtotal m advance 25,862 1,639 4,862 3,086 7,668 4,615 2,509 677 579 100 11 10 10 24 10 61 ‐ ‐ ‐ ‐ Ore Development Secondary Ore Development ‐ m advance 31,392 ‐ 344 1,124 4,120 5,111 3,086 2,489 2,719 3,122 1,970 1,590 1,499 1,499 1,519 1,201 ‐ ‐ ‐ ‐ 5.0 x 5.0 Sills Secondary Ore Development ‐ m advance 746 ‐ 579 167 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 5.0 x 5.0 Ramp VCR Slot Raises m advance 440 140 300 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ VCR Stope tonnes 2,628,934 ‐ ‐ ‐ 1,150,339 865,475 372,450 240,670 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Induced Block Cave tonnes 117,411,822 ‐ ‐ ‐ 2,515,454 6,745,898 7,412,768 8,346,701 8,395,000 8,395,000 8,395,000 8,418,000 8,395,000 8,395,000 8,395,000 8,418,000 8,395,000 8,395,000 8,395,000 2,238,011 Subtotal m advance 32,578 0 923 1,431 4,420 5,111 3,086 2,489 2,719 3,122 1,970 1,590 1,499 1,499 1,519 1,201 ‐ ‐ ‐ ‐ Rock Haulage Production Haulage – Truck 1,129,529 ‐ 59,982 85,370 984,177 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Production Haulage – Conveyor 121,004,751 ‐ ‐ ‐ 2,952,532 7,943,579 7,985,782 8,749,128 8,571,763 8,597,925 8,523,060 8,521,318 8,492,430 8,492,452 8,493,719 8,496,062 8,395,000 8,395,000 8,395,000 2,238,011 Subtotal 124,372,291 ‐ 59,982 85,370 3,936,709 7,943,579 7,985,782 8,749,128 8,571,763 8,597,925 8,523,060 8,521,318 8,492,430 8,492,452 8,493,719 8,496,062 8,395,000 8,395,000 8,395,000 2,238,011 Development Ore tonnes 2,093,525 ‐ 59,982 85,370 270,914 332,207 200,564 161,758 176,763 202,925 128,060 103,318 97,430 97,452 98,719 78,062 ‐ ‐ ‐ ‐ Stoping Ore tonnes 120,040,756 ‐ ‐ ‐ 3,665,794 7,611,373 7,785,218 8,587,371 8,395,000 8,395,000 8,395,000 8,418,000 8,395,000 8,395,000 8,395,000 8,418,000 8,395,000 8,395,000 8,395,000 2,238,011 Total Ore tonnes 124,372,291 ‐ 59,982 85,370 3,936,709 7,943,579 7,985,782 8,749,128 8,571,763 8,597,925 8,523,060 8,521,318 8,492,430 8,492,452 8,493,719 8,496,062 8,395,000 8,395,000 8,395,000 2,238,011 Au g/t ‐ 0.514 0.972 1.141 1.123 0.954 0.781 0.770 0.796 0.846 0.861 0.760 0.779 0.842 0.893 0.849 0.872 0.860 0.860 Cu‐% ‐ 0.095 0.168 0.189 0.189 0.185 0.151 0.144 0.160 0.168 0.160 0.158 0.162 0.163 0.168 0.170 0.168 0.160 0.160 Au‐Eq. g/t ‐ 0.568 1.055 1.224 1.209 1.067 0.873 0.853 0.900 0.953 0.952 0.869 0.890 0.942 0.991 0.959 0.974 0.952 0.952 Primary Development Waste tonnes 736,404 106,553 291,008 159,290 134,502 36,272 8,778 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Secondary Development Waste tonnes 895,041 ‐ 20,179 33,230 348,026 247,812 149,348 44,032 37,655 6,483 724 667 667 1,560 670 3,988 ‐ ‐ ‐ ‐ Total Waste tonnes 1,631,444 106,553 311,187 192,520 482,528 284,084 158,126 44,032 37,655 6,483 724 667 667 1,560 670 3,988 ‐ ‐ ‐ ‐ Total Tones Hauled to Surface tonnes 123,765,724 106,553 371,169 277,890 4,419,236 8,227,663 8,143,908 8,793,161 8,609,418 8,604,408 8,523,784 8,521,985 8,493,097 8,494,012 8,494,389 8,500,050 8,395,000 8,395,000 8,395,000 2,238,011

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Mining Equipment and Maintenance

Mobile trackless equipment will be used including face jumbo drills, stope in‐the‐Hole (ITH) drills, load‐haul‐dump machines (LHDs), haulage trucks and support fleet, see Table 19‐5. Hand held drills will be used for rock bolting and miscellaneous rockworks. A raise driving contractor will use his own equipment.

Table 19‐5: Ciresata Mobile Trackless Equipment

Equipment ID Development and Production Units Required Face Jumbo DD210 2‐boom Drifting Jumbo 6 LHD Toro LH410 5 yd w/ Remote 0 Toro LH514 8 yd w/ Remote 0 Toro LH517 10 yd w/ Remote 10 Truck Production ‐ Toro 50, 50 tonne 10 Cable Bolter Cabolt 07 0 Longhole Drill Solo 7 10C 5 Support Fleet Grader, M120 0 Scissor Lift 6 Electrical service tractor 1 UG supply (nipper vehicle) 2 Toyota Landcruiser 3 Powder Trucks 3 Cap Truck (wood box) 2 Lube truck 1 Crane truck 1 Shotcrete Machine truck, T50 0 Sub‐total Mobile Equipment 50 Raise Equipment Alimak Raise Climber ‐ use Contractor's 2 Raise Borer ‐ use Contractor's 2 Hand Drills Jackleg/Stoper Drills 24 Sub‐total Drilling Equipment 28 Total Underground Equipment 78

Running repairs will be completed in an underground service station located near the crusher. Major repairs and engine overhauls will be completed in the maintenance shop used for open pit equipment on surface.

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Ore and Waste Handling

Development waste will be deposited in a designated area on surface for Phase I and Phase II then hauled for disposal at the nearest open pit fill area.

Blasted ore from Phase I will be mucked by a LHD remotely controlled and stored in a re‐ muck bay. From the re‐muck bay, a load‐haul‐dump will load into a truck that will haul to the primary crushing plant on surface. Once the ore pass to the Phase II area is complete, ore in Phase I will be trucked to the ore pass and sent to the mill via the conveyor.

Blast ore from Phase II will be mucked by LHD from the Excavation level to a series of orepasses. The active ore‐passes have a grizzly (0.6 m x 0.6 m) for screening. The ore passes feed to an apron feeder on the Material Handling level where the ore is conveyed to the crusher. This conveying system is design to handle ‐0.6 m material.

Backfill

No backfill is planned to be used with these open stope approaches. Subsidence is anticipated; however, the exact amount will have to be determined in future analysis.

Ventilation

Alimak will drive ventilation raises in stages from the Phase I Level 250 to surface, and fans will be installed on the surface collar of each raise.

Ventilation air quantity is based on the mobile diesel‐powered fleet, and calculated to be 470 m3/sec (995 kcfm), see Table 19‐6. The ventilation is staged and heavily dependent on the trucking for early development. The ventilation drops significantly once Phase II is operational. A practical estimate at this level of study for a final ventilation system is 236 m3/sec (500 kcfm).

Phase I will use a downcast ramp arrangement and upcast the vent raise as a return air rise to surface. Ventilation will have a maximum for this system of 236 m3/sec (500 kcfm). This system will then be flipped as the fresh air supply for Phase II (Figure 19‐11). For Phase II when the mine is in full production, fresh air will be downcast from the upper ramp and raise system and exhausted through the conveyor drift and its associated development infrastructure. A push‐pull ventilation system is envisioned, with fans installed near the portals of the main intake and exhaust drifts. Bypasses will be excavated, where required, and air locks will be installed to maintain control of the ventilation system (Figure 19‐12).

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Table 19‐6: Preliminary Listing of Equipment for Vent Air Requirement

Units Vent per Total Vent by Equipment ID Development and Production Required Unit kCFM Unit kCFM Face Jumbo DD210 2‐boom Drifting Jumbo 6 22 132 LHD Toro LH410 5 yd w/ Remote 0 Toro LH514 8 yd w/ Remote 0 Toro LH517 10 yd w/ Remote 10 40 400 Truck Production ‐ Toro 50, 50 tonne 10 52 52 Cable Bolter Cabolt 07 0 Longhole Drill Solo 7 10C 5 15 75 Support Fleet Grader, M120 0 Scissor Lift 6 17 102 Electrical service tractor 1 16 16 UG supply (nipper vehicle) 2 15 30 Toyota Landcruiser 3 12 36 Powder Trucks 3 26 78 Cap Truck (wood box) 2 20 40 Lube truck 1 18 18 Crane truck 1 16 16 Shotcrete Machine truck, T50 0 - - Sub‐total Mobile Equipment 50 - - Raise Equipment Alimak Raise Climber ‐ use Contractor's 2 - - Raise Borer ‐ use Contractor's 2 - - Hand Drills Jackleg/Stoper Drills 24 - - Sub‐total Drilling Equipment 28 - - Total Underground Equipment 78 - 995

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Figure 19‐11: Ciresata – Phase I Ventilation Schematic Diagram

Figure 19‐12: Ciresata – Phase II Ventilation Schematic Diagram

Used air will be exhausted to surface via the conveyor ramp and the series of return air raise and ramp located along the conveyor ramp.

Dewatering

Water inflow during Phases I and II developments will come mainly from the underground operations (Figures 19‐13 and 19‐14).

The initial development dewatering system will involve pumping unsettled water to surface in stages of 60 m vertical lifts using 30 HP submersible pumps delivering water at 200 gal/min up to the next stage sump above, via a 4‐inch pipe. This system will be used for a maximum of five temporary lifts. Once five temporary sumps have been excavated (usually benched re‐mucks), a walled arrangement with higher lift and volume capacity pumps will be installed. Discharge ultimately will be via the conveyor drift to the mill complex where mine water will be recycled into mine supply water.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Figure 19‐13: Ciresata – Dewatering Schematic Phase I

Figure 19‐14: Ciresata – Dewatering Schematic Phase II

19.3 Open Pit Mining

19.3.1 Geologic Model Importation

Geologic resource block models were created for each of the three deposits within the Rovina property. These were created by PEG using Gemcom© software. The information contained within these geologic models was exported to an ASCII format and imported into a MineSight© model for the mining evaluation. A model with no rotation was created for each of the areas utilizing the identical Gemcom block model dimensions, see Table 19‐7.

Table 19‐7: Block Model Block Sizes X Y Z Deposit (m) (m) (m) Rovina 15 15 10 Colnic 5 5 5 Ciresata 5 5 5

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The mining model utilized the same block dimensions, but the model boundaries were expanded to include material expected to be incorporated within a large open pit. A default specific gravity of 2.65 t/m3 was applied to those blocks beyond the geologic model boundary. Each block was considered to be waste and no grades were included in the expansion portion of the model.

The mining models were created on a whole block basis meaning the block grade was applied to the entire block tonnage. From the geologic models, the copper and gold grades were imported in addition to classification, specific gravity, and rock type.

Resource classification was developed by PEG in the geology models and reported in the previous November 2008 NI 43‐101 resource report. This classification model was unchanged for the mining model. Measured, Indicated, and Inferred material classifications were utilized in the calculations for this study.

Initial indications were that the rock at all three deposits would be non‐acid generating, this was assumed for the purposes of this study, and no coding for ARD potential placed in the mining model. Future test work will need to be undertaken to confirm this assumption.

Carpathian provided the digital topography from Romanian Government files. This topography was used for the mining model and any surface infrastructure designs.

19.3.2 Production Rate Trade‐off Study

To understand the potential of the three deposits, and how to proceed, a production rate trade‐off study was initiated. The intent was to determine at which rate of production the maximum net present value occurred yet fit within reasonable capital constraints.

Volatility in metal prices existed during the time of the study and continues to exist making the divination of long‐term metal prices for use in this study was difficult. While three‐year averages provide one method, they do not necessarily represent a reasonable case in the time of falling metal prices as happened during the study. After discussion between PEG and Carpathian, it was agreed for the purposes of the production rate trade‐off study, the following metal prices would be used:

 Copper = US$2.00/lb/lb  Gold = US$750.00/oz

Upon completion of the production rate trade‐off, metal prices would be discussed again and reset if necessary.

Initial metallurgical work on the individual deposits had been completed at the initiation of the study with additional metallurgical work completed during the course of the study.

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Table 19‐8 shows the metallurgical parameters used for the preliminary pit optimizations used in the production rate trade‐off study.

Table 19‐8: Metallurgical Parameters by Deposit

Recovery Percentage (%) Concentrate Grade Area Copper Gold Cu% Rovina 92.0 65.3 27.0 Colnic 87.5 63.3 25.0 Ciresata 89.5 58.3 25.0

Smelting terms play a critical role in any economic pit calculation and particularly in the Rovina Valley deposits due to the high gold content of the concentrate. The gold represented significant revenue to the Project and as such, the highest accountability was crucial. Gold grades in the copper concentrate were initially expected to be in excess of 50 g/t.

For the purposes of this study, four European smelters were considered that were known to provide excellent gold accountability. These included Freeport in Spain, Norddeutsche Affinerie in Germany, Boliden in Sweden and the former Outokumpu smelter in Finland. The smelters were not directly contacted for this study, but market smelter terms and shipping to the Freeport smelter were considered to be the base case scenario although in practice it was anticipated that lots would be sent to each of the four smelters to avoid unexpected disruptions.

The copper concentrate was designed to be loaded into tote bags for better gold accountability rather than transportation in bulk. This also offered flexibility for concentrate shipping as it could be placed in containers and shipped in that manner. Once in the tote bag, it would be trucked to Deva, Romania some 50 km from the Project site, and then railed to the port of Constanta on the Black Sea. The concentrate would be loaded on a ship and transported to the final destination.

Transportation terms were estimated from various known rates in country for the initial pass as more detailed quotations were being obtained for later in the study. Ocean shipping rates were obtained from public information.

Table 19‐9 shows the input parameters for the smelter, refining, and transportation charges. Unless otherwise noted, all currency values are denoted in American dollars. An exchange rate of US$1.4 to €1 Euro was adopted as the base rate.

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Table 19‐9: Smelting, Refining, and Transportation Costs

Value Item Unit ($) Concentrate Trucking $/t conc. (wet) 64.68 Port Cost $/t conc. (wet) 16.00 Ocean Shipping Cost $/t conc. (wet) 14.00 Copper Concentrate Moisture % 6 Copper Minimum Deduction % 1.3 Copper Smelting Charge $/t conc. (dry) 90.00 Copper Refining Charge $/lb Cu payable 0.090 Gold Payable % 98.5 Gold Refining Charge $/troy oz 8.00

Initial operating costs estimates were developed for various production rates to determine the pit contained resources for each deposit. Production rates for 10,000 t/d to 60,000 t/d at 10,000 t/d increments were considered.

The mining cost per tonne was developed from equipment operating cost estimates provided by suppliers and estimates of strip ratio and haulage distance. A base cost was developed for each deposit at a reference elevation (the valley floor level) then incremental costs were established.

The processing costs were estimated from first principals and then compared to other similar sized operations. General and administrative costs were also developed from base principals with some initial labour cost estimates and Carpathian's experience working in Romania. Table 19‐10 shows a summary of the parameters used in the development of initial economic shells for the Rovina and Colnic Deposits.

The incremental mining costs for Rovina were applied to benches below the 510 El. Colnic incremental costs were applied below the 370 level. Both of these levels represent valley exits for the pits.

The Ciresata deposit was not considered for open pit development for this study. Preliminary work for the NI 43‐101 Geologic resource indicated that the Ciresata deposit mining costs were comparable to or exceeded anticipated bulk underground mining costs. This was a function of the depth of the deposit below surface, and the size of the ore body as it is presently known.

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Table 19‐10: Economic Shell Operating Cost Parameters

Mill Production Rate (t/d) 10,000 20,000 30,000 40,000 50,000 60,000 Mining Cost Rovina $/t (all) 1.76 1.35 1.19 1.09 1.00 0.96 $/t (waste)/10 m Bench 0.04 0.04 0.04 0.04 0.04 0.04 $/t (ore)/10 m Bench 0.03 0.03 0.03 0.03 0.03 0.03 Colnic $/ (all) 1.71 1.30 1.14 1.05 0.96 0.93 $/ (waste)/10 m Bench 0.06 0.06 0.08 0.07 0.07 0.07 $/t (ore)/10 m Bench 0.03 0.03 0.03 0.03 0.03 0.03 Processing – US$/t (mill ore) 9.10 8.24 7.85 7.64 7.40 7.32 G&A – US$/t (mill ore) 1.83 0.98 0.72 0.57 0.46 0.40

An initial pass to examine the open pit potential of the Ciresata deposit was completed assuming the same parameters as the 30,000 t/d case with the exception that the mining cost was raised to $1.25/t for total material due to anticipated longer hauls for waste storage. A 45 degree overall wall angle was applied. With these parameters no economic shell developed.

A second review of the Ciresata deposit used copper prices from $1.65 to $2.00/lb for copper and $700 to $750/oz for gold. The open pit mining cost was varied from $1.25 to $1.50 to reflect the greater mining depth anticipated. Processing costs were lowered such that the sum of the processing and G&A varied between $4.00/t and $4.60/t. This would be in the order of 100,000 t/d of ore operation. The gold recovery was raised and varied between 70% and 85%.

With these parameters, an open pit would develop, but was sensitive to the overall wall angle. A one‐degree difference in the overall angle could mean the difference between a large open pit forming and no pit forming at all. The strip ratios varied from 5.8:1 up to 8.2:1, with waste tonnages ranging from 750 Mt to over 1.3 Bt. An average cost per tonne of ore to mine was in the order of $11 to $12/t of ore without consideration for capital. When the waste storage area requirements were also examined, the mining of Ciresata by open pit methods was considered prohibitive with the current knowledge of the deposit. For the remainder of the PEA study, Ciresata was designed as a bulk underground mine.

Ore haulage from the Ciresata underground mine was considered using an underground conveyor to a plant located between the Rovina and Colnic open pits. The majority of the

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ore tonnage mined was from the open pits and for the purposes of the PEA, it was considered logical to locate the mill there.

The access from Ciresata to the Rovina mill site via truck would have required upgrading of bridges and widening of the road through narrow winding roads with houses in the town of Bucureşci immediately adjacent to the road. The disturbance on the local populace would have been tremendous and for this reason, an underground conveyor was selected. Some initial trucking of ore would be required as the conveyor gallery was being constructed but this would be very minor tonnage and would be manageable on a limited time basis.

Initial geotechnical information indicated that for the intrusive rocks, the following assumptions could be made:

 Bench face angle = 65 degrees  Distance between safety benches = 30 m.

The minimum width of the safety bench examined was 8 m. In this configuration, an inter‐ ramp angle of 53.7 degrees was achieved. PEG considered that an 8 m berm width was too narrow and opted instead for a minimum width of 10 m. The resulting inter‐ramp angle was 51.3 degrees. This was discussed with BGC and agreed upon for use in the intrusive rocks.

Several economic cones were completed using the inter‐ramp angle only to determine the maximum depth that would be developed at different production rates. With that depth, an adjustment to the angle was made by including a 30 m wide ramp system to the pit bottom. The impact the ramp would have on the overall angle was calculated. The overall angle was approximately 47 degrees in the Rovina pit and 48 degrees in the Colnic pit. This overall angle was used for the production rate trade‐off study economic cones.

For each production rate, five economic cones were developed with metal prices varying from:

 Copper: $1.00 – $2.00/lb in $0.25 increments  Gold: $375 – $750/oz in the same ratio as the copper.

This provided an indication of the sensitivity of each area to metal prices as well as gave guidance on internal phasing for the open pit development.

With these shells, mining schedules were developed for each of the production rate cases. It was assumed that based on the resource tonnages, the underground mining would account for half the mill tonnage in each schedule up to the point where the underground operation could produce no additional daily tonnage. What was observed in the review of the underground was that the maximum tonnage output was in the order of 20,000 t/d to 24,000 t/d due to the geometry of the deposit. For the 50,000 t/d and the 60,000 t/d cases, the underground was maximized and the open pit provided any additional feed tonnage

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required to maintain the plant at full capacity. The initial underground mining method was sub‐level caving for costing purposes.

Each of the open pit production schedules were then examined in detail to confirm the operating cost estimates using updated haulage profiles. This provided a proper haulage weighted average operating cost. These updated operating costs were then used in the cash flow calculations.

For each production rate, the mining fleet was examined to determine the appropriate size of truck and loader in addition to the quantity required. Pricing obtained from Caterpillar in Europe was then used to determine overall mining capital requirements by production rate case. The 10,000 t/d case utilized the Caterpillar 777 (90 tonne) truck matched to the Caterpillar 993 loader. The 60,000 t/d case employed Caterpillar 793 (227 tonne) haulage trucks with O&K RH340 hydraulic shovels.

Updated estimates for underground mining, and processing operating costs were also provided based on additional detailed work. Capital estimates for each plant configuration were developed in addition to infrastructure requirements. The average operating costs used in the final cash flow comparison are shown below.

A standalone case for underground was also examined to determine if this offered opportunities to overall project economics. Table 19‐11 shows the operating costs for that option.

Table 19‐11: Final Production Rate Trade‐off Operating Costs

Plant Production Rate ‐ Ore (t/d) Units 10,000 20,000 30,000 40,000 50,000 60,000 UG Only Open Pit Mining Cost US$/t total material 1.80 1.41 1.26 1.21 1.13 1.10 ‐ Underground Cost US$/t ore 7.00 6.50 6.00 5.50 5.01 5.01 5.01 Processing Cost US$/t ore 9.10 8.24 7.85 7.64 7.40 7.32 8.05

Figure 19‐15 shows the results of the trade‐off study with the base metal prices of $2/lb Cu and $750/oz Au and discount rates of 5%, 8%, and 10%.

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Figure 19‐15: NPV Comparison for Trade‐off Study

$500

$400

$300 millions) $200 ($

$100 Value

$0 Present ‐$100

Net ‐$200

‐$300 10,000 20,000 30,000 40,000 50,000 60,000 UG Only

Production Rate Option 5% 8% 10%

This indicated that the higher production rate cases were offering a better net present value as would be expected due to greater utilization of the resource earlier. It was noted though that the net present value was levelling off with the higher production rates. The results also indicated that the underground alone option was not as attractive as the combination of open pit and underground mining.

While the net present values were one factor in the decision process, the internal rate of return and total capital requirements were also examined. The results of this indicated a slightly different case.

Table 19‐12: Production Rate Trade‐off IRR and Capital Costs

Production Rate Option IRR Total Project Capital Cost (t/d) (%) (US$ M) 10,000 0.7 429.3 20,000 7.2 523.6 30,000 9.1 629.7 40,000 11.6 710.4 50,000 11.7 821.5 60,000 12.3 882.6 Underground Only 10.0 555.1

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The internal rate of returns showed a close comparison between the last three open pit/underground combination production rate cases with less than 1% difference on the IRR. The underground alone option did not offer the same level of economics with the Ciresata ore body as it is understood presently. It did illustrate that an underground only option may have merit should additional tonnage or grade be found at Ciresata.

The results were discussed with Carpathian management and it was decided to proceed forward with the 40,000 t/d case. This was due primarily to the lower capital requirements for very similar rates of return as the 50,000 t/d and 60,000 t/d cases.

The detail on the production rate trade‐off study including cash flow sheets has been included in Appendix D.

19.3.3 40,000 t/d Pit Designs and Phasing

With the clear direction to proceed with the 40,000 t/d production rate, each discipline fine‐ tuned their designs to better approximate the final expected operating cost. The mining cost was updated to reflect updated equipment operating cost information. Metal prices to be used in the economic shells were also updated. Carpathian and PEG have jointly decided to use a slightly lower copper price for the design of the shells, while the gold price would remain as it was for the production‐rate trade‐off study. The new metal prices were:

 Copper = $1.75/lb  Gold = $750/oz.

Table 19‐13 shows an updated list of input parameters.

New economic pit shells were developed and summarized. In the production‐rate trade‐off study, only the pit shells had been used to schedule the tonnages. For the final design, the new economic shells acted as guidelines for detailed designs including ramps. This was completed to ensure that the designs and their interior phasing accurately represented expected ore release and the associated grades.

The design of the phases was based on the physical width between each phase. A minimum width of 100 m for each phase was the target although some relaxing of the constraint was permitted around ramp entrances. Calculations of net value per tonne of ore were also completed for each phase and area.

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Table 19‐13: Updated Economic Shell Parameters

Cost Parameter Units Value Comment Rovina Base Mining Cost $/t total material 1.06 Level mining cost Waste Incremental Cost $/t material per 10 m bench 0.04 Below 510 level Ore Incremental Cost $/t material per 10 m bench 0.03 Below 510 level Overall Wall Angle degrees 47 Colnic Base Mining Cost $/t total material 1.02 Level mining cost Waste Incremental Cost $/t material per 10 m bench 0.06 Below 370 level Ore Incremental Cost $/t material per 10 m bench 0.03 Below 370 level Overall Wall Angle degrees 48 Processing Cost $/t ore 6.13 G&A $/t ore 0.57 Concentrate Transportation Cost Mine to Port $/t concentrate 40.13 Mine to Constanta Port Cost $/t concentrate 16.00 Port charges Ship $/t concentrate 14.00 Port to Spain

The final designs for each area contained three phases: a starter pit, intermediate phase, and the final phase. The pit designs utilized the following geotechnical parameters in their development:

 Berm width = 10 m  Safety Bench Separation = 30 m vertically  Bench Face Angle = 65 degrees.

The double lane haulage ramps were designed with a width of 33 m. This ramp width is based on:

 200‐ton truck operating width = 7.7 m  Running surface = 3 times the truck operating width (23 m)  Berm height = ¾ the height of the largest tire (2.6 m) and 1.5:1 slopes  Ditch depth = 0.83 m with 1.5:1 slopes.

The single lane ramp width for the same trucks was 25.5 m. This was only used in the last 4‐5 benches of the final pit phase.

Table 19‐14 shows the final pit phase ore and waste tonnages and their associated grades.

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Table 19‐14: Final Open Pit Phase Tonnages

Ore Cu Au Waste Phase (t) (%) (g/t) (t) Strip Ratio Rovina Phase 1 23,325,500 0.30 0.31 28,496,600 1.22 Rovina Phase 2 19,449,800 0.24 0.29 51,838,200 2.67 Rovina Phase 3 30,970,200 0.24 0.31 98,558,800 3.18 Colnic Phase 1 6,253,300 0.12 0.79 3,268,500 0.52 Colnic Phase 2 20,908,900 0.10 0.77 25,244,100 1.21 Colnic Phase 3 40,151,400 0.10 0.59 80,722,200 2.01

The tonnages shown are the total ore tonnes. The cutoff value for reporting of the tonnage was based on a block–by‐block NSR calculation. This calculation considered all mining, processing, G&A costs as well as the concentrate shipping costs, smelting and refining charges, thus representing a profit per tonne of ore. This NSR value was used as a guide in the mine scheduling of the phases to ensure high value material was sent to the mill first to enhance early mine life economics. Figure 19‐16 displays the NSR values by phase and area.

Figure 19‐16: NSR per Tonne by Area and Phase

$12.00

$10.00

$8.00 ore)

($/tonne

$6.00 Value

Smelter

$4.00 Net

$2.00

$0.00 Rovina Phase 1Rovina Phase 2Rovina Phase 3Colnic Phase 1Colnic Phase 2Colnic Phase 3

Other considerations in the ranking for the phases for the mine schedule included the need for fill material to establish infrastructure and the potential backfilling opportunities into the old pits.

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The Rovina first phase, while slightly lower in value than the first two phases of Colnic, contained an equal ore tonnage with a similar strip ratio. The Rovina first phase also had a much shorter haul to the proposed plant and site location in the Baroc valley where some fill material was required. The fill was to be used to build around infrastructure including the primary crusher. It would also fill the narrow valley floor for a haul road connecting Colnic to the plant site. The haul from Rovina was slightly downhill making this an attractive haul for waste over using Colnic waste, which would have been longer and uphill. The Colnic hauls benefit the most by keeping the haulage distance closer to the pit outline.

One of the advantages of the geometry of the two open pits was that the Colnic pit was higher value early in the mine schedule, and it was located downhill from Rovina. The Rovina deposit had readily accessible waste storage locations that were either a flat or a slightly downhill haul from the pit entrance into the Baroc valley at the 510 El. This geometric advantage was considered and the concept was to use this to backfill the Colnic pit. By shifting the later phases of Rovina mining to near the completion of Colnic, a portion of the Colnic pit could be backfilled. This was designed into the mine schedule.

Figure 19‐17 shows a representative cross‐section of the Rovina pit. This shows the three phases designed as well as ore grade material based on net value per tonne calculation. Two cutoff values are illustrated in the figure, which is discussed further in the mine scheduling section. All coloured blocks represent material that was economic to mine with the input parameters that were used.

Figure 19‐18 shows a cross‐section of the Colnic deposit with the ore grade material also shown as coloured blocks. In the same manner as Rovina, the pit has been divided into three distinct phases for the purpose of mine scheduling.

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Figure 19‐17: Rovina East‐West Cross‐Section at Northing 520580

Phase 1

Phase 2 NSR>$5

Phase 3

$0.01>NSR<$5

Figure 19‐18: Colnic East West Cross‐Section at Northing 517875

Phase 2Phase 3

Phase 1

NSR>$5

$0.01>NSR<$5

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19.3.4 Mine Scheduling

For the mine schedule, the tonnages for each phase were broken into high grade and stockpile categories. The “high‐grade” material was any material that had an NSR value of $5.00 and greater, or a profit of more than $5/t. The material between $0 and $5 NSR was labelled “stockpile” and scheduled to be processed later in the mine life.

The underground sequence as described earlier focused on the high‐grade upper portion of the deposit with sub‐level caving methods while the main development at depth was occurring preparing the way for the bulk mining of the Ciresata ore body. This development started two years in advance of mill operation and was primarily due to the time requirements to establish the underground conveyor gallery, and ore draw points. The tonnage from this early development was trucked to the plant site and stockpiled for processing when the mill was commissioned.

The first year of mill processing was assumed to including commissioning time so the tonnage milled included the ramp up schedule. A total tonnage of 10.8 Mt was processed in the first year. The plant was running at full capacity of 14.4 Mt from that point onwards.

The intent in the mine scheduling was to meet the plant requirements with 100% of the Ciresata underground ore and supplement the feed with open pit ore. This was essentially a 50:50 blend of open pit and underground material over the life of the mine, but slightly higher in the initial years. This strategy ensured that the higher value ore from the underground mining at Ciresata remained a priority feed for the mill.

The open pit mining sequence started with Rovina Phase 1, and Colnic Phase 1 and Phase 2. The Rovina first phase would be mined in its entirety, finishing in Year 5 before starting the pre‐stripping of the second phase beginning in Year 6. There was no overlap in the mining in the phases as the ore was not immediately required as Colnic was able to provide sufficient feed. The Colnic phases would progress from Phase 1 to 2 then transition into Phase 3 until completion in Year 10.

By deferring the mining of the higher strip ratio Phases 2 and 3 of Rovina until later, it allowed this waste material to take advantage of the backfilling opportunity in the Colnic pit. The haul was slightly downhill and faster which benefits the overall project operating costs with increased productivities. The backfilling of Colnic does not begin in earnest until Year 12, as the haulage configuration from Rovina was unfavourable until that time. The upper benches of Rovina were being mined until Year 12, which were a more efficient flat to slightly uphill haul to existing dumps in the Baroc valley. To haul to Colnic in that period would have involved significant downhill hauls with switchback roads. This would dramatically increase operating costs associated with tires, reduced truck speeds due to hauling loaded downhill on grade and have potential safety concerns in winter operation.

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The underground mining at Ciresata was complete in Year 16 with the known resource. At this time, the ore feed would be from Rovina and rehandle of the lower grade stockpile material. The final year of processing, Year 19, was entirely from stockpile.

Figure 19‐19 shows the mill feed tonnes by year and area, Figure 19‐20 the copper and gold feed grades by year, and Figure 19‐21 the mined waste tonnages by year and area.

Figure 19‐19: Mill Feed by Year and Area

16,000,000

14,000,000

12,000,000

10,000,000 (tonnes)

8,000,000 Tonnage

Feed

Mill 6,000,000

4,000,000

2,000,000

0 2 1 1 2 3 4 5 6 7 8 9

‐ ‐ 10 11 12 13 14 15 16 17 18 19 20

Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year

Ciresata Colnic Rovina Stockpile Rehandle

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Figure 19‐20: Copper and Gold Feed Grades by Year

0.30 1.20

0.25 1.00

0.20 0.80 (%)

Grade 0.15 0.60 (grams/tonne)

Grade

Copper Gold 0.10 0.40

0.05 0.20

0.00 0.00 2 1 1 2 3 4 5 6 7 8 9

‐ ‐ 20 19 18 17 16 15 14 13 12 11 10

Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year

Copper (%) Gold (g/t)

Figure 19‐21 Waste Tonnage Mined by Year and Area

30,000,000

25,000,000

20,000,000 (tonnes)

15,000,000 Tonnage

Mining

Waste 10,000,000

5,000,000

0 9 8 7 6 5 4 3 2 1 2 1

‐ ‐ 20 19 18 17 16 15 14 13 12 11 10

Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year

Rovina Colnic

The detailed mine schedule has been included in Appendix D.

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19.3.5 Waste Dump Designs

The waste dumps will be developed as various lifts over the life of the mine. Initial material from Rovina will be used to develop the access road from Rovina to Colnic, and provide fill for infrastructure as required. Once that is complete, the dump will extend into the Rovina valley to create a site and sound barrier to the town from the mining activities together with Colnic material. Then the primary dump for Rovina will be to fill in the west side of the Baroc valley to the 450 level. Once that is complete, the dump will be lifted to the 475 level and higher. It is noted that the entrance to the Rovina pit is at the 500 level so these dumps are level to slightly down hill on the haul ex‐pit.

The Colnic dumps at this time are to the south of the pit and to the north of the pit filling in the river valley together with the Rovina material from El. 450 downwards. Material will be hauled towards the plant location then dumped flat to the east. Once that level has been completed, a lift upwards will be finished.

The Colnic South dump will be completed in Year 7. The 450 level waste dump to the north of Colnic will be completed in Year 4 with the lift to the final top elevation of 550 completed in Year 10. The dump approaches but does not encroach upon the town of Merisor.

The Rovina material will be routed to backfill the Colnic pit starting in Year 12 until the end of the mine life. It is envisaged that the waste material would be dumped level off the 375 level, the main entrance elevation of the Colnic pit.

The low‐grade stockpile was placed on the 450 level near the plant to facilitate the ore rehandle at the end of the mine life.

The small stream that flows out the Rovina valley lies beneath the 450 dump and passes through the Colnic Pit then passes under the South Dump. The current plan for this river is to place it into a pipeline that would be buried beneath the dumps and discharge as normal. The pipeline would be placed on an extra width berm in the Colnic pit during mining. This berm would be at the same 375 level that the Colnic pit entrance is currently located. This is also the reason the backfill of the Colnic pit is at this level.

An option in the future may be to utilize a rock drain beneath the waste dumps. If the waste rock through further studies indicates that the material is of such a nature to allow water to pass directly, the pipeline could be eliminated in all areas except for crossing the Colnic pit. This area needs further study going forward towards prefeasibility and feasibility.

Figure 19‐22 illustrates the initial dump configuration and Figure 19‐23 the final dump configuration with the Colnic backfill. The detailed annual waste schedule is included in Appendix D.

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Figure 19‐22: Initial Open Pit Waste Dumps

Rovina Pit

475 450

Colnic Pit

South Dump

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Figure 19‐23: Final Waste Dump Configurations

Rovina Pit

565

Low Grade Stockpile

550 Backfill Colnic Pit

19.3.6 Tailings Management Facility

The mine schedule has a total of 265.4 Mt of ore processed over the 19 year mine life. This material will be deposited in a traditional tailings facility. To estimate the volume required

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for the tailings, a density of 1.65 t/m3 was used. This resulted in a volume of 160.9 Mm3 required.

A number of locations were considered (Figure 19‐24). These include:

1. Rovina Valley 2. Baroc Valley 3. Valley North of Merisor 4. East of Merisor 5. East of Ciresata deposit.

Figure 19‐24: Tailings Management Areas Examined

Rovina

Plant Location 3 2 1

Colnic

Bucuresci 4

The benefits and constraints of each option have been listed below. These were considered in the decision process for determining which location was suitable for the Rovina ValleyProject tailings.

1) Rovina Valley

Pros

 proximal to the plant location resulting in reducing pumping and piping requirements  all the material was contained within the one valley limiting the impact to surrounding areas and communities

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 easy to contain any drainage from the tailings  dam would be constructed primarily of mine rock which reduced cost and also allowed a much greater thickness of the dam to be built dramatically increasing the factor of safety  accommodates the entire tailings volume with additional capacity possible.

Cons

 would require the relocation of the people in the town of Rovina and a portion of Merisor  would require relocation of the local church and associated graveyard  the people of Merisor would be able to view this tailings area with the potential for dust blowing.

Figure 19‐25 illustrates the final design.

Figure 19‐25: Rovina Valley Tailings Option

Rovina Pit

Dam = 550

548

450

Colnic Pit

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2) Baroc Valley

The Baroc valley is the valley just to the west and connected to the main Rovina valley. It is at a higher elevation than the Rovina valley.

Pros

 contained within the Rovina Valley  mine waste could be used to develop the dam  minimal disturbance to local populace.

Cons

 does not accommodate all the tailings volume, only ¼ of the capacity required  a new plant location would have to be chosen  occupies short haul waste locations for the Rovina pit  tailings would encroach on the Rovina pit.

Figure 19‐26 shows the proposed design for the Baroc Valley.

Figure 19‐26: Baroc Valley Tailings Concept

Rovina Pit

525

Dam = 530

Colnic Pit

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3) Valley North of Merisor

This site is located in the next valley to the north of the town of Merisor. It utilizes the deep north‐facing valley.

Pros

 accommodates all the tailings volume.

Cons

 tailings is in a separate drainage area so multiple impacts  tailings are on the other side of a mountain which would require either an extended pipeline and pumping or a tunnel through the mountain  final dam height is 200 m from toe to top.

Figure 19‐27 illustrates the proposed design.

Figure 19‐27: Tailings Design North of Merisor

Rovina Pit

Dam = 590

585

Colnic Pit

4) East of Merisor

An additional site to the east of Merisor was also examined. The tailings dam was located in the valley upstream from Bucureşci but attempted to avoid disturbing the accessing through the valley.

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Pros

 relatively close to the plant location  deep valleys to help reduce dam volumes required  valleys are uninhabited or do not contain houses.

Cons

 does not accommodate the entire tailings volume, only ¼ the capacity required  impacts another drainage area  a two dam concept was envisaged to maximize storage capacity but still did not fully accommodate the volume  a third dam may be required on the west side, complicating monitoring.

Figure 19‐28 shows the tailings concept.

Figure 19‐28: East of Merisor Site

Colnic Pit

Bucuresci 560

465

5) East of Ciresata deposit

Upstream from Bucureşci and east of Ciresata is a narrowing of the valley. This is located just downstream from the East of Merisor option. A few houses are present in this valley in addition to a road. The road can be easily relocated.

Pros

 maximum dam height is 140 m

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 minimal disturbance to existing farms  road way is relatively easy to relocate  accommodates all the tailings volume and further capacity available.

Cons

 large area encompassed by the tailings  immediately upstream of a small town  affects another drainage area.

Figure 19‐29 shows the final configuration for this tailings option.

Figure 19‐29: East of Ciresata Deposit

Colnic Pit

Bucuresci

475

Dam = 480

Preferred Tailings Option

The preferred and selected option was the East of Ciresata option which was then included in the cost estimate. This tailings facility ultimately will encompass an area of 391 ha.

Further work is required to determine if this location is the optimal for tailings storage. Detailed costing also needs to be completed on this option.

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20 TRANSPORTATION AND INFRASTRUCTURE

20.1 Transportation and Logistics

20.1.1 Overland Transport

Due to the value of the gold content and to minimize the copper/gold concentrate spillage risk, the product from the Rovina Valley process plant will be put in one‐tonne sacks and loaded into containers. The container transport will be contracted out to a local highway tractor‐trailer company to deliver the containers to Deva, Romania, at an average total rate of 340 t/d. At Deva, the containers will be transferred to rail and transported to the port of Constanta, Romania, on the Black Sea. The overland combined (truck/rail) transport distance is approximately 750 km (Figure 20‐1). A port on the Adriatic Sea would be marginally farther and would involve crossing at least two international borders.

Space representing one month of production will be allocated within the mill building as a storage/stockpile buffer. The bagging and container loading tasks will be performed in the mill.

20.1.2 Marine Transport

The existing year round port facilities at Constanta on the Black Sea will receive the containers of bagged concentrate.

The maximum expected annual tonnage of concentrate to be handled by the port is 143,000 tonnes.

The proposed shipping lane, to and from Spain or elsewhere in Europe, would be through the Mediterranean Sea (Figure 20‐2).

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Figure 20‐1: Overland Concentrate Shipping

By Truck By Rail

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Figure 20‐2: Shipping Route

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20.2 Infrastructure and Site Layout

The RVP infrastructure and site layout consists of the following:

 Rovina open pit  Colnic open pit  Ciresata underground development including conveyor system from Ciresata to the process plant  Waste rock dumps  Rovina process plant and mobile equipment shops  Curechiu tailing impoundment area.

This overall layout is illustrated in Figure 20‐3.

20.2.1 Site Buildings

The mill complex is to be located between the Rovina and Colnic open pits just west of Rovina on a height of land clearing. Refer to Figure 20‐4 for a mill site layout.

20.2.2 Mill Facility

The mill complex will consist of the processing facility and the supporting infrastructure for the mining/milling operation. The main process building contains the ore processing facility, offices, warehouse, maintenance, and service shops, with separate buildings for administrative offices/dry, main warehouse and mobile equipment maintenance. In addition, there will be a separate load‐in facility with a primary crusher.

20.2.3 Water Balance System

Approximately 1,400 m3/h of fresh water will be required per day to satisfy makeup water demand for the process plant.

Water required for the operations makeup will be pumped from nearby wells into a water storage tank in the mill. Water will be drawn from this tank, treated, and pumped to the process plant and other locations where potable water is needed.

Other water sources are recycling water from the tailings area and water from mine dewatering operations.

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Figure 20‐3: Rovina Valley Site Layout

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Figure 20‐4: Rovina Valley Site – Process Plant Site Layout

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20.2.4 Tailings Line

The tailings discharge consists of a pumphouse with two pumps (one operating and one standby) and a pipeline from the processing plant that will follow the site access road to the tailings impoundment area and will be placed alongside the tailings water reclaim pipeline.

20.2.5 Fuel Storage and Handling

The maximum fuel consumption will be 30,000 L/d and the fuel storage capacity at the site will be for five days of storage at 150,000 L. The tank farm is to consist of two 75,000 L tanks, with spill basins and containment.

20.2.6 Maintenance Facilities

A mobile equipment garage will be constructed with seven service bays, and one drive through bay, to accommodate the open pit and surface equipment. It will be required to maintain mine haulage trucks, service trucks, mobile mining equipment, service and maintenance vehicles, and personnel vehicles.

20.2.7 Warehouse, Office, and Dry

The main warehouse, office, and dry will be in one building located near the mill. The office section will accommodate administrative staff and warehouse personnel. The dry will accommodate all mine and process plant personnel.

20.2.8 Roads

The site will provide roads connecting the open pits and underground operation to the main processing area. The roadways will not be paved, but will be lime treated. A new road from Highway 741 will be provided to access Rovina and Meisor, as the present access road will be interrupted by the Colnic open pit. The new road will also provide access to the process plant complex from Highway 741.

20.2.9 Waste Management

Industrial and domestic waste from this site will be transported to local disposal sites.

20.2.10 Electrical and Backup Power

The anticipated power demand for the mill complex is approximately 50000 kW. This energy will be provided through a single 110 kV tap from the nearby utility transmission line and a main substation. The main substation will house two‐step down transformers and 13.8 kV

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distribution switchgear. At this location, there will be approximately 6000 kW of diesel driven standby power available.

The electrical service at the Ciresata underground development will be provided by a tap off the 110 kV utility grid as well, with an estimated demand of 2800 kW. The conveyor system from Ciresata to the mill will be partially fed at depth from Ciresata, and partially from the mill distribution. Distribution voltage at Ciresata is anticipated to be 13.8 kV. Back‐up power will be provided to accommodate for mine evacuation purposes.

There has not been any provision for permanent electrical infrastructure at the Colnic or Rovina locations since these locations will be serviced by mobile equipment.

The electrical service at the recycle water pump house will be provided by a tap from a nearby utility distribution line.

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21 MARKETS AND SMELTER

This section examines potential smelting and refining terms for the consumption of the copper concentrates that are expected to be generated from the RVP, the elements that may affect the Project’s net revenue flow, and the potential consumers for the Project’s copper concentrates.

The estimated commencement date of production from this Project, during late 2015, suggests that first full year shipments may occur during 2016. This report assumes that the international demand for the Project’s product shall continue to expand at an annual rate of approximately 4.0%; and, that future economic recession or international conflict shall not adversely influence these patterns. The increasing demand for copper in the Asian markets, commencing during the late 1990s, has stimulated the expansion of processing capacities for copper raw materials in Asia, and rationalized reduction and/or elimination of similar existing processing capacities elsewhere in the international market. The balancing of supply and demand is expected to continue where newly created processing capacity should absorb much of the new copper concentrate production capacity that will be realized prior to 2016.

The quality of the Project’s product will influence the targeted regions for consumption; therefore, stressing the importance of the Asian smelting and refining growth on the overall copper concentrate market, while focusing on the unique quality of this product.

The quantity and estimated value of the Project’s product will allow movement of product to multiple regions; therefore, the regions and consumers providing the least commercial risk and the optimum NRR to the Project should be considered.

The objective is to establish the estimated smelting and refining terms and conditions for the Project’s products, based on the analysis provided, and to predict the estimated NRR for the Project, assuming prices and market conditions commencing late 2015. Further, it is intended to provide options for the Carpathian management to consider while evaluating the development of this Project with respect to consuming regions, potential clients, and logistical alternatives.

A proforma calculation for the product is provided in Appendix F where the value for the product is determined on estimated CIFFO delivery port and FOBST mine assumptions.

21.1 General Considerations

The consolidation of major participants in the copper mining, smelting, and refining market will influence the characteristics of the copper market but should not adversely affect the market demand for the Project’s product. The product will be clean, relatively low copper content with high sulphur values and very high gold content. The annual quantity of product is not extraordinary and the mine life is reasonably long‐term, estimated at nineteen years.

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The Project should not compete directly with major producers such as BHP‐B, RTZ, Codelco, Freeport, Vale, Anglo, Teck, Antofagasta, Xstrata, and Grupo; however, will be influenced by this group’s interaction with the major consumers in China, India, Japan, Korea, and Philippines. Many of the above producers control or influence the operations of copper smelting and refining complexes.

PEG recommends that the Project focus upon selective smelting and refining complexes that currently process copper concentrates with high gold content. Those smelters, which process a dominant quantity of low‐precious metal copper concentrates, will struggle to maximize their recovery of the precious metal. This cause is related to the loss of precious metals into the slag where a small quantity of high‐precious metal copper concentrate entering a smelter with dominant large volume of low‐precious metal copper concentrates, is diluted. Since some precious metal will report to the slag, most of the loss will be attributed to the small quantity of high‐precious metal concentrates.

Smelters that normally process high‐gold content copper concentrates should be considered as potential candidates along with those smelters, which have installed technology to process slag in an effort to improve the recovery of precious metals.

To establish the consumption pattern, the base line should include those smelters, which consume high‐gold copper concentrates such as OK Tedi and Freeport Indonesia, which have less gold content than the Project’s product but will establish a trend.

Many smelters may complain about the low copper content of the Project’s product but will recognize the benefit of the high sulphur content, which reduces the fuel requirements of their furnaces. As the quantity of the Project’s product is manageable for most smelters, the product is an excellent blend for many smelters to combine with products having high gold and copper, and low sulphur contents.

The Project should closely monitor the silica and alumina contents since smelters will attempt to identify any negative item that will permit greater smelter participation in the gold values. The current silica and alumina levels are acceptable while the majority of the dilution appears to be related to the pyrite content that is a major contributor to the high sulphur content.

This report suggests that the Project consider distributing the sale of product among at least three smelters to minimize operational disruptions, minimize client risk, and to maximize leverage of negotiations. Unless, the Project desires to link product sales with potential Project Financing, the above strategy is highly recommended.

Logistics must be examined; however, freight costs should not greatly influence the NRR of this product. The product value dictates that the inventory in‐process at the mine, inventory in‐transit from mine to port, inventory in storage awaiting shipment at the port, and inventory in‐transit from shipping port to receiving discharge port, must be minimized.

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Further, extreme procedures, considering the product value, should be considered for handling, sampling, assaying, and moisture determination. Normal deviations in moisture content and the methods established to sample and determine the settlement dry weight must be closely examined and controlled. Moisture samples should be taken when product is weighed and sampled for assays at the trailer or car discharge in the storage area designated for loading the carrying vessels. Care must be taken to immediately seal the moisture samples and to follow the established procedures for drying and determination of dry weight. Sampling for assay determination should be examined but will likely follow normal procedures where samples should be taken from the transit trailers or cars when departing the mine area and absolutely upon loading of the carrying vessel where a static scale is utilized and frequently calibrated before the trailers or cars are discharged at storage area prior loading of the vessel. The trailers or cars must be recorded for tare weight as well as total weight. The storage area for loading the carrying vessels must be very secure and covered to protect from weather conditions as best possible.

Tare is the total weight of the product in the containing vessel or package minus the product weight (in other words, the weight of the railcar, container, bags, drums, trailer, or cart, empty). When the product arrives at a static weighing station, the whole system is weighed loaded, and then weighed empty after discharge of the product –tare is then deducted from the first weight. In the case of containers stuffed with bags, the container is weight loaded, then empty and the weight of the bags is also added to the empty container weight to establish the total shipped wet weight. This is a delicate operation where many buyers steal product either in the weight procedure, in the sampling for moisture procedure, or in the assay exchange procedure; or, in all cases. This requires professional guidance and advice for the Producer.

Assaying, exchange of assay results, and the splitting limits for determination of settlement results must be professionally managed. Dust control and wash‐down facilities for trucks and rail should be examined since the Project should avoid unnecessary losses by handling and transport. Similar facilities install wash‐down facilities for trucks prior departing the loading area at the mine and similar facilities at the discharging area prior loading onto carrying vessels. Since the product has a value in excess of US$2,000/DMT tonne, care must be taken to contain losses to the most minimum level. Transit trailer or cars must be tightly covered to avoid wind losses during transit.

The product may be shipped in containers or other alternative packaging, which will minimize losses during handling and shipping.

PEG suggests shipment in the smallest vessels that are conducive for the movements required to minimize the in‐process inventory. The alternative is to demand advanced provisional payments from consumers upon loading of the carrying vessel; however, this procedure may not be acceptable to some or all consumers, and the consumer (smelter) will attempt to adjust the terms and conditions to reflect the loss of interest and risk.

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Professional surveyors are recommended at loading and discharge ports. Professional support is suggested for the Project to assist negotiating and drafting the commercial Sales/Purchase Agreements for the product with the various consumers. This practice would reduce the exposure to a number of critical elements within the commercial agreements and define how best to manage and control the liquidation process.

PEG strongly recommends that the Project does not establish a hedging program and only considers such a process after commercial production has been established with professional support and advice.

Primary regions that may be considered for this product are Western Europe, Eastern Canada, Japan, Korea, and India. Subject to considerable evaluation of the process recovery and controls, management of the facility, and competitive terms and conditions, the MDK Bulgarian smelter may be a candidate (please refer to the determination of moisture, weights, sampling, assaying, and handling comments above). Western Europe hosts smelters in Scandinavia and Baltic Regions, Germany, and Spain, all which process high gold copper concentrates. Eastern Canada, Japan, and Korea have excellent processes for consuming high gold copper concentrates. India, Bulgaria, and some smelting complexes in China do process high gold copper concentrate.

The selection of the final consumers will be dictated by the potential consumer’s appetite for high gold copper concentrates on a long‐term basis; terms and conditions; and, the evaluation of client and domicile risk.

21.2 Terms and Conditions Discussion

21.2.1 Accountable Metals

The actual recovery of payable metals varies by smelting processes; treatment of precious metals and by‐product streams; concentration of payable elements within the standard smelting bed (the desired blend of concentrates entering the process); and, the impact of deleterious elements on the processing efficiency, payable metal recovery, and deleterious element containment costs. A smelter, having minimal precious metal in their overall feedstock, will struggle to achieve modest recovery of the precious metals as compared with a smelter having above average precious metals in their feed stock. Some smelters have efficient slag cleaning furnaces while older facilities are not physically able to improve precious metal recovery.

21.2.2 Smelting and Refining Charges

The proposed smelting and refining terms for each product are consistent with the anticipated market trends reflecting a rise in mine production to compensate for the immediate market shortages and higher than usual prices for each accountable metal. The

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time‐line to construct and commission smelters and refineries is less than the time‐line to explore, identify, evaluate, develop, and exploit a mineral property. Smelter and refinery expansion is driven by separate economics as compared with mine development, which is more focused on long‐term price and consumption patterns.

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22 ENVIRONMENTAL AND SOCIOECONOMICS

The RVP, 100% owned by Carpathian, is composed of three gold‐copper porphyry deposits located in close proximity to each other in the Rovina Valley and Garzi Valley of Hunedoara County in the South Apuseni Mountains of western Romania. The project is currently at the PEA study stage of development.

The initial phases of exploration of the RVP has been completed with the discovery of the third porphyry, the Ciresata deposit, approximately 4 km south of the Colnic deposit in Garzi Valley, late in the exploration program in 2008. The mining design from this PEA study utilizes open‐pit mining methods for the Rovina and Colnic Deposits and bulk underground mining methods for the Ciresata deposit. The ore processing method will use industry standard crushing‐grinding and flotation technology to recover a gold‐copper concentrate without the use of cyanide.

Advanced exploration continues at Ciresata to define the limits and grades of the new discovery to NI 43‐101 standards. To that extent, exploration in the area has not been completed.

The Project is located within the Golden Quadrilateral Mining District that has a long history of mining and contains areas with extensive mining disturbance. State owned and subsidised mining operations were closed in 2006 after a long period of declining investment in operations resulting in legacy environmental issues and high un‐employment. The Rovina property lies just east of the Brad‐Barza sub‐mining district, which was operated by the State until closing in 2006. On the Rovina property, there are no previous state‐owned mining operations with previous activity restricted to exploration utilising drilling and limited underground gallery excavations.

Following the Aurul Mine cyanide spill in the Baia Mare Mining District (northern Romania) in 2000, environmental concerns relating to mining activities in Romania and their potential trans‐boundary impacts have been heightened. The major areas of environmental concern include soil erosion and degradation, water pollution, air pollution in the south from industrial effluents, and contamination of Danube delta wetlands. The EU has reviewed mining practices and developed criteria for responsible mining which are included in the ‘EU Mining Waste Directive’. This directive came into force in April 2006. Romania became a full member of the EU on 1 January 2007 and has adopted the EU Mining Waste Directive in 2008. This directive allows the use of cyanide in mineral processing providing defined concentration levels of cyanide in tailings management facilities are met. In addition, Romania has adopted the EU legislation for environmental protection and public consultation that meets international best practice standards.

The Project lies near rural settlements that under the present mine dump designs will be impacted by their proximity. Trade‐off studies to evaluate various mine design features,

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such as waste dump and tailings locations, are planned for the next phase of engineering. Carpathian has adopted a proactive stakeholder engagement approach under the guidance of Corporate Social Responsibility (CSR) framework.

This section will outline the major elements of the environmental/socioeconomic setting, licensing and permitting procedures, and environmental work that will be required to prepare the Project for production. In addition, it will present the approach that Carpathian is taking on environmental and social issues within the concept of sustainability. It sets out the requirements for the baseline work required for an EA process and the preparation of an EIAR for approval by Romanian government agencies.

22.1.1 Carpathian Background in Romania

Carpathian operates in Romania through its wholly owned subsidiary SAMAX with registered seat and office in Baia Mare, project office, and technical facilities in Criscior, and an office in Deva, the Huneadora County seat. SAMAX has been operating as an exploration company since 1999 following inception of the modern mining law in 1998. Previously SAMAX has held two Exploration Licenses in the Baia Mare Mining District under Joint Venture agreement with REMIN, the State Mining Company, and an additional five Exploration Licenses in all the major mineral belts of Romania. Work programs have been completed on all these licenses and they have been closed and returned to the National Agency for Mineral Resources (NAMR). Presently, SAMAX holds only the Rovina Exploration License.

In April 2004, SAMAX was granted a non‐exclusive Prospecting Permit, which includes the present area of the RVP. In August 2005, following a public tender and bid process, SAMAX was granted the Rovina Exploration License (Rovina Nr. 6386/2005) for a period of four years by the NAMR. In August 2009, SAMAX was granted a three‐year extension to the Rovina Exploration License. Technical studies are now underway to meet the requirements of the NAMR for conversion of part of the Rovina Valley Exploration License covering the RVP area into a Mining License.

SAMAX has completed 181 drill holes for a total of 71,300 m of drilling on the Rovina Exploration License. All drilling activities require the appropriate environmental permits for access development, and drilling operations along with surface rights agreements. Thus far, SAMAX has not encountered any obstacles in obtaining the necessary environmental permits and surface rights access.

22.2 Permitting Requirements

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participation. The environmental protection laws and procedures generally meet with international best practices; however, governmental institutional capacities are still in the building stage. The Romanian EIA process has adopted some guidelines from the World Bank for public involvement and consultation in project planning.

Romanian Government environmental regulations include the 1995 Environmental Protection Law. The major provisions set out in the environmental code include the following:

 principles and strategic elements that are the basis of the laws  right to access information on environmental quality  right to information and consultation on the sitting of industrial facilities as set out in the Law on Environmental Impact Assessment  implementation of environmental impact assessments, the results of which are to be made available to the public  establishment of liabilities regarding environmental quality rehabilitation  management regime for dangerous substances, hazardous waste, chemical fertilizers, and pesticides  protection against ionizing radiation and safety of radiation sources  protection of natural resources and biodiversity conservation  prompt action and reporting when accidental pollution occurs  prerogatives and responsibilities of the environmental protection authorities, central and local authorities, natural and legal persons  right to appeal to the administrative or judicial authorities.

22.2.1 Exploitation License/Mineral Rights

In Romania, and common elsewhere, licenses are issued to provide rights to develop resources and permits are issued to allow operations. NAMR under the Ministry of Economy and Sustainable Development in Bucharest manages the mineral resources of Romania. The NAMR enforces the Mining Law 85/18.03.2003 and issues Prospecting Permits, Exploration Licenses, and Exploitation Licenses. The RVP lies within the Rovina Exploration License which is 100% held by Carpathian through its wholly owned subsidiary SAMAX. The holder of an Exploration License has the exclusive right to apply for an Exploitation License within the property boundary.

The Romanian Mining Law defines exploitation as including all operations executed at the surface, and beneath it, for the extraction, treatment, and delivery of mineral resources. An Exploitation Licence is granted at the discretion of NAMR and can be awarded to an Exploration License holder through an application, review, and award process, or based on a

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public offer in the case of no current Exploration License. Prior to receiving an Exploitation Licence, the successful party must submit:

 a feasibility study for the mining operations  an EIA and environmental audit  a minimum investment and development plan  a remediation plan to remedy any environmental damage caused by mining operations  a social impact statement and a social mitigation plan.

These studies and reports must be completed by Romania accredited consultants or institutions and are utilized by the NAMR for judging the feasibility of the proposed mining operation prior to issuing an Exploitation License. The Exploitation License does not include any permits for operating, and is issued at the sole discretion of the NAMR. Operating permits require further detailed studies, public consultation, and review by the appropriate government agencies (Section 22.2.3).

Holders of an Exploitation Licence must pay annual land fees of RON 25,000/km2 (approximately US$9,000/km2) of terrain subject to exploitation at surface or underground. This land fee may be adjusted for currency inflation. In addition, a royalty must be paid to the State budget equal to 4% of the value of the polymetallic and/or precious metals mineral resources extracted from a particular site, and is payable quarterly. This royalty was increased from 2% to 4% during 2007.

22.2.2 RVP Exploitation License Studies

Carpathian has begun the work to obtain an Exploitation License covering the Project. A consortium of six Romania qualified and accredited consultant groups, led by EcoTerra SRL, where retained in late 2009 and are presently engaged in conducting the necessary studies and reports for an Exploitation License application to the NAMR. These studies are as follows:

 Technical Study, to evaluate the economic feasibility of the proposed mining operation with the goal of obtaining state registered reserves  Environmental baseline and Impact Assessment Studies, which includes water and soil resources, biodiversity, air quality, landscape, and cultural‐heritage resources  Health and Safety Baseline and Impact Studies, which includes local population health status, medical resources, local health and safety issues, and possible impacts over the life‐cycle of the proposed mining operation  Social Study, to define baseline community and financial resources and evaluation of the positive and negative impacts of the proposed mining operation with proposed mitigation measures

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 Risk Analysis Study, to evaluate operational risks of the proposed mining operation on environmental and social resources and proposed mitigation measures over the life cycle of the Project.

These studies are planned to be completed in Q3 2010, will provide a foundation for the definitive studies required to obtain the operational permits and Licenses which are described below.

22.2.3 Mine Permitting

The Romanian consulting company EcoTerra SRL has provided to Carpathian a summary of the regulations and procedures for acquiring operating permits for a mine under the Romanian legislation and regulations (EcoTerra SRL, 2008). These requirements are typical of those required by other jurisdictions around the world.

There are three pieces of legislation pertaining to the development of a new mine in Romania:

 legislation governing mining activities  legislation regarding permits for construction  legislation concerning environmental protection.

Prior to any permitting approvals in Romania, and UC is required. The UC includes a description of the Project and contains a template of all possible remits required in Romania. Depending on the level of disturbance of the proposed project, the required approvals and permits are selected from the template. The UC is issued by the county Environmental Protection agency and is required for activities ranging from exploration drilling to mine permitting. Large impact projects also require UC approval by the local county council.

Following the issuance of the UC, the licensing, permitting requirements, and procedure for a mine site with significant impact are summarized below:

 Construction License ‐ land use approval Planul Urbanistic General (PUG) for proposed new categories on a local and regional area basis (involves public meetings for feedback and approval) ‐ land use approval Planul Urbanistic Zonal (PUZ) for industrial zones including detailed development plans (involves public meetings for feedback and approval) ‐ environmental procedure requirements through local environmental protection agency ‐ approved by the local County Council  Environmental License ‐ Environmental Impact Assessment Report (EIAR)

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‐ Social Impact Assessment Report (SIAR) ‐ Closure And Remediation Plan ‐ Technical Authorizing Committee (TAC) Review (TAC comprising experts and interested parties from recognized institutions) ‐ Public Hearings for Feedback ‐ TAC and company review of public feedback (as per spirit of the Equator Principles and Aarhus Convention) ‐ approved by the Regional Environmental Agency  Construction Permit Issued – allows construction to begin  Operational License ‐ reception note for the construction works to specification ‐ environmental design requirements met ‐ health and safety measures in‐place ‐ all additional operating permits ‐ intervention plans for accidents and natural disasters  Operational/Environmental Permit Issued – allows mining operations to begin.

The EIAR is required to have a number of substantiating studies prepared, and these are quite typical of those required in North America. For example, they will include studies on vegetation, water quality, fauna, biodiversity, hydrology and hydrogeology, archaeology, and human health and safety. Additional permits address development of water and power supplies, and dam safety. Prior to issuance of the Construction Permit, all surface rights within the determined industrial zone need to be acquired. In addition, if the proposed project has potential international trans‐boundary impacts, under the Espoo Convention, public consultation in neighbouring countries is required.

The Environmental License is issued by the Regional Environmental Agency, following a specified procedure, which includes the setup of a Technical Authorizing Committee, whose decisions are presented to the public (together with the EIAR). The public takes an active part in making the decision, as envisaged under the Aarhus Convention. The Environmental License authorizes the Project

The final step of issuance of an Environmental Permit requires that a Reception Record Note for construction works has been submitted, that all requirements of the Environmental License have been met, and that the Application Form, Location Report, and Safety Report have been completed. An Internal Emergency Plan is required to be submitted with the Safety Report. The Environmental Permit authorizes the operation. A water‐use license/permit may also be required prior to commencing any activity that requires use of groundwater or surface water.

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EcoTerra SRL (2008) has provided a spreadsheet showing the likely timeline for permit acquisition for the Construction Permit and Operations Permit. Figure 22‐1 presents a summary starting with the preparation of the Land Use Plan, EcoTerra projects, which will take just over three years to obtain the Construction Permit. An important consideration in the permitting timelines is the possibility to conduct required studies and reporting in parallel to obtain different Licenses. For example, much of the work required to obtain the land use re‐zoning (PUG and PUZ) is also required for the Environmental License. Under the category of Operations Permit, EcoTerra identified a further two years (including the construction period) to obtain the Environment/Operations Permit.

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Figure 22‐1: Estimated Timeline for Permit Acquisition

Time Frame for Preparation and Iussuance of Permit or License Year 1Year 2Year 3Year 4 Year 5Year 6 Sub‐requirements (Possibley Time Permit/License Reqirements to Obtain Permit/License ID required but not limited to:) (yrs) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Land Use Planning PUG 8.1 1.50 ―――――― (General Land Use Plan) 8.1.1 Technical Project Description 0.50 8.1.2 PUG Strategic Enviro. Assessment 0.50 8.1.3 Public Hearing 0.25 8.1.4 Response Period 0.25 8.1.5 Re‐zoning (City Council) 0.25 PUG Issued Land Use Planning PUZ 8.2 3.00 ―――――――――――― (Town Planning Certificate) 8.2.1 Sanitary Plan 2.25 8.2.2 Water Management Plan 2.25 Construction 8.2.3 Forest Management Plan 2.25 Permit 8.2.4 Technical Project Plan 2.25 8.2.5 Firefighting Plan 2.25 8.2.6 Emergency Situations Plan 2.25 8.2.7 Cultural & Heritage Report 2.25 8.2.8 Geo‐Technical Report 2.25 8.2.9 Dam Safety Permit 2.25 8.2.10 Public Hearing 0.25 Public hearing 8.2.11 Response Period 0.25 Answer period 8.2.12 Romanian Academy Approval 0.25 8.2.13 Re‐zoning (County Council) 0.25 PUZ Issued Enviro. Impact Assessment Report (EIAR) 7.0 3.25 ――――――――――――― 7.5 Air‐quality Management Plan 2.25 7.6 Biodiversity Management Plan 2.25 7.7 Cultural & Heritage Plan 2.25 Environmental Health‐Safety & Risk assessment Report 7.8 2.25 License Social Impact Assessment (SIAR) 7.4 Plan 2.25 TAC Review 9.0 0.25 TAC Review Public Hearings 9.0 0.25 Public hearings Response Period 9.0 0.25 Answer period Construction License granted 10.0 0.25 Cunstruction License Granted Construction Period 19.0 2.25 ――――――――― Operational/ Environmental Permit 11.0 1.25 ――――― 11.1 Application/Location Safety Reports 1.00 Internal Emergency Plan 11.2 Accident/Pollution intervention Plan 1.00 Operational/ Prevent and Intervention Plan for Environmental 11.3 Hazardous substances 1.00 Permit 11.4 disasters 1.00 11.5 met 0.25 Requirements of Environmental License met 11.6 Reception of Record Note 0.25 Reception of Record Note Operational Permits Issuance 12.0 0.25 Operations Permit Issued

Legend PUG = General Urbanisation Plan SIAR = Social Impact Assessment Report PUZ = Zonal Urbanisation Plan TAC = Technical Assessment Committee EIAR = Environmentla Impact Assessment Report

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22.3 Environmental

22.3.1 Project Footprint

The three deposits lie along a north‐south linear trend over a distance of approximately 7 km with Rovina, Colnic, and Ciresata occurring north to south respectively. The Rovina and Colnic Deposits are 3 km apart (centre‐to‐centre) and Ciresata is 4 km south of Colnic (refer to Figure 20‐3). The Project footprint, as a rectangular boundary, extends over an area approximately 8 km north‐south and 7 km east‐west. Within this area there are projected to be two open pit mines (Rovina, Colnic) and one underground operation (Ciresata), some 293 ha of waste dumps, low grade stockpiles and haul roads, two pipelines, a power line, and a Tailings Management Facility (TMF) covering approximately 391 ha. The direct physical disturbance related to the proposed mine is approximately 1,200 ha representing 22% of the 8 km by 7 km area of the Project footprint boundary.

Within the Project footprint as defined, there are two villages (Rovina, pop. 230; Merisor, pop. 110) and one town (Bucureşci, pop. 700). An existing county road (paved, one and two lane road) connects these three communities.

The development plan for the Project envisages open pit mining of Colnic and Rovina in sequence, with waste from the Rovina pit being used for road construction and eventual backfilling of the Colnic pit. Concurrent to this, underground development at Ciresata will commence, and an underground conveyor gallery will be driven 6 km to connect Ciresata to the mill complex situated close to Rovina. For approximately six months, while the conveyor gallery is being driven, development ore from Ciresata will be trucked through the town of Bucureşci on Highway 741 en route to the mill. This will involve 10 truck movements each way per day.

The mill will have a capacity of 40,000 t/d (14.4 Mt /a), and will produce copper concentrates containing gold (for shipment offsite for sale) and tailings at 60% solids (which will be pumped to the TMF). The TMF lies approximately 6 km to the southeast of the mill complex at Rovina. Reclaim water from the TMF will be pumped back to the mill. The TMF will fill existing valleys in the area at an elevation of 475 m, and will have two retention dams, one at the northwest edge, and the other near the village of Curechiu (pop. 410) at the southeastern edge.

Project design at this stage has taken into consideration direct and visual impacts on local communities. The open pit operations, waste dumps, and process plant site in the Rovina Valley are in close proximity to the villages of Rovina and Merisor. The Ciresata deposit, which is planned as an underground operation, does not have any nearby settlements. The present study includes environmental monitoring as an operating cost (Table 24‐3) and includes an environmental staff of four technicians and one environmental manager.

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The development of the Project will be dependent upon obtaining approvals from the Government of Romania, and this will require the support of the local communities. Carpathian has already taken steps to involve and engage the local communities (Section 22.4) and has formed good working relationships with them. Two Carpathian’s senior staff on site are focused on that aspect of the Project, so good communication has been established.

The present study includes environmental monitoring as a general administration operating cost (Section 24.2.5) and includes an environmental staff of four technicians and one environmental manager.

22.3.2 Baseline Studies

The climate in the region is regarded as mild temperate–continental. Generally, the winter months are from December to March, and snow is common though accumulation is typically less than 30 cm. Mean winter temperatures are around ‐3°C to ‐5°C; however, periods of severe temperatures (as low as ‐20°C) can occur. Although exploration can continue year‐ round in this part of Romania, occasional heavy snowfalls can hamper access for short periods during the winter months. Springtime temperatures of 5°C to 10°C can start in early April, but patchy snow cover can last until mid‐May in the forested areas. The summer months, from June to September, have temperatures that range from 10°C to 20°C with rare maximum highs near 35°C. The typical annual precipitation is 800 to 1,100 mm.

The property is located in the southern Apuseni Mountains, which are mostly gently rolling with some abrupt slopes and cliff forming rock exposures. The highest peaks near the property are Duba Peak (969 masl), Coasta Mare Peak (786 masl), and Cornetel Peak (695 masl).

In the areas of the Rovina, Colnic, and Ciresata Deposits, the terrain is hilly to mountainous with access through relatively gently sloped narrow valleys with moderately steep slopes to rounded ridges. The minimum and maximum elevations ranges for each of the deposits are for Colnic 350 m to 540, for Rovina 500 m to 680 m, and for Ciresata 420 m to 480 m.

The property is mostly forested with deciduous forests (beech and oak) and occasional conifers, particularly at higher elevations. Wildlife on the property includes deer, fox, and wild pigs. Local streams on the property are not known to have fish.

The most significant source of surface water in the vicinity of the Colnic, Rovina, and Ciresata Deposits is the Bucureşci River (south of Conic) and its tributaries. This river flows west to the Crisul Alb River at Criscior, thereafter flowing westward to cross eventually the Romania– Hungary border and discharge into the major Tisza River. The Tisza River flows into Serbia and joins the Danube River just north of Belgrade; the Danube eventually enters the Black

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Sea within Romania territory. Within the property area, smaller year‐round creeks have provided an adequate supply for historic drilling programs.

The objective of baseline studies is to describe the present situation and provide the foundation for the impact and closure/remediation studies. These baseline studies may highlight positive and negative aspects of the present environment. In addition, these studies should also include all spheres/scales of potential environmental influence of the Project.

Although some preliminary baseline work has been carried out to date, there has not been a detailed program of baseline work completed over the entire project footprint. The baseline work that has been completed was based upon the operation as it was envisaged in 2007, i.e., Rovina and Colnic, and neither the Ciresata area nor the surface transportation corridor between Ciresata and the Rovina mill or considerations of possible locations for the Tailing Management Facility were included in that work.

Previous Work

The baseline work completed by Carpathian to date has included the activities relating to the implementation of its exploration program i.e. soil and rock geochemistry, mapping and documenting previous exploration activities. In addition, Carpathian commissioned Golder Associates in 2007‐2008 to provide strategic assessment, issue scoping, and recommend long‐lead baseline studies. Reports and site visits by Golder personnel led to the design and implementation of the weather and water monitoring programs discussed below (Golder Associates Europe Ltd., 2007; Golder Associates Ltd, Canada, 2007). Baseline work completed thus far includes the following aspects:

 Multi‐element soil geochemistry surveys covering much of the northern part of the Rovina Exploration License.  Documentation of legacy mining works, which are limited to underground exploration galleries at the Rovina deposit (Romania State Mining company ca. 1980s), and exploration galleries located in the alteration halo of the Colnic deposit (Austro‐ Hungarian period ca. 1870s).  Survey for designated protected areas and cultural‐heritage sites, which has identified a single site in the Rovina village of an 18th century wood church.  Archaeology research and baseline field survey directly over the Rovina, Colnic, and Ciresata Deposits completed by the Romanian Centre for Culture and Archaeology, Deva (Romanian Center for Culture and Archaeology – Deva 2009).  Surface water monitoring programs designed by Golder Associates to characterize the Rovina Valley watershed (Rovina and Colnic Deposits) included measurement of surface water flows, and eH‐pH analyses of the water, at six locations where water gauges were installed (all taken monthly), and periodical eH‐pH measurements at three sites related to old workings.

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 Weather monitoring program designed by Golder Associates utilizing three weather stations (at Remetea, Rovina village, and Criscior exploration office) installed to measure daily temperature, precipitation, wind, humidity, etc.  Historical data over the period 1986‐2006 purchased from the government weather and water flow station on the Bucureşci River in the village of Bucureşci.

Figure 22‐2 shows an aerial perspective view of the Project area, and includes environmental monitoring stations and locations of the Rovina, Colnic, and Ciresata Deposits.

Figure 22‐2: Aerial Perspective of Project Area and Monitoring Stations

Observations

Widespread soil geochemistry results indicate the mineralizing systems at Rovina, Colnic, and Ciresata are porphyry‐type and do not have associated epithermal suite of elements (As, Sb, Hg). Anomalous soil geochemistry is restricted to low levels of copper and gold.

Surface water monitoring of pH in the Rovina Valley watershed show surface water is neutral to mildly alkaline. Three sites near the Rovina deposit, which include drainage from an old state exploration gallery (Gallery Diana, 1980) and related waste dump show pH in the range of 7.08 to 8.23, indicates the present flow is not considered as ARD. The water draining the

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Diana Gallery, while presently neutral, is precipitating Fe‐Hydroxides. This suggests this water may have been acid, but has been neutralized along its flow path. Chemical analysis of these surface waters has not been completed.

The Rovina, Colnic, and Ciresata porphyry deposits do contain phyllic alteration halos typical of porphyries. The alteration halos contain disseminated pyrite and will be treated as waste in the open pit operations. Thus, further work will be needed to characterize the Acid‐Base balance of this waste rock and metal‐leaching characteristics to determine if ARD mitigation measures will need to be designed. For the purposes of the PEA, the waste rock is assumed to all be non‐acid generating.

The above is good preliminary information, and was as well focused as it could be at the time it was obtained. The scale and scope of the development currently envisaged for the Project; however, is much greater in extent than previously expected, primarily because of the discovery of Ciresata, so although this previous work is useful it will not meet the needs of the EIAR. Further work is planned and presently baseline studies associated with the application for a Mining License are underway as described previously in this section. The previous work, along with the Mining License studies will form a good foundation for the future studies relating to the EIAR.

Recommended Further Work

Comprehensive baseline environmental surveys should be focused on the likely affected areas of any project, and must gather information to support the closure and remediation options available to the Project. The design of an effective program therefore must be informed by the preferred project footprint, and any alternative project options.

A thorough environmental baseline survey will need to be designed to characterize properly the area prior to the development of the Project. The footprint of the proposed project is substantial, and the baseline studies need to characterize the pre‐existing conditions of hydrologic regimes (both surface and groundwater), biodiversity, soils, archaeology, cultural sites, air quality, and weather. Additional baseline studies should evaluate the potential of mine waste rock and potential sites for barrow quarries (used in road and dam construction) to generate metal ARD and metal leaching. This work should cover the entire footprint and include the open‐pit and waste dump areas, surface at the Ciresata underground mine, tailings management facility, process plant site, pipeline corridors, and access/ore‐haulage roads for both the preferred and alternative option locations. In addition, the baseline study should include areas outside of the immediate project footprint that may have impacts from the Project, for example, downstream drainages.

It is beyond the scope of this report to prepare and design the environmental baseline survey, and that will require detailed analysis of the Project footprint and proposed activities to establish the parameters of the work. As required by the Mines Law in Romania and by

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good industry practice, however, the baseline work will be a core element of the EIAR and Carpathian has committed to carrying it out to the highest standards.

Some key topics to be addressed in future baseline studies as highlighted by the present mine‐site design are as follows:

 ARD and metal leaching testwork from the wall rock of the Rovina and Colnic ore bodies, which will enable mitigation measures to be designed if needed  ARD and metal leaching testwork for the underground mining waste rock at the Ciresata deposit and the proposed 6 km long underground conveyor tunnel  The proposed TMF is located some 6 km to the southeast of the mill, and tailings will be pumped to the facility and reclaim water returned to the mill. There will need to be a detailed assessment of the existing conditions under the footprint of the TMF and the supply pipelines, and an understanding of the design details of the retaining dams as well as possible alternate locations.  surface hydrologic studies of the mine and TMF areas to provide accurate data for engineering design of diversion and containment structures  hydrology of watersheds proximal to the mine footprint, which may serve as potential water supplies if needed  characterization of pre‐existing conditions at potential barrow pits/quarries for use in construction  inclusion of all planned infrastructure development (power, roads, water) in baseline studies  archaeology baseline study over all the mine footprint area  baseline work can also be helpful in mine closure design, i.e., hydrologic and soil resources, pre‐existing agricultural capacities.

22.3.3 CSR Guiding Principles for Environmental Management and Project Implementation

The mineral resources industry is quickly evolving into one of the leaders in the field of sustainability (social, environmental, and economic responsibility) and corporate responsibility through the equitable involvement of all stakeholders. Carpathian has endorsed the concepts of sustainability as a framework for project development. Carpathian has developed a Corporate Social Responsibility (CSR) Manual, which is presently in final draft form and under review (Carpathian, 2009).

Sustainable Development

“Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” (UN World Commission on Environment and Development, 1987) This involves balancing and developing financial, natural, human, social and manufactured capitals when addressing economic, social and environmental factors

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(both internal to the organisation and externally), their interdependence and the concerns of our stakeholders.

This CSR approach envelops all aspects considered important in the framework of sustainable development of projects and includes organisational, environmental, and stakeholder engagement commitments. Carpathian recognizes that sustainable projects do not occur in isolation and rather, need to be integrated into the broader context of long‐term development. At the RVP, the environment (Natural Resources) and the community (Social Resources) are closely related and thus require an integrated approach on the issues of sustainable project development.

The following is an excerpt from the CSR manual (in final draft form).

We have developed this manual through:

 first and foremost, identifying the reality on the ground  combining our team’s knowledge and experience  using guidance from best practices on the international and local levels.

In order to recognize fully the appropriate methods for effective stakeholder engagement of both businesses and communities, it is useful to consider what exactly they may wish to engage. Common community/stakeholder themes are linked to social and financial issues, but none of these issues exists in isolation. They exist within the context known today as sustainable development. In recent years, the World Bank and the Forum for the Future have initiated a practical concept with which to approach the concept of sustainable development more easily, a concept referred to as the Five Capitals of community, society, or sustainable development. These are human, social, manufactured, natural, and financial.

This “Five Capitals Model” provides a basis for understanding and managing sustainability in terms of the economic concepts of wealth creation, resources, and capitals. Generally speaking, the model recognises that organizations and communities use five types of capital to develop. A sustainable organization or community will maintain and where possible enhance these stocks of capital assets, rather than deplete or degrade them.

The Five Capitals Model can be used to allow Carpathian to develop a vision of what sustainability looks like for the Company; it can also be used to find the common ground between a community’s development needs and those of the Company. The vision is developed by considering what needs to be done in order to optimize the value of each capital. However, in order to avoid “trade‐offs” damaging to sustainable development, to Carpathian, or to the Project’s stakeholders, they all need to consider the impact of activities on each of the capitals in an integrated way. Using the model as a support for decision‐ making can lead to more sustainable results, and to Carpathian optimizing their social responsibility, including that of developing a robust business.

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Figure 22‐3 shows the organizational (or institutional) policies of Carpathian’s CSR approach, which illustrates the guiding principles for corporate wide application.

Figure 22‐3: Carpathian Guiding Policies

22.3.4 Environmental Study Key Topics and Closure Considerations

The development of the Project will inevitably result in major disturbance of mine and mine waste areas. In Carpathian’s approach of utilizing the framework of sustainability concepts for project development, it will be vitally important to have accurate portrayals of the environmental setting pre‐mining (Baseline studies), impacts from mining (Impact assessments), and post mining (closure‐remediation). Environmental baseline and impact studies will highlight key topics of concern that when properly addressed will enable the Project to develop in a sustainable manner. Mine closure and remediation studies will provide the designs to meet the intention of re‐directing the land use of the mine and mine waste areas following closure and be included in the local community’s Strategic Development Plan.

The EIAR will need to address closure planning and costs, and must be in sufficient detail to estimate the required closure bond (i.e., financial assurance). In order to make a first estimate of closure costs, a conceptual closure plan needs to be developed. There should be as much mitigation by design as possible as this is developed, so that the closure aspects are an integral part of the initial construction and operation. At the minimum, there will need to be conceptual design information on the five major aspects of the proposed operation; the

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mines, waste dumps, haul roads, tailings impoundment, and buildings. Furthermore, the post‐closure fate of the developed facilities will have to be determined.

A critical question to ask is “what does the community want to do with this land when mining is finished?” Carpathian will need to provide options to the community based on requirements of relevant mine closure regulations and the Projects physical and economic capabilities. Community involvement in post‐mining land use design is an important part of a sustainability framework approach. This will have a considerable impact upon the closure‐ design chosen and warrants significant stakeholder engagement and a risk‐based approach (SWOT analyses) to define end use selected.

Mines

A closure plan will need at least a conceptual understanding of the manner in which the mines will be closed. The extent of partial or complete backfilling of the pits (e.g., Colnic), and what drainage is expected into the pits (i.e., will the pits flood), will need to be addressed. The pits will also have to be rendered physically safe, at the least, so they will require berming, flattening of top slopes, and perhaps fencing.

Information on the exposed wall rock chemistry will be required to establish the likelihood of ARD from the pit walls. Some level of understanding of the groundwater (i.e., hydrogeology) and surface water regimes will be useful in this context. Predicted groundwater inflow rates and pumping requirements can have a significant impact on operational costs but also influence closure options.

Waste Dumps

An estimate will be required for the total quantity (i.e., mass and volume estimate) of material that will be excavated and require disposal as waste, and what area it is expected to cover. The current site development plan prepared by PEG, indicate that the waste dumps will have a footprint of approximately 290 ha, which is 75% of the proposed tailings area footprint. A closure plan will need to address management of surface water runoff as well as minimizing infiltration of water into the dumps and subsequent leakage.

The ARD potential of the waste dumps will need to be assessed as this will have an impact on the closure methods chosen. If the ARD potential of waste rock is well characterized during mining, waste rock dumps can be designed to minimize ARD potential through blending potential‐ARD and ARD waste with neutralizing waste rock.

The intent is to rehabilitate waste dumps by planting trees on the exposed slopes of the waste dumps as they are built to provide stabilization and aesthetic “cover” for the rock piles. Further work will need to be done to gauge the effectiveness of this, given the potentially ARD nature of the substrate.

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The proposed waste dump locations of the Rovina and Colnic open pits are constrained to the Rovina Valley, a tributary of the Bucureşci River. This will enable close monitoring of the discharge from the Rovina Valley, which could affect downstream communities. A preliminary hydrological assessment of watersheds and discharge locations of the proposed facilities should be carried out early in the environmental baseline survey. Effluent and runoff from the proposed waste rock dumps will be discharging to surface water and groundwater sources that supply residential communities so a negative impact to water quality may not be acceptable and risks to both ecological and human health should be considered within a surface water management plan.

Closure of the waste rock piles will likely need a final cover that limits infiltration of precipitation and associated acidic and metal laden drainage from the piles if studies show this potential. Such a cover could be constructed of low permeability clay if any is available nearby, or alternatively a geosynthetic barrier or membrane could be used. However, covering the waste dumps with a cover to reduce infiltration may not be required or exceed the economic constraints of the Project.

Haul Roads

The use of mine waste rock to construct haul roads and access roads has been considered and can minimize the need for further disturbance from additional barrow quarries. However, as noted above, this will need geochemical characterization of the waste rock (i.e., Rovina pit) that is designated for use on the haul roads. The present plan calls for at least partial backfill of the Colnic pit, which is encouraged by the EU Mining Waste Directive. Again, this will need to be carefully considered in terms of hydrologic regime and geochemical characterization of the backfill waste for possible long‐term effects. These comments are also relevant to the closure needs, as these roads will have to be remediated to an agreed final use profile.

As with the waste dumps, long‐term management of surface water runoff from the haul roads will need to be addressed, as will the limitation of infiltration of water into the road substrate. A high level of confidence on the benign nature of this road‐building material will need to be developed. Mine roads may be useful to the community for post‐mine land use and should be included in mine closure stakeholder engagement planning. In any case, these roads will have to be remediated to an agreed final use profile.

Tailings Management Facility

Tailings management will likely be the biggest issue, and cost, in the closure plan. Information on how Carpathian intends to design, operate, and close the tailings facility (e.g., paste, hydraulic slurry, water cover, soil cover, revegetation) is required to develop the closure plan and estimate costs. Prior to completion of the EIAR, additional tailing options will need to be evaluated in terms of both locations and tailings emplacement technology. The selected closure plan for the tailings area should consider precipitation (including

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substantial snow pack in the winter) and hydrology. For example, for a flooded closure plan an adequate supply of surface runoff is required into the tailings impoundment.

There will need to be information available on the chemistry of the tailings, with a simulation of pore water chemistry during and after the life of the mine. The size of the tailings impoundment (391 ha) is considerable, and rehabilitation of the tailings area may pose significant construction challenges if the tailings will not support heavy equipment.

A sufficiently detailed closure plan for the TMF will need the following baseline and design information:

 conceptual design and operations plan for the TMF  tailings discharged method to the impoundment (e.g., paste, hydraulic slurry, how many spigot locations, subaqueous discharge, etc.)  tailings dam construction design to be water‐tight or permeable  initial dam constructed for long‐term (i.e., 1,000 year earthquake) stability or to be upgraded at closure  dam seepage to be contained (e.g., blankets or cutoff walls) or collected downstream  hydrologic assessment of the TFM (i.e., catchment area)  dam spillways from the TMF to be constructed for operation and should have sufficient capacity for long‐term closure  water balance that considers tailings process water and metrological inputs (e.g., site climate)  if flooded closure is selected, deposited tailings may need to be regraded to ensure no tailings are exposed above the low water elevation. In this case, specialized tracked equipment or dredging equipment may be necessary  dams need to be designed with sufficient freeboard to provide adequate tailings storage and water cover depth in a flooded closure scenario.

Covering the 391 ha of the TMF with a soil cover would likely be very expensive, so flooded closure may be the most economic option (and technically effective at mitigating ARD).

Buildings

The closure plan will require demolition and removal of mine and mill buildings, and related infrastructure (e.g., maintenance sheds, pipelines). Alternatively, a post‐mine closure end‐ use of these buildings could be evaluated. In addition to management of building demolition waste, there may be hydrocarbon and/or metal contaminated soil in these areas that will require remediation. Allowances for collection and proper disposal of hazardous waste materials are included in the closure cost estimate (Section 24).

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Site Issues

Drainage and diversion of clean surface water across and around the site needs to be considered during the operational phase of the mine, but also for post‐closure. Diversion channels should be constructed to reduce runoff into the open pits during operation but configured to allow the pits to flood at closure. Diversion channels can also be designed to reduce runoff onto/under the waste rock piles by directing clean surface water around these facilities. Surface water drainage may be needed to flood the tailings area during operations and maintain flooded closure in the long term (with confidence that water cover will be maintained during periods of drought).

As a general comment, Carpathian will need to ensure that the waste dumps, haul roads, and TMF are designed for closure at the outset. There are many examples of closed mines whose TMF was suitable for operations but under‐designed for closure resulting in increased closure costs. Facilities designed and operated for closure often have the lowest total life‐cycle cost.

Closure Planning

New mine developments, wherever they are located, are now required to include a detailed closure plan. This plan will require local community approval and approval from permitting agencies and will be included in the EIAR. A closure bond (i.e., financial guarantee) and schedule is agreed to with the appropriate government agencies based on estimate to implement the closure plan.

Current practice is for operations to carry out progressive reclamation, where they remediate portions of the site during the operational period, thus spreading out the closure costs and reducing the “end cost” of closure. As an operator completes progressive closure, the regulator may release portions of the bond as rehabilitation is completed. Ideally, after complete site rehabilitation and closure is completed then the balance of the closure bond refunded is released to the operator.

It will be important for Carpathian to discuss its closure plans with the affected communities to establish the most suitable end uses for the area, and develop the closure plan accordingly. Regulators will need to see community acceptance of the closure plan before they grant an operating permit for the mine. The permitting process will require closure plans for the Mining License, Land use re‐zoning (PUG and PUZ), and for the environmental license (EIAR). Each of these will require differing levels of technical design and community input.

A detailed closure plan will require more thorough studies that include an environmental evaluation of the mine wastes (dumps and tailings), ultimate pit wall compositions, hydrologic regimes, and end‐use. These studies are typically completed as part of the Feasibility Study. In the present study, environmental reclamation costs are included as capital cost items in mine‐life Years 17, 18, and 19 (Section 24).

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22.4 Socioeconomics

22.4.1 Introduction

The RVP lies within the Golden Quadrilateral Mining District, which has a long history and tradition of mining. State owned and subsidised mining operations were closed in 2006 after a long period of declining investment in operations resulting in legacy environmental issues and high un‐employment. The RVP lies just 4 km east of the Brad‐Barza sub‐mining district, which was operated by the State until closing in 2006.

Foreign investment for mineral exploration and development in the Golden Quadrilateral since introduction of the modern mining law in 1998 has defined new mining projects that are at the permitting stage. Arguably, Romania is now at the stage of approving new projects to introduce a modern mining era for the Golden Quadrilateral.

Since joining the EU in January 2007, Romania has adopted the General Framework Law 294/2003, which requires a compulsory EIA process for certain projects. The Guidance Document no. 918/2002 (transposing EU Directives) and four Ministerial Ordinances were adopted which establish competencies, procedural stages and instructions, including public participation. There is a requirement in the Romanian EIA process for “a) continuing consultation throughout implementation of high‐risk projects and b) use of independent advisory panels during the implementation of such projects” (World Bank, 2006, Romania Social Inclusion Project – Operational Manual: Guidelines for Environmental Analysis of Sub‐ Projects E1362). Application guidelines have been published by the Romanian Government entitled “Operational Guide – for development of the community’s institutional level capability (development of community capabilities)” (HG nr. 1059 din 08/09/2005 (Romania Official Monitor, 2005).

Romania has also ratified the UN/ECE Convention on Access to Information, Public Participation in Decision Making and Access to Justice in Environmental Matters (Aarhus Convention 1998).

One of the challenges that the Project will face is obtaining, and maintaining the ‘Social License’ to operate from the local communities, which will provide support during the permitting process. Carpathian has committed to comply with National, EU, and International (e.g., IFC) guidelines for stakeholder engagement and public consultations. Local communities in this region generally support mining projects and Carpathian has taken a proactive approach to local stakeholder engagement. As an example, Carpathian has opened a local community information centre and held Town Hall meetings for public consultation even at a relatively early‐stage of project development.

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This section will describe the Project’s socioeconomic setting, status of baseline studies, approach, and implementation of Carpathian’s stakeholder engagement policies, and surface rights.

22.4.2 Regional Setting

The project lies within the northern part of Huneadora County, which encompasses approximately one‐half of the historic Golden Quadrilateral mining district. Mining has played an important role in the economy of Huneadora county with Romania’s largest hard‐ coal reserves in its south part (Jui Valley) and gold and base metal production from presently in‐active mines in the north part (Zlatna‐Stinija belt and Sacarimb‐Brad belt of the Golden Quadrilateral). Other industries include the Arcelor‐Mittal Steel factory at Hunedoara, the large mine and cement factory of the German Hiedleberg Cement Group (Carpat Cement), and Romania’s third largest thermo‐electric power plan (Deva‐Mintia Plant) with a 1260 MW capacity.

The city of Deva (pop. 80,000) is the county administrative seat and was the headquarters of Minvest Deva, the state‐owned metal mining company for the South Apuseni Mountains. In the peak of mining activity, nearly 15,000 people where directly employed by Minvest Deva. During the 1990s, the state subsidized mining activity was scaled back until final closing in 2006 resulting in an unemployment rate nearly double the national average of 21.3% in 1999.

Following the 1989 revolution and the transition from state owned economy to private and free market capitalism, Romania experienced a difficult period – more difficult than many other countries behind the ‘Iron Curtain’ – whereby GDP was negative until 2000. From 2001, GDP steadily climbed up to 7.1% in 2008. Romania has been strongly affected by the financial crises of 2008‐2009 with GDP in 2009 at ‐7.0% and a resulting doubling of unemployment to 7.6%. Industrial production growth in 2009 is estimated at – 9% and is one of the areas of growth focus for the present government. The current minimum wage in Romania on a net basis is RON 600/month (US$190/month) which is multiplied by 1.2 for skilled workers. The average net salary in Romania for 2008 is EUR 350/month (US$490/month) and diverges widely from the city areas and rural areas.

During the process of economic restructuring from a state controlled economy toward private free‐market capitalism, the national government has defined certain areas in Romania as Disadvantaged Zones. Twenty‐three of the 27 declared disadvantaged zones are in mining regions. A Disadvantaged Zone is any region in Romania in which:

 one industry dominates the local economy by employing 50% of the work force  the mining industry predominates and has experienced significant closures (23 of the 27 nationally declared Disadvantaged Zones are in mining regions)

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 more than 25% of the local work force has been laid off  local unemployment is at least 25% higher than the national level.

Investment and development projects within these zones may be entitled to at least one of a range of entitlements provided that certain requirements are met for eligibility (i.e., number of employees) Entitlements relevant to the mining industry would be:

 10 year profits tax of 6% for companies exporting products  exemption of all fees associated with re‐zoning of agricultural land for industrial purposes  access to a special development fund.

The status of a Disadvantaged Zone is effective for between 3 and 10 years. Recent changes to the Disadvantaged Zone benefits apply to companies that begin production after July 2002 in which the 10‐year profits tax exemption is modified. The new law (#345/2002) applies to companies that export products in which profits are taxed at a flat rate of 6%. The property encompassing the Rovina, Colnic, and Ciresata Deposits occurs within an area declared as a Disadvantaged Zone.

As fallout from the recent financial crises, in late 2009 a consortium of institutions including the IMF, World Bank, EU, and the European Bank for Reconstruction and Development agreed to provide a package of loans potentially worth over US$30 billion to Romania with half of this amount allocated for use in the financial sector. Tranches have begun in early 2010 and are based on meeting certain goals intended to reduce government deficits and measures to encourage economic growth.

22.5 Project Area Social Footprint

The Project is in a rural area with broadleaf secondary forests covering approximately 85% or the terrain. Scattered small rural settlements exist on the property, comprising subsistence agricultural activities, mostly on the gentler low‐elevation slopes, and in the river valleys. The valleys contain open land, which is used for pasture and houses with small garden‐sized vegetable plots. The east‐west trending Bucureşci river valley includes the town of Bucureşci (pop. 675) which is the seat of the Bucureşci Commune. The Bucureşci Commune encompasses an approximate area of 50 km2 and includes the satellite communities of Rovina (pop 214), Merisor (pop. 107), Curechiu (pop. 410), and Sesuri (pop. 480).

The Rovina and Colnic Deposits occur in the Rovina Valley, a small south flowing tributary of the Bucureşci River, which contains the Rovina and Merisor satellite communities. The Ciresata deposit occurs 4.5 km south of the Colnic deposit in the Garzi Valley, which lies with the neighbouring Criscior Commune.

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There are no houses recorded in the direct vicinity of the Rovina, Colnic, and Ciresata Deposits. In the Rovina Valley, isolated houses and farms occur within 1,000 m south of Colnic and within 980 m east of Rovina (the village of Rovina). At Ciresata, the nearest houses are more than 3 km distant.

The present mine design includes two open pits and associated waste dumps, process plant, and pipeline corridor in the Rovina Valley. In addition, a new access road is planed to the communities of Rovina and Merisor in the Rovina Valley. The current mine site design includes the consideration to minimize direct impact on hoses in the vicinity, in particular the Rovina and Colnic Deposits in Rovina Valley. Waste dumps and plant site locations are selected to minimize impacts on nearby houses. The present location of the Tailings Management Facility (TMF) is in the Bucureşci River valley between the communities of Bucureşci and Curechiu. As the Project advances, optional locations for the TMF will be developed as well as trade‐off studies of different mine design options. Even with minimal direct impact on houses, given the scale of the Project, Carpathian will need broad‐based community support for approval.

Some of the community development needs highlighted by the Bucureşci Commune in their long‐term strategic development plan include infrastructure for water and sewage (presently houses utilize well‐water and individual sewage septic systems), natural gas pipelines for heating and cooking, and local economy development and employment (Bucureşci City Council, 2006). Carpathian is presently the largest single employer in the Bucureşci area.

Employment

State‐operated mines were the dominant employer in the area prior to closure in 2006. The nearby Brad Barza state mine, with operations centered in Criscior (pop. ~ 3,000) 5 km west of the RVP, closed in 2006 laying‐off 300 workers. During peak operation, 5,000 workers were directly employed. This supported the economy of the Bucureşci area, Cirscior, and the city of Brad (pop. 17,000) 10 km west of the Project. Replacement jobs in the local areas have not been developed and un‐employment is high. Many of the local residents are engaged in sustenance agricultural activities or have left the area seeking employment. A 2010 census by the Bucureşci Commune shows a 15% decline in population since the official census of 1992.

The project is expected to employ directly over 600 employees from the Bucureşci‐Criscor‐ Brad area. Applying a 3‐times multiplier on direct employment, it is estimated that a further 1,800 jobs will be created in services to the mine both direct and indirect.

Carpathian has committed to supporting community development in the context of sustainable development framework. This will involve working closely with community leaders and government to be partner for implementing projects envisioned by the community for long‐term sustainability. An important aspect of these projects will be

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capacity building of local human resources in addition to the infrastructure needs. The project includes US$5.5 million over its lifetime to help implement these projects.

22.5.1 Social Baseline Study

Carpathian has not completed a formalized social baseline study at this stage; however, this work presently occurring as part of the ongoing Mining License application process. The present study will include the local community demographics, health, human capacities, employment, and economic resources. Through Carpathian’s exploration activities and its community and government relations, a significant amount of knowledge and data have been collected. This will be incorporated into the social baseline study.

Knowledge and data sources available for use in a social baseline study include the following items:

 Strategy Plan for the long‐term development of the Bucureşci area, commissioned by the Bucureşci City Council, 2006. This includes base‐line census and description of local community and resources with simple SWOT analyses on various baseline aspects. The activities of SAMAX (Carpathian’s wholly owned subsidiary) are mentioned as strength for future employment potential.  Local community census completed in 2010. Previous official government census completed in 1992 and 1977.  Landowner database compiled by Carpathian for surface rights in the vicinity of the deposits.  Feedback from the community regarding project development from Public Meetings, Information center, and distributed questionnaires (i.e., perception of potential radioactivity risk, and sourcing employees locally).  CSR Workshops that include Carpathian’s local employees for insights into community concerns (AstonEco SRL, 2008).  Working relationships with local government officials (i.e., Mayor and City Council) and community leaders (i.e., local Priest).

22.5.2 CSR Guiding Principles for Socially Responsible Project Implementation

Carpathian has adopted principles of social responsibility and stakeholder engagement from the early stages of the Project. This approach, in part, was necessitated by the requirement of community approval of exploration permits and engagement of many local landowners for surface access agreements within the Rovina Exploration License. In addition, Carpathian recognizes and respects the community’s interest in the future of the Project. Drilling started in February 2006, and in October 2007, a Community Information Center was opened in the village of Rovina. In November 2008, the first Town Hall Public Meeting was held and the first information pamphlets were distributed. These activities are not required for

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exploration stage work; however, Carpathian believes investment in Social responsibility in the early stage is necessary for smooth development implementation as the Project matures. Carpathian has held Stakeholder engagement workshops on‐site and developed a Stakeholder Engagement Manual providing guidelines for practice (AstonEco SRL, 2009).

Social Responsibility

Carpathian has adopted a CSR manual (in final Draft format) that has developed from project‐level approach upward toward corporate institution polices. The following is extracted from Carpathian’s CSR manual (Section 22.3.3 for CSR approach to sustainability):

Social Responsibility – Definition:

Responsibility of an organization for the impacts of its decisions and activities on society and the environment:

 through transparent and ethical behaviour that: ‐ is consistent with sustainable development and the welfare of society ‐ takes into account the expectations of stakeholders ‐ is in compliance with applicable law and consistent with international norms of behaviour ‐ is integrated throughout the organization.

 As adopted by Carpathian, it highly endorses the field of sustainability and wishes to contribute and where possible enhance this evolution in its day to day operations and business environment and: ‐ wants to be the business partner of choice in our host communities contributing to their long‐term strategic development plans ‐ fully supports community‐based programs that enhance and develop capacity building within the context of sustainable development.

Carpathian’s Core Principles of Social Responsibility

 stakeholder recognition and engagement  prior consultation and consent as appropriate  capacity building through: ‐ community projects developed through local multi‐stakeholder forum ‐ encouragement of civil society NGO projects ‐ support of training programs for company and community ‐ partnership on community development projects  recognition of the realms of stakeholder decision ownership as shown in Figure 22‐4, multi‐stakeholder forum (MSF) schematic diagram.

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Figure 22‐4: Realms of Stakeholder Decision Ownership

Actions

Carpathian’s stakeholder engagement program is a continuous process linked to the advancement of the Project. This includes the everyday community interactions and the culmination of planned projects. Below is a partial list of completed actions through the stakeholder engagement program:

 continuous stakeholder engagement program – from first drill hole (2006)  community information centre opened (2007)  informative brochures for the community (2008) to be updated in 2010  advanced‐stage exploration stakeholder engagement – community Town Hall meetings (last meeting March 2009) with next meeting planned for May 2010  stakeholder engagement training for company employees (2007‐ongoing)  support community for their own leadership training (2008 – ongoing)  following CPN encouragement of NGO activity, now six independently funded projects under community supervision  participation in a local community Multi‐stakeholder forum created in January 2008 to discuss common issues  partner and sponsorship of cultural events (last event April 2010)  partnership program (local city council, local NGO’s, EU, community leaders and CPN) build and open a children’s library and playground (July 2009)  responsible land‐access and land‐use practices with reclamation approved by owners;

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 health‐environment and safety programs for employees and the community.

22.5.3 Acquisition of Surface Rights

Carpathian will need to acquire all the surface rights within the industrial zone as determined by the PUG and PUZ re‐zoning process (Section 22.2.3) prior to issuance of a construction permit. The direct impact from the proposed Project covers an area of approximately 1,200 ha. Of this land, approximately 85% is covered by secondary forests with mixed ownership including state, community, and private owners. Private ownership in the area is typically of 0.5 to 10 ha in size.

The final determination of surface area impacted will be based on the Feasibility Study, PUG and PUZ land‐use public meetings, and the EIAR. Carpathian has committed to, and is implementing public consultation actions well in advance of official land‐use public meetings. Land acquisition costs are difficult to assume at this point, but will vary according to land‐use (example forest and pasture land use). The present economic study includes an Owners Cost to anticipate this expenditure (Section 24).

22.6 Stakeholder Engagement Compliance Matrix

PEG retained AECOM on behalf of Carpathian, to conduct a review of stakeholder engagement efforts and related reporting of those efforts for Carpathian’s proposed Rovina Project gold mine operation in Romania (AECOM, 2009). SAMAX is developing the Project, which is a wholly owned subsidiary of Carpathian Gold, in the Rovina Valley of Hunedoara County in western Romania. The review highlights SAMAX’s work and reporting in relation to Romanian environmental assessment legislation and regulations together with internationally accepted standards such as the Equator Principles, EU environmental assessment expectations, and European Bank for Reconstruction and Development guidelines. This section summarizes the findings of the review.

22.6.1 Methodology

There is a plethora of international guidance documents that a mining company should be aware of, and take account of when it is considering developing a new mine. AECOM has reviewed a number of legislation and international guidance documents that were supplied by Carpathian. Five guideline themes, which encompassed current good mining practices, were common amongst international guideline documents. These major themes included organizational governance, human rights, environment, and sustainable development, contribution to community well‐being, and stakeholder engagement. The list of international guideline documents that were reviewed by AECOM was composed of:

 AA1000AS2008 – Accountability’s Assurance Standard, Draft, May 2008

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 Accountability and UNEP – Accountability and the United Nations Environment Programme’s Stakeholder Engagement Manual: From Words to Action, 2005  Equator Principles  Global Reporting Initiative (GRI)  Global Reporting Initiative Sustainability Reporting Guidelines (GRI SRG)  International Council on Mining and Metals (ICMM)  International Finance Corporation Stakeholder Engagement: A Good Practice Handbook for Companies Doing Business in Emerging Markets, 2007  ISO 26000 – International Standards Organization 2600 Guidance on Social Responsibility, 4th Working Draft, June 2008  OECD Guidelines for Multinational Enterprises – Organization for Economic Co‐operation and Development Guidelines for Multinational Enterprises, 2000  OECD Principles of Corporate Governance – Organization for Economic Co‐operation and Development Principles of Corporate Governance  Renewed EU Sustainable Development Strategy  United Nations Global Compact.

AECOM has reviewed documents provided by Carpathian related to its stakeholder engagement and reporting efforts and has provided descriptive comments on compliance and recommendations for further work in terms of compliance with international guidelines.

22.6.2 Summary

AECOM’s review indicates that Carpathian has been proactive in stakeholder engagement efforts that speak to the five key guideline themes (as identified in Section 22.3.3 – Methodology). Where gaps between SAMAX’s activities and international guidance have been found to exist, AECOM has provided recommendations on future action items to ensure complete compliance with appropriate legislation and good mining practices. These have been highlighted in a report to Carpathian, and for ease of reference, Table 24‐2 shows a summary of Carpathian’s stakeholder engagement efforts and proposed action items.

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Table 22‐1: Stakeholder Engagement Commitments and Recommendations

Theme and Sub‐Themes Commitments Recommendations Organizational Governance ‐ anti corruption ‐ Developing internal corporate anti‐corruption policies. ‐ Developing a company policy on appropriate political ‐ appropriate political involvement ‐ Minimizing vulnerability to corruption by maintaining diplomatic involvement and ensuring that employees are made ‐ appropriate disclosure and transparency procedures contacts at the highest levels possible. aware of and that they comply with the policy. ‐ ethical and fair business practices ‐ Assessing legal acts that could be vulnerable to negative attack. ‐ Reporting and publishing on compliance with local, ‐ Developing and implementing a strategy to cover any weak national, and international laws and regulations, as points related to legal acts. appropriate. ‐ Developing and maintaining fair business practices within EU and ‐ Implementing the Global Compact 10 Principles and Romanian requirements. publishing a ‘Communication on Progress’ report on an ‐ Adopting a corporate policy for following international good annual basis. practice. ‐ Publicly advocating the Global Compact and its ‐ Committing to proactively surveying legislative changes and legal principles. requirements for issues that could affect operations. ‐ Establishing an ethics hotline for suspected ethics violations. ‐ Establishing a company‐wide ethical and fair business practices code of conduct. Human Rights ‐ anti‐discrimination practices ‐ Developing a community and occupational health and safety plan ‐ Developing a corporate anti‐discrimination policy. ‐ continual improvement of corporate health and for the proposed Rovina operations. ‐ Developing and publishing a company‐wide policy on safety appropriate labour standards. ‐ promote consultation and co‐operation between employers and employees Environment and Sustainable Development ‐ social and environmental standards ‐ Adopting appropriate international mining criteria for addressing ‐ biodiversity and land use planning potential impacts from various development activities. ‐ environmental and socioeconomic assessments ‐ Incorporating net conservation benefits that are consistent with ‐ protected areas maintaining the ecosystem, biological, socioeconomic, and ‐ environmental planning and sustainable cultural resources of the area. development be integrated into decision making ‐ Completing an archaeological survey of the mining area. ‐ Completing environmental and socioeconomic assessments. ‐ Avoiding environmentally and socially sensitive areas. ‐ Performing monthly water quality studies, rapid biodiversity

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Theme and Sub‐Themes Commitments Recommendations assessments, habitat mapping, noise, and air quality studies. ‐ Ensuring that experts in sensitive fields are available for possible communication requirements. ‐ Incorporating environmental assessments that include worst‐case scenarios and analyze potential off‐site impacts. ‐ Consulting and interviewing stakeholders and community members. ‐ Ensuring that stakeholders and community members are involved in the environmental impact assessment. ‐ Defining a formalized stakeholder engagement process. ‐ Encouraging and assisting governments to develop appropriate management capacities to allocate appropriate resources necessary for sustainable development. Contribution to Community Well‐Being ‐ raise awareness of the rights and duties of citizens ‐ Developing a ‘Corporate Social Responsibility’ strategy with ‐ Supporting and promoting continuing education for ‐ Social development community input. employees and their families, especially children. ‐ Meeting with members of the local community to brainstorm and identify issues, risks, and fears concerning the proposed Carpathian Mine project. ‐ Bearing all environmental and social costs resulting from their actions, including post‐closure. ‐ Engaging stakeholders to strengthen community relations and long‐term community partnerships. ‐ Developing corporate social responsibility policies related to governance, transparency, environment, health and safety, human rights, social commitments, and ethical business practices in keeping with international good practice. ‐ Identifying corporate and community priorities and develop training programs for skills needed in the future. ‐ Promoting capacity building programs and sponsor conferences and workshops promoting sustainable mining practices, good governance, and environmental management.

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Theme and Sub‐Themes Commitments Recommendations Stakeholder Engagement ‐ grievance mechanisms ‐ Providing a draft version of the Corporate Social Responsibility ‐ Developing a company grievance mechanism in order ‐ community access to relevant project information workshop report in both English and Romanian to workshop that employees have a means to communicate their ‐ independent monitoring and analysis attendees for review and input. concerns. ‐ information disclosure to stakeholders ‐ Reviewing relevant Romanian legislation and local permitting ‐ Promoting third party involvement in project ‐ developing partnerships requirements, EU directives and industry good practice. monitoring. ‐ communication be made in crisis situations ‐ Reviewing international agreements ratified by the Romanian ‐ Initiating partnerships with community stakeholders, ‐ Stakeholder consultation Government (e.g., Aarhus Convention, Kyoto Protocol, etc.), government, and NGOs. government plans, and policies relating to sustainable ‐ stakeholder identification and involvement ‐ Publicly committing to a response time to address any development. complaints or comments related to operations. ‐ report on the implementation of the sustainable ‐ Developing a local communication plan and internal policies for development strategy ‐ Further promoting stakeholder involvement in project communication. monitoring. ‐ Developing youth programs, information resources for schools, ‐ Submitting, on a biennial basis, a progress report on visitors, and town‐hall meetings in partnership with local the implementation of the sustainable development stakeholders. strategy. ‐ Undertaking a windshield survey of the proposed site to ‐ Forming a multi‐stakeholder national advisory council understand the local social and economic development needs. on sustainable development to stimulate informed ‐ Identifying key stakeholders. debate, assist in the development of sustainable ‐ Conducting a site visit to identify local needs, fears, concerns, development strategies, and/or contribute to national local leaders, and local expectations of the proposed mine. and EU progress reviews. ‐ Developing strong grass‐root community‐relations. ‐ Proactively engaging stakeholders. ‐ Mitigating negative impacts that activities might have on stakeholders. ‐ Identifying local partners for environmental, socioeconomic, and public consultation initiatives. ‐ Evaluating the local population’s identity and culture as well as evaluating political issues related to Indigenous Peoples, natural resource, or development issues. ‐ Identify “hot spots” for environmental and socioeconomic issues and assisting with developing environmental and socioeconomic strategies.

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23 TAXES AND ROYALTIES

The Project will be subject to the following taxes and royalties as per legislation in the Romania tax codes and the current mining law.

23.1 Taxes

In Romania the current corporate tax is a flat rate of 16% on profits and after tax profits can be repatriated to the parent corporation. Fiscal losses can be carried forward for seven years. Most methods for accounting depreciation are allowed in Romania including straight‐ line, accelerated, and reducing balance method. The most common for mining operations is to depreciate per tonne ore extracted from the total resource. Romania presently offers tax incentives for large investments that include accelerated depreciation for machinery and equipment allowing 50% depreciation in year 1 followed by straight‐line depreciation of the remaining value over its usable life. An additional incentive presently available is tax exemption of re‐invested profit used for the purchase of additional new equipment.

The NAMR collects annual taxes based on surface areas of Exploration and Exploitation Licenses. This tax rate was increased in 2007 to the rates listed below, and may be subject to adjustment for currency inflation;

 Exploration License ranges from ROM 1,000/km2 in years 1‐2 (~360 USD/km2), RON2,000/km2 in Years 3‐4 (~US$720/km2), and RON5,000/km for +4 years (~US$1,800/km2)  Exploitation License RON25,000/km2 (~US$9,000/km2) and is equivalent.

Building and property taxes are administered by the local government. Local governments commonly offer tax incentives for large investment projects.

The Mining Law (85/18.03.2003) provides exemptions from import duty tax for equipment and machinery required for mining operations.

The Project is located in a nationally declared ‘Disadvantage Zone’ for which incentives for investment are provided by the Government (Section 22.4.2). Incentives are applied on a case‐by‐case basis and may include profits tax rate reduction, and access to special development funds. In addition, Romania has access to structural development funds from the EU and has provided guidelines for projects to qualify for nonrefundable grants. As example, a project with a minimum 300 employees and greater than €50 million Euros investment can qualify for €28.15 million Euros grant. The Romanian authorities estimate that on average 14 projects will benefit from this fund each year and the annual average budget allocated for this program is €200 million Euros. The financial model in this PEA study does not include possible tax incentives or development grants.

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23.2 Royalties

A royalty must be paid to the State budget equal to 4% of the total revenue of the polymetallic and/or precious metals mineral resources extracted from a particular site. The royalty is administered by the NAMR and is payable quarterly. This royalty was increased from 2% to 4% in 2007. The 4% royalty has been considered in the PEA cash flow model. It amounts to a cash cost of $198.8 million over the life of the Project.

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24 CAPITAL AND OPERATING COSTS

24.1 Capital Costs

24.1.1 Summary

The capital costs for the RVP are summarized in Table 24‐1. The costs are based on a 40,000 t/d processing plant using a standard flotation circuit to recovery copper and gold for the 19‐year mine life. Mill feed will be from two open pits and a bulk underground mine. The underground mine will provide approximately 50% of the mill feed until Year 16 when the underground mine is scheduled to have mined all the known resource. The remaining feed until the end of the mine life will be from the open pits and reclaim of the low‐grade stockpile.

Table 24‐1: Rovina Valley Capital Cost Summary

Initial capital requirements as shown above are $509.4 million. The indirect and contingency percentages varied by capital cost item. As referred to in Table 24‐1, the indirect and contingency values are percentages of the direct capital numbers. Table 24‐2 shows these percentages.

Table 24‐2: Indirect and Contingency Percentages by Capital Category

Indirects Contingency Capital Category (%) (%) Open Pit Mining 10.0 15.0 Underground Mining 0.0 15.0 Processing 45.4 25.0 Infrastructure 30.0 20.0 Environmental 15.0 15.0

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24.1.2 Open Pit Mining

The capital costs for the open pit mine are based around the development of two open pits with conventional mining equipment. Diesel powered rotary drills with 200 mm bits will be used for drilling. Haulage trucks with a capacity of 180 tonnes were matched with electric drive hydraulic shovels. Support equipment includes track dozers, graders, rubber tired dozers and additional ancillary equipment. Table 24‐3 provides detail on the major open pit capital costs by unit and Table 24‐4 shows the capital by period.

Table 24‐3: Major Equipment – Open Pit Capital

Unit Cost Operating Life LOM Fleet Cost Equipment Capacity (US$ M) (h) (US$ M) Production Drill 200 mm 1,500,000 25,000 13,500,000 Front‐end Loader 20 m3 3,300,000 35,000 3,300,000 Electric‐Hydraulic Shovel 21 m3 6,000,000 60,000 18,000,000 Breaker Loader 6.5 m3 890,000 20,000 3,560,000 Haulage Truck 180 tonne 2,400,000 60,000 40,800,000 Tracked Dozer 306 kW 650,000 35,000 3,900,000 Grader 233 kW 625,000 20,000 3,125,000 Rubber Tired Dozer 350 kW 850,000 30,000 1,700,000 Support Equipment variable ‐ ‐ 8,847,000 Total Mine Capital ‐ ‐ ‐ 96,732,000

Table 24‐4: Open Pit Capital by Period

Pre‐Production Capital Production Capital Sustaining Capital Total Capital Year – 3 to Year ‐1 Year 1 Year 2+ Capital Category (US$ M) (US$ M) (US$ M) (US$ M) Production Drill 13.5 4.5 ‐ 9.0 Front‐end Loader 3.3 3.3 ‐ ‐ Electric‐Hydraulic Shovel 18.0 12.0 ‐ 6.0 Breaker Loader 3.6 0.8 ‐ 2.8 Haulage Truck 40.8 19.2 ‐ 21.6 Tracked Dozer 3.9 2.0 ‐ 1.9 Grader 3.1 1.3 ‐ 1.8 Rubber Tired Dozer 1.7 0.8 ‐ 0.9 Support Equipment 8.8 2.7 0.2 5.9 Total Mine Capital 96.7 46.6 0.2 49.9

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Indirect costs and contingency were estimated at 10% and 15% respectively. Initial capital represents just slightly under 50% of the LOM capital requirements.

24.1.3 Underground Mining Capital

The underground mine development was broken into three sections in the development plan:

1) Conveyor gallery development

2) Vertical Crater Retreat (VCR) development of upper high‐grade zone

3) VCR/Induced block cave for lower high‐grade section.

The conveyor gallery development is initiated in Year ‐3 from a location at the south entrance to the Rovina Valley, on the outskirts of the town of Bucureşci. This location is approximately half way along the 6 km conveyor length. In Year ‐2, the portal at the plant site in the Baroc valley is initiated. Development uses an advance rate of 4 m/d per heading, but with multiple headings developed, the advance rate is increased. The conveyor gallery is designed at 5 m x 5 m. Ventilation raises have been designed in the conveyor gallery at distances of every 1,500 m. These raises are 4 m x 4 m. The conveyor gallery development is completed half way through Year ‐1.

A surface portal is developed in the valley to the west of the Ciresata deposit to access the upper high‐grade zone. The ramp access is 5 m x 5 m. Once the ore body has been reached, panels will be developed in addition to extra ventilation raises.

The lower section of the mine is developed once the conveyor has reached the bottom of the deposit. Additional development is required in preparing the working, ventilation and haulage levels. At the same time, a ramp access will be developed to join to the upper zone being developed. An ore pass from the upper zone to the lower zone will also be developed in addition to further ventilation.

With the final design developed in Surpac, a mine schedule was created to determine equipment and labour requirements. In the case of the conveyor gallery, an additional crew was added in Year ‐2 with the start of the portal near the plant. When the connection to the Bucureşci portion is complete in Year ‐1, that same crew will relocate to the bottom of the Ciresata deposit and develop the ramp upwards to the upper zone as well as continue development beneath the deposit for extraction. The detail associated with the metres of advance by year has been included in Appendix D.

With the schedule, the equipment requirements could be determined. The result was a higher number of trucks required initially due to conveyor and ramp requirements.

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However, once the conveyor gallery had been completed, the number of trucks dropped to almost in half. Table 24‐5 shows the equipment requirements.

Table 24‐5 Underground Equipment Requirements

Equipment Capacity or Size Year 2 Trackless Longhole Rig 55 mm 5 Rock Truck 50 tonne 10 (19 max. Yr ‐1) Jumbo Drill Slides up to 4.9 m+ 6 Load Haul Dump (LHD) 7.6 m3 10 Scissor Lifts ‐ 6 Powder Trucks ‐ 3 Cap Truck (with wood box) ‐ 2 Lube Truck ‐ 1 Supervisor Vehicle ‐ 3 Electrical Service Tractor ‐ 1 UG Supply Truck (nipper vehicle) ‐ 2 Crane Truck ‐ 1 Jack Legs ‐ 12 Stopers ‐ 12

The underground mine capital was accumulated under three categories:

1. Equipment Capital 2. Development Capital 3. Ventilation, Ore Pass, Muck Bay Capital.

The equipment capital was primarily an upfront capital cost. The development capital was an ongoing expense as the base of the induced block gave was increased for ore release. The ventilation, ore pass and muck bay capital was also primarily an upfront capital cost due to the nature of the mining method.

The equipment capital was a simple accumulation of the equipment requirements together with the vendor supplied pricing.

The development capital relied upon the mining schedule developed and the resulting required meters and tonnages to be moved in any particular year. Table 24‐6 shows the unit rates developed. The ventilation, ore pass, and muck bay capital, were also calculated from the mining schedule developed.

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Table 24‐6: Underground Development Capital Unit Rates

Unit Cost Mine Operations ‐ Direct Costs (US$/m) Primary Waste Development – 5 m x 5m Ramp 1,614 Primary Waste Development – 5 m x 5 m Conveyor 1,614 Primary Waste Development – Ventilation Raise 4 m x 4m 1,695 Secondary Waste Development – Muck Bays, Infrastructure 3,500

Two additional categories were part of the underground capital, the conveyor system, and the initial ore haulage.

The conveyor system was based on a 6 km belt running from the base of the Ciresata deposit to the plant site in the Baroc valley. A quotation was obtained for this unit installed.

The initial ore haulage was the ore tonnage mined in the upper section of the Ciresata deposit. This ore was mined in Years ‐2 and Year ‐1, hauled to the plant site through Bucureşci on the existing road, and stockpiled. A total of 145,400 tonnes of ore is moved via contract trucking at a rate of $2.75/t.

Table 24‐7 shows the total underground mine capital.

Table 24‐7: Underground Capital Cost

Cost Capital Cost Category (US$) Equipment Capital 39,866,000 Development Capital 64,293,000 Ventilation, Ore Pass, Waste Pocket Capital 3,593,000 Underground Conveyor 14,800,000 Ore Haulage from Ciresata Portal 400,000 Total Underground Capital Cost 122,952,000

24.1.4 Processing

Basis of Estimate

Capital costs are estimated based on an equipment list generated from the process design criteria and a material balance. All costs are quoted in third quarter 2009 US dollars.

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Equipment costs are developed from vendor budget quotations supplemented by EHA in‐ house cost data. Quotations were received for the primary gyratory crusher, SAG and ball mills, major grinding area slurry pumps, regrind tower mill, and flotation cells. All other equipment costs are from EHA files.

Direct costs other than equipment are factored on equipment or direct costs on a process area basis, using factors derived from historical projects.

Building costs are based on a combination of direct cost factors and area/ volume unit cost factors and a provisional mill footprint sketch. The process building cost represents a fully serviced building including space allowance for facilities such as mill offices, change rooms, laboratory and maintenance area.

The capital cost does not include site development costs, which are reported separately in the Infrastructure costs.

Indirect costs are factored on direct costs using information derived from past projects. The EPCM cost includes a fee allowance. A contingency allowance is added, based on total direct plus indirect costs.

The following costs are included in the estimate:

 all process equipment costs  all direct costs related to the process  serviced process building  construction indirect and EPCM costs  spare parts allowance  start‐up allowance  freight allowance  first fill allowance.

The following costs are excluded from the estimate:

 ancillary buildings and services, including any mine related facilities, camp and general administration  site development costs  all off‐site costs including services to the site  tailings disposal  effluent treatment facilities if required

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 taxes and duties  initial product inventory  mobile equipment  Owner’s costs  escalation.

The accuracy of the estimate is ±30%

Processing – Capital Cost Summary

Table 24‐8 shows a summary of the process plant capital costs.

Table 24‐8: Processing Capital Cost Summary

Cost (US$) Direct Costs Process Equipment (cost) 75,200,400 Total Direct Cost 203,744,000 Indirect Costs Construction Indirect 46,389,500 EPCM 29,132,300 Freight (to port) 5,985,400 Spare Parts 5,985,400 Start‐up Allowance 1,995,100 First Fill 2,992,700 Total Indirect Costs 92,480,400 Contingency 50,936,000 Total Estimated Cost 347,160,700

Direct Costs by Process Area

A detailed equipment list and costing is presented in Appendix E. Table 24‐9 shows the direct costs by process.

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Table 24‐9: Process Plant Direct Costs

Equipment Cost Direct Cost Area (US$) (US$) Ore Receiving and Crushing 7,753,600 15,509,900 Grinding 51,894,000 115,970,100 Flotation and Regrinding 10,694,400 19,211,300 Product Recovery 2,709,100 5,682,500 Reagents and Utilities 2,149,300 4,607,300 Process Buildings ‐ 24,240,900 Sustaining Capital 18,522,000 Total Direct Cost ‐ 203,744,000

24.1.5 Infrastructure and Site Layout

The mine/mill facility infrastructure capital costs, required by the mining and processing operations, are listed in Table 24‐10. These costs are based on information from published data and from previous work on similar operations.

The tailings dam comprises over 50% of the total infrastructure cost. The cost at $74.55 million includes the capital indirect costs (30%) and contingency costs (20%) and spreads over the LOM with initial capital spending starting in Year ‐1.

Road cost allowance of $3.9 million including indirects and contingency is for site roads and new road to access Rovina from Highway 741, as the Colnic open pit will interrupt the existing road. Local Contractors provided costing input for the new access road to Rovina.

The capital cost of the electrical power supply including standby power of $19.8 million (includes indirects and contingency) includes supplying power to the mill complex and the underground development at Ciresata only. The long‐term power costs utilized are $0.075/kWh and do not include power line installation cost of $58,000/km plus indirects and contingencies of 30% and 20% respectively for a total cost of $87,000/km.

Costing was based on utilizing local Contractors and Vendors such as for roads and power supply. Vendor pricing was utilized for key components such as the fuel storage and dispensing explosives storage, and concentrate storage. In addition, high‐level quantity take‐ offs of excavation, backfill, reinforced concrete, etc. were also undertaken for the various infrastructure items such as the concentrate storage, fuel storage tanks and loading/dispensing, site roads, power supply, garage/administration/dry, and water pumphouses.

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Table 24‐10: Infrastructure Capital Costs

Unit Cost Total Capital Infrastructure Capital (US$) Unit Life Cost (US$+ Year ‐3 Year ‐2 Year ‐1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Power ‐ Power Lines, Transformer 13,200,00 ‐ 13,200,00 6,600,000 6,600,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Concentrate Storage 250,000 ‐ 250,000 ‐ 250,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Explosives Storage Area 250,000 ‐ 250,000 250,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Tailings Dam Construction 49,700,000 3.5/m3 49,700,000 ‐ 3,976,000 1,988,000 2,485,000 1,988,000 1,988,000 1,988,000 1,988,000 1,988,000 2,982,000 2,982,000 2,982,000 2,982,000 2,982,000 2,982,000 2,982,000 2,982,000 2,982,000 4,473,000 Tailings pipeline and sewage 6,700,000 ‐ 6,700,000 2,010,000 4,690,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Fuel Storage 250,000 ‐ 250,000 ‐ 250,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Shop and Garage 7,050,000 ‐ 7,050,000 5,287,500 1,762,500 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Fresh Water and Pumping System 4,000,000 ‐ 4,000,000 1,200,000 2,000,000 800,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Site Roads 2,600,00 ‐ 2,600,000 2,600,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Relocation 5,000,000 ‐ 5,000,000 2,500,000 2,500,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Mobile Equipment 3,500,000 ‐ 3,500,000 1,750,000 1,750,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Communications 100,000 ‐ 100,000 100,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Subtotal Infrastructure ‐ 92,600,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Infrastructure Indirects (30%) ‐ 27,780,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Infrastructure Contingency (20%) ‐ 18,520,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Total Infrastructure ‐ 138,900,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐

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Costs associated with the tailings dams are carried in the capital costs for the full LOM in the Infrastructure category. The tailing dams are designed to be constructed in a staged approach rather than one large dam initially to both offset capital costs, but also monitor the design as it is being built to allow for improvements in the design as the mine progresses.

The final dam design was completed to determine the volume of material required. The level of the annual tailings lifts were then calculated using the final dam design and the topography available. This allowed a calculation of the required dam elevations from year to year and thus the annual dams construction volumes necessary. To this volume, a construction cost of $3.5/m3 of material was applied.

The initial dam will be constructed upstream of Bucureşci in a narrowing of the mountains in Year ‐1. Each year another lift will be applied to the dam to ensure sufficient freeboard exists to support the structure. The initial portion of the south dam will be constructed in Year 2. The capital costs for the lifts and the initial portions are calculated on an annual basis and used in the financial cash flow.

Overall infrastructure capital indirects and contingency were estimated to be 30% and 20% respectively.

24.1.6 Environmental Costs

Closure design and costs cannot be detailed until more thorough studies are completed that include an environmental evaluation of the mine wastes (dumps and tailings), ultimate pit wall compositions, hydrologic regimes, and end‐use. These studies are typically completed as part of the Feasibility Study and the EIAR that will design a definitive closure plan. In the present study, environmental reclamation costs are included as capital cost items in mine‐life Years 17, 18, and 19 and total US$13 million (including indirects and contingency). An estimated environmental reclamation program is shown in Table 24‐11 and includes TMF reclamation, open pit closure, and site facilities de‐commissioning. Depending on the final closure design and reclamation costs, usually defined in the EIAR required for the Environmental License and Construction Permit, a Closure Bond amount is agreed with the NAMR and Environmental agencies. Previously, the NAMR has utilized a method of a certain percentage of annual operating costs be set aside as a rehabilitation bond to cover end‐of‐ mine closure costs.

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Table 24‐11: Allocation for Environmental Rehabilitation Costs for Closure (US$ M)

Rehabilitation Zones Year 17 Year 18 Year 19 Total Waste Dumps 2.50 0.50 ‐ 3.00 Open Pit/ Mine Site Closure 0.50 2.50 ‐ 4.00 TMF Closure ‐ 1.00 3.00 3.00 Indirects 0.45 0.60 0.45 1.50 Contingency 0.45 0.60 0.45 1.50 Total 3.90 5.20 3.90 13.0

24.1.7 Owners Cost

Owners cost were provided by Carpathian and total US$25 million allocated as a capital cost of US$2.5 million in Year ‐3, US$10 million in Year ‐2, and US$12.5 million in Year ‐1. The costs covered by this amount will include surface rights acquisition, the Owner’s project development team, closure bond insurance, and local government taxes. In addition, included in the financial model under infrastructure development costs is a total of $7.5 million ($5.0 million direct, $1.5 million indirects, and $1.0 million contingency) for relocation of structures that may be required for mine development. Owners cost will be refined in planned future mining technical and environmental and social studies.

24.1.8 Indirect Costs

The indirect costs vary between capital cost categories. Table 24‐12 shows the percentages that were applied to each capital cost category. This is to account for various items including construction supervision, erection of equipment, first fills, etc.

Table 24‐12: Indirect Percentages Applied

Indirects Capital Category (%) Open Pit Mining 10.0 Underground Mining 0.0 Processing 45.4 Infrastructure 30.0 Environmental 15.0

An Owner’s cost of $25 million dollars has been estimated and included under the Indirect Cost category of the capital. This cost is to cover the Owner’s development of the Project,

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land purchases, and any item associated with the Project that would be carried by Carpathian, that would not be considered as sunk costs.

24.1.9 Contingency

Contingency costs have been estimated based on various percentages applied to the direct capital costs. Table 24‐13 shows these percentages and illustrates the level of confidence in each of the direct capital cost estimates.

Table 24‐13 Contingency Percentages by Capital Cost Category

Contingency Capital Category (%) Open Pit Mining 15.0 Underground Mining 15.0 Processing 25.0 Infrastructure 20.0 Environmental 15.0

24.2 Operating Costs

24.2.1 Summary

The operating costs developed are for a 40,000 t/d mining and milling operation running for 19 years. This production rate was selected after analysing various production rates and this provided reasonable economics and rational capital requirements with the known resource base. Two open pits, Rovina and Colnic, and one underground mine, Ciresata, provide mill feed. The underground mine and at least one open pit operate concurrently.

All prices considered in this PEA are based on 3Q 2009 American dollar pricing. Any prices quoted in Euros were converted using and exchange rate of US$1.4 to €1 Euro. Diesel fuel was estimated at $1/L and electricity pricing was based on $0.075/kWh.

The open pit mine is developed using conventional rotary drilling, blasting and loading with hydraulic shovels and 180‐tonne trucks. The drills will be diesel powered to facilitate movement within the pits, while the hydraulic shovels will be electric powered to reduce operating costs. The open pit mines will have a LOM strip ratio of 2.04:1. A total of 141.1 Mt of ore will be supplied to the mill from the open pits, while 288.1 Mt of waste will be moved.

A total of 71.1 Mt of waste, or 25% of the total mine waste movement will be backfilled into the Colnic pit prior to the end of the mine life. This waste will be direct hauled from the Rovina pit in Years 12 to Year 19.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

During the open pit mine operation, the ore will be separated into high grade and low grade with the low grade ore stockpiled until later in the mine life. This is to increase the head grades initially in the repayment of capital. The low‐grade ore stockpile will be developed on top of a dump proximal to the plant location to reduce future rehandle costs. The stockpile tonnage will peak at 39 Mt in Year 10. After this time, minor quantities will be rehandled until Year 16 when underground mining is scheduled to cease. At that time, the stockpile will supplement the remaining open pit ore to ensure the plant tonnage remains at 40,000 t/d until the end of the mine schedule in Year 19.

Underground mining will commence in Year ‐3 with the development of the 6 km conveyor gallery between Ciresata and the plant located on the edge of the Baroc valley. The conveyor gallery will be developed from two fronts simultaneously to advance this development as quickly as possible. The first will be at an intermediate point near the village of Bucureşci. At this spot, development will occur towards the bottom of the Ciresata deposit. The second front will be with the portal in the Baroc valley were the plant is located. The advance will be toward the intermediate point developed near Bucureşci.

While the conveyor gallery development is occurring, a portal will be developed in the valley to the west of the Ciresata deposit. The purpose of this development is to develop the smaller higher‐grade pod of ore that exists at the top of the deposit. The small quantity of initial ore from this portal would be trucked to the plant along existing roads and stockpiled until the plant was commissioned. Upon completion of the conveyor gallery and the draw points at the bottom of the known Ciresata deposit, ore would be conveyed to the plant from the underground mine. The Ciresata underground mine is designed to target the higher‐grade core and work outwards allowing the ore to collapse to the draw points. As the mine development progresses, additional drawpoints will be developed to pull the periphery material. The known resources will be completely recovered in Year 16.

The process plant is designed to operate at a rate of 40,000 t/d with feed material from the three mining areas: Rovina, Colnic, and Ciresata. The plant will utilize conventional flotation to make a copper concentrate with a high gold content. No cyanidation of the material is currently envisaged. The high‐grade copper concentrate will be placed in tote bags and then these will be loaded into shipping containers for transportation to market.

The tailings will be pumped approximately 6 km to a location in the neighbouring valley. This valley is located southeast of the town of Bucureşci and east of the Ciresata deposit.

General and Administrative costs are based on a staff comprised of 61 employees located at the Project site, an office in Deva and also personnel at the port in Constanta.

Concentrate transportation costs are estimated using quotations from local trucking companies. The concentrate that is loaded in standard shipping containers will be trucked to Deva and then transferred onto railcars for shipment to Constanta.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Port costs consider all handling of containers, plus assaying and referring of the concentrate grade.

The shipping to smelter cost is based on rates applicable to ship the concentrate from the port of Constanta to the Freeport smelter in Spain. This cost would be applicable to shipping to other ports for access to smelters in Germany or Finland where high gold accountability is possible and important due to the high gold value of the concentrate.

Table 24‐14 shows a summary of the mine operating costs for the open pit and underground mine. This is based on the actual tonnes mined by that method. Table 24‐15 shows a summary of all operating cost categories on a cost per tonne ore basis over the total over tonnage.

Table 24‐14: Mine Operating Cost per Tonne

Total Open Pit Underground Cost Centre (US$ M) ($/t ore) ($/t ore) Open Pit – Ore and Waste 508.8 3.60 ‐ Underground – Ore 822.5 ‐ 6.62

Table 24‐15: RVP Total Operating Costs

24.2.2 Open Pit Mining

Mine operating costs were developed from base principles using hourly rates provided by vendors. These hourly rates were based on owner‐operated scenario with the vendor providing direct technical support such as training.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Key inputs into the mine operating cost estimate fuel, electricity, and labour. The diesel fuel cost for this study was estimated at US$1/L. Electricity was based on discussion Carpathian has had with the local supplier and set at $0.075/kWh.

Labour costs were developed jointly between Carpathian and PEG using Carpathian's in‐ country experience. PEG supplied Carpathian with a list of mine labour categories, which were discussed by Carpathian and their local construction and technical vendors. From these, estimates of the expected labour rates were arrived upon and used in the calculation of operating costs. A burden of 75% was added to the base salary used for all national staff and 50% for expatriate. The final operating costs developed were then compared to equivalent size operations worldwide for reasonableness. PEG considered the final operating costs were reasonable for the size of operation proposed. The quantity of employees required was calculated using a 12‐hour shift.

The only expatriate positions in mine operations were the technical superintendent and the mine operations superintendent. They have been included for the first five years of production after which the positions are eliminated. The intention is to transition to national staff at the earliest possible moment. Romania has a long history of mining, and in particular in the Brad area and Carpathian considers it reasonable to proceed forward with that expertise.

Mine operations labour is broken into two categories, staff or salaried and hourly. Figure 24‐1 shows the labour requirements for the 12,000 t/d schedule.

The variation in the labour has not been balanced for this study, but results from the increasing hauls from Colnic while Rovina is idled after the initial start‐up. This is also replicated later in the mine schedule when the Colnic pit is exhausted and Rovina is ramping up once again in Years 11, 12, and 13.

Open pit mining at Rovina and Colnic are designed to utilize proven technology and equipment as well as considering the European location. Rock drilling is accomplished with the use of 200 mm rotary blasthole drills. These drills are diesel powered to provide for greater mobility within the pit. Rock haulage is handled using the 180 tonne class of trucks. Selective mining is not a major requirement, but the use of electric hydraulic shovels is commonplace in Europe and played a factor in selecting that type of unit. The lower capital costs relative to the cost of a traditional cable shovel also played a role in the selection process. Track dozers, graders, and rubber‐tired dozers round out the major equipment list. Support equipment includes water trucks, a small backhoe with rock hammer, utility loaders, blasting loaders, pickup trucks, small submersible pumps, and light plants. Table 24‐16 shows the average equipment requirements.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Figure 24‐1: Open Pit Labour Requirements

200

180

160

140

120 Employees 100 of

80 Number

0 1 2 3 4 5 6 7 8 9 1

‐ 10 11 12 13 14 15 16 17 18 19 20

Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year

Total Staff Hourly

Table 24‐16: Open Pit Mine Equipment Requirements (maximum in parenthesis)

Equipment Capacity Year ‐1 Year 1 Year 2 to 19 Production Drill 200 mm 2 3 2 Front‐end Loader 20 m3 1 1 1 Hydraulic Shovel 21 m3 1 2 2 Breaker Loader 6.5 m3 1 1 1 Haulage Truck 180 tonne 6 8 8(11) Tracked Dozer 306 kW 3 3 3 Grader 233 kW 2 2 2 Rubber Tired Dozer 350 kW 1 1 1 Backhoe and Hammer 2.3 m3 1 1 1 Water Truck ‐ 1 1 1 Tool Carrier ‐ 1 1 1 Blasting Loader ‐ 1 1 1 Light Plants ‐ 7 7 7 Crew cab Pickup Trucks ‐ 3 3 3 Blasters Truck ‐ 1 1 1

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Equipment Capacity Year ‐1 Year 1 Year 2 to 19 Pumps ‐ 4 4 4 Pickup Truck ‐ 2 2 2 Manbus ‐ 1 1 1 Ambulance ‐ 1 1 1 Fire Truck ‐ 1 1 1 Lowboy ‐ 1 1 1

The mine equipment requirements remain fairly constant over the mine life once the initial purchases have been completed. Three extra trucks are required in Years 6 to 9, and these will not be replaced later in the mine life when the initial truck fleet is replaced. When the stockpile rehandle is occurring, it is envisaged that one of the shovels would be moved into the stockpile to load trucks. The large front‐end loader would be used as a backup loader as required throughout the mine life. A smaller loader would be used at the primary crusher to assist in tramming material from temporary piles to ensure the primary crusher is maintained full and general jobs around the crusher and in the pit as required.

As part of the operating cost, mine general and engineering is included. This covers the mine operations supervision and support staff, mine engineering and geology cost functions.

Drilling for the open pits is completed using two to three diesel drills with a 200 mm bit diameter. The pattern size used in the costing is the same for both ore and waste and is shown in Table 24‐17.

Table 24‐17: Open Pit Drill Pattern Specifications

Equipment Unit Ore Waste Bench Height m 10.0 10.0 Sub‐drill m 1.1 1.1 Blasthole Diameter mm 200 200 Pattern Spacing – Staggered m 6.4 6.4 Pattern Burden – Staggered m 5.6 5.6 Hole Depth m 11.1 11.1

Table 24‐18 shows the parameters used to estimate drill productivities.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Table 24‐18: Open Pit Drill Productivity Criteria

Drill Activity Unit Ore Waste Pure Penetration Rate m/min 0.6 0.60 Hole Depth m 11.1 11.10 Drill Time min 18.50 18.50 Move, Spot and Collar Blasthole min 3.00 3.00 Level Drill min 0.50 0.50 Add Steel min ‐ ‐ Pull Drill Rods min 0.50 0.50 Total Setup/Breakdown Time min 4.00 4.00 Total Drill Time per Hole min 22.50 22.50 Drill Productivity m/h 29.60 29.60

Local vendors RomNitro and Austin Powder supplied explosives quotations for the PEA study. An ANFO product was considered for 85% of the blasting requirements and emulsion for the remaining 15% of the holes. The use of a blasthole service was included in the explosives costs. This has the vendor delivering the product to the blasthole with Carpathian employees loading the holes.

Table 24‐19 shows the powder factor for the PEA.

Table 24‐19: Open Pit Design Powder Factor

Unit Ore Waste Powder Factor kg/m3 0.79 0.79 Powder Factor kg/t 0.29 0.29

Loading costs were estimated using the hydraulic shovels as the primary material movers. The front‐end loader in the first two years of mining was responsible for 15% of ore and waste movement. After that, the percentage dropped to 10% and remained at that for the rest of the mine life. The hydraulic shovels were responsible for the remaining 85%. Table 24‐20 shows the loading percentages and other loading information.

The trucks present at the loading unit refers to the percentage of time that a truck is available to be loaded. To maximize truck productivity and reduce operating cost, it is more efficient to slightly under‐truck the shovel. The single largest operating cost item is the haulage and minimizing this cost by maximizing truck productivity is crucial to lower operating costs. The value of 80% comes from typical standby a shovel encounters due to a lack of trucks.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Table 24‐20: Open Pit Mining Loading Parameters

Mining Equipment Units Front‐End Loader Hydraulic Shovel Waste Tonnage Loaded % 10 85 Ore Tonnage Mined % 10 85 Bucket Fill Factor % 90 95 Cycle Time sec 35 30 Trucks Present at the Loading Unit % 80 80 Loading time min 4.20 3.20

Haulage profiles were determined for each pit phase and area to either ore, waste or stockpile locations. From these profiles, Caterpillar's FPC software was used to determine haulage cycle times. These cycle times were applied to the appropriate yearly tonnage by area and phase to estimate the haulage costs.

Support equipment costs were determined using either a percentage applied to the truck hours or the loading hours. As indicated earlier, these percentages resulted in the need for three track dozers, two graders and one rubber‐tired dozer. Their tasks include cleanup of the shovel face, roads, dumps, and blast patterns. The graders will maintain the ore and waste haul routes.

Table 24‐21 shows a summary of the equipment hourly rates applied. All rates include consumables including fuel, tires, maintenance labour and associated consumables (drill bits, steel, etc.) if applicable. Operating labour has not been included in these rates. Fuel consumption has been estimated using vendor provided estimates with a check on the haulage trucks with the FPC software.

Table 24‐21: Open Pit ‐ Major Equipment Hourly Rates

Equipment Hourly Rate (US$/h) Production Drill 262 Front‐end Loader 275 Hydraulic Shovel 300 Breaker Loader 110 Haulage Truck 239 Tracked Dozer 134 Grader 82 Rubber Tired Dozer 99

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

The mining cost is calculated on an annual basis as shown in Appendix D. This value is determined based on tonnages mined, haulage profiles for that year and required equipment. The LOM cost was determined and applied in the cash flow spreadsheets as a weighted average. Table 24‐22 shows the mine operating cost by category.

Table 24‐22: Open Pit Mine Operating Unit Costs

LOM Cost (Year – 3 to Year 19) Description (US$/t) General Mine and Engineering 0.05 Drilling 0.12 Blasting 0.19 Loading 0.13 Hauling 0.52 Support 0.13 Total 1.14

24.2.3 Underground Mining

The average LOM operating costs were estimated to be $6.62/t or ore produced. Year ‐1 and Year 1 had significantly higher costs per tonne ore due to the development activities and minimal ore tonnage release, but the remainder of the years reflected the average cost or lower.

The mine development was broken into three sections in the development plan:

1. Conveyor gallery development 2. Vertical Crater Retreat (VCR) development of upper high‐grade zone 3. VCR/Induced block cave for lower high‐grade section.

The conveyor gallery development is initiated in Year ‐3 from a location at the south entrance to the Rovina Valley, on the outskirts of the town of Bucureşci. This location is approximately half way along the 6 km conveyor length and allows the development towards the bottom of the Ciresata deposit and another upwards towards the plant site. Development was designed to advance at a rate of 4 metres per day per heading, but with these multiple headings could advance more rapidly. The portal near the plant location in the Baroc valley is developed in Year ‐2 and advanced towards the middle access that was developed earlier. As this development advances, the conveyor is being prepared for installation. The conveyor development is a capital cost item but is discussed here to better understand the development sequence as it pertains to the differentiation of capital and operating costs.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

At the same time that the conveyor gallery is being driven to the bottom of Ciresata, a portal is being developed on the surface in the valley to the west of Ciresata. This is targeting the higher‐grade zone at the top of the deposit for early ore release by VCR methods. It was originally considered to develop access to the bottom of the Ciresata deposit first with this development but the timing to reach the bottom of the deposit was longer than via the conveyor gallery, thus it was decided to focus on high grade ore release from the upper portion first. The costs associated with this development to the ore and subsequent developments are a capital cost. Once the ore had been reached the costs associated with secondary ore development sills, ramps, and VCR slot raises were accumulated in operating costs.

Once the conveyor had reached the bottom of the deposit, work on developing the working, ventilation and haulage levels commenced as well as developing connecting access between the upper mine and the lower mine with an ore pass. The work of development at the base of the induced cave continued until the end of the mine life.

Initially operating costs were for direct ore haulage to the surface. This occurred in Years ‐2 and ‐1 with a total of 145,000 tonnes of ore hauled out the portal and by truck to the plant location. Starting in Years 1 onwards, the ore from the upper section was hauled to an ore pass and sent via the conveyor at the bottom to the mill site. This was joined with the material that was being pulled from the lower portion of the deposit by that time.

The stope designs for the underground mine were developed in Surpac, then scheduled to determine equipment and labour requirements. The annual quantities of material moved for development, metres of advance and ore tonnes released with their associated grades calculated. Unit costs developed from base principles and other similar properties were then applied to these values. Table 24‐23 shows the unit costs used in the operating cost calculation.

Table 24‐23 Underground Mining Direct Cost Unit Rates

Unit Cost Units (US$) Secondary Ore Development – 5 m x 5 m Sills US$/m 1,614 Secondary Ore Development – 5 m x 5 m Ramps US$/m 1,614 VCR Slot Raises US$/m 952 VCR Stopes US$/t 5.45 Induced Block Cave US$/t 2.29 Production – Truck (Upper Level) US$/t 2.26 Production – Truck, Conveyor, Crusher (Lower Level) US$/t 1.41 Conveyor Haulage – Ciresata to Plant US$/t 0.41

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Indirect costs for the purpose of the Underground operating cost calculation included labour and materials such as fuel and maintenance parts, power, etc. These calculations were made on equipment hours as part of the scheduling.

Table 24‐24 shows the underground operating costs for the underground operation.

Table 24‐24: Underground Mine Operating Cost Breakdown

Cost Unit Cost (US$ M) (US$/t Ore) Mining – Ore Development 51.9 0.42 Mining – Slot Raising 0.4 0.00 Mining ‐ Ore Production 288.3 2.32 Production – Hauling Trucks 2.6 0.02 Production – Hauling Trucks/Conveyor 174.0 1.40 Conveyor Haulage – Ciresata to Mill 50.9 0.41 Total Mining Direct 568.1 4.57 Indirect ‐ Allocated Labour 107.5 0.87 Indirect ‐ Allocated Materials (fuel, maintenance) 139.3 1.12 Electric Power Consumption 7.5 0.06 Total Allocation Indirect 254.3 2.05 Total Mine Operating Cost 822.5 6.62

Detailed cost information by year is included in Appendix D.

24.2.4 Processing

Basis of Estimate

Operating costs are in third quarter 2009 US dollars and include all processing costs from receipt of ore through to concentrate production and tailings prior to disposal. Labour costs are based on local wage rates supplied by Carpathian Gold converted to US dollars at a rate of 3.35:1 Lei:US, and estimated manning levels. The cost of training and supporting the local labour force during the early months of operation are not included. The unit power cost is based on recent experience and studies for other projects in Romania. Reagent prices are based primarily on vendor budget quotations from Europe and China, and allowances for freight to site where necessary. Carpathian provided locally supplied grinding steel and lime costs. No contingency allowance has been applied to the estimated operating costs.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

No provision has been made in this section for the direct costs of tailings pond management or secondary treatment of effluents or for the transportation of product from the mill site. A small crew is included for non‐process general site maintenance.

Indirect costs such as the following are not included in this section:

 insurance  taxes  safety and security  research and development  general administration and head office expenses  depreciation and amortization.

Processing Operating Cost Summary

Table 24‐25 shows a summary of the estimated process operating costs.

Table 24‐25: Processing Operating Cost Summary

Unit Cost Annual Cost Item (US$/t) (US$/a) Operating Staff and Labour 0.101 1,454,400 Operating Supplies 0.740 10,656,000 Reagents and Consumables 1.399 20,145,600 Power 1.838 26,467,200 Maintenance Labour 0.072 1,036,800 Maintenance Supplies 0.288 4,147,200 Sub‐total 4.438 63,907,200

Processing Operating Cost Details

Operating Supervision

Table 24‐26 shows staff and annual salary levels.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Table 24‐26: Processing Staff

Total Title Number (US$/a) Mill Superintendent Expat. 1 ‐ Assistant Mill Superintendent 1 ‐ Metallurgist 1 ‐ Metallurgist 1 ‐ Metallurgical Technicians 1 ‐ Foreman 1 ‐ Shifters 4 ‐ Chemists 1 ‐ Lab Technicians 3 ‐ Secretary/Clerk 1 ‐ Total 15 259,200 Burden ‐ 164,400 Total Annual Cost ‐ 423,600 Cost per Tonne ‐ 0.029

Operating Labour

Table 24‐27 shows a summary of the operating labour. A contingent of 53 is provided.

Table 24‐27: Processing Operating Labour

Number Hours Labour Annual Cost Title per Shift (h/wk) (h/a) (US$/a) Loader Operator 1 168 8,766 ‐ Crushing 1 168 8,766 ‐ Grinding 1 168 8,766 ‐ Flotation 1 168 8,766 ‐ Product 1 168 8,766 ‐ Reagents and Sampling 1 168 8,766 ‐ Sample Preparation 2 168 17,532 ‐ Tailings/Effluent 1 168 8,766 ‐ Training 2 168 17,532 ‐ Labour 3 84 13,149 ‐ Total ‐ ‐ 109,575 603,400 Burden ‐ ‐ ‐ 452,600 Total Annual Cost ‐ ‐ ‐ 1,056,000 Cost per Tonne ‐ ‐ ‐ 0.072

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Operating and Analytical Supplies

An allowance of $0.740/t or $ 10,656,000/a includes provision for liners, screen cloths, and miscellaneous consumables.

Maintenance Supervision

Table 24‐28 shows a summary for maintenance supervision.

Table 24‐28: Processing Maintenance Supervision

Total Title Number (US$/a) Maintenance Superintendent 1 ‐ Maintenance Engineer 1 ‐ Planner 1 ‐ Draughtsman 1 ‐ Maintenance Foreman 2 ‐ Total 6 96,716 Burden ‐ 72,537 Total Annual Cost ‐ 169,300 Cost per Tonne ‐ 0.012

Maintenance Labour

Table 24‐29 shows labour and annual costs.

Table 24‐29: Processing Maintenance Labour

Number per Labour Hours Labour Hours Annual Cost Title Shift (h/wk) (h/a) (US$/a) Mechanics and Welders 12 480 25,046 ‐ Electricians 4 160 8,349 ‐ Instrumentation 4 160 8,349 ‐ Surface Crew 5 200 10,436 ‐ Helpers 10 400 20,871 ‐ Labour 10 400 20,871 ‐ Total 45 ‐ 93,921 505,610 Burden ‐ ‐ ‐ 379,208 Total Annual Cost ‐ ‐ ‐ 884,800 Cost per Tonne ‐ ‐ ‐ 0.061

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

Maintenance Supplies

The cost of maintenance supplies is estimated as a percentage of mill capital cost.

Maintenance supplies: $4,147,200/a $0.288/t

Reagents and Consumables

Reagent and consumables prices are based primarily on vendor budget quotations with quoted or estimated freight to site included.

Table 24‐30: Processing Reagent and Consumables Costs

Consumption Price Cost Item (kg/t) (US$/kg) (US$/t) Xanthate 0.005 1.826 0.009 MIBC 0.020 5.110 0.102 Lime (as CaO) 0.800 0.080 0.064 3418A 0.006 11.210 0.067 Flocculant 0.0005 4.956 0.002 Grinding Steel 5" 0.407 1.000 0.407 Grinding Steel 2" 1.132 0.660 0.747 Total ($/t) ‐ ‐ 1.399 Total ($/a) ‐ ‐ 20,145,600

Power

Power costs are based on a unit cost of US$0.075/kWh and a connected load of 57690 kW. An overall utilization factor of 88% and a power factor of 95% have been assumed.

Total Power Drawn 53334 kW Consumption 24.5 kWh/t Cost per Tonne US$1.838 Cost per Annum US$26,467,200

24.2.5 General and Administrative

The General and Administrative costs include the cost of 61 management staff, located at the Project site, an office in Deva, as well as support staff monitoring the port in Constanta. The G&A cost in the cash flow starts in Year ‐3 and increases in value until Year ‐1 when it reaches a maximum amount of $5.7 million annually and continues until the end of the mine life.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

The management staff comprises one expatriate, the General Manager; the remainder are nationals. Twenty‐one are salaried and forty are hourly. The labour cost is one of the largest components of the G&A after taxes and insurance. As was done in the mine operating labour, a 75% burden was applied to the base salary for national employees and 50% for the expatriate.

Table 24‐31 shows the annual costs by category for Year 1. This represents an average year for the mine life.

Table 24‐31 G&A Cost Calculation (Year 1)

Annual Cost (Year 1) Category (US$) Salaried Staff 553,000 Hourly Personnel 487,100 Site Operation and Maintenance Supplies 25,000 Site Power 300,000 Deva Office 200,000 Information Systems (Hardware/Software) 100,000 Communications 200,000 Public/Community Relations 250,000 Recruitment and Training 200,000 Safety and Medical Supplies 75,000 Consultants 300,000 Legal and Audit Fees 400,000 Taxes and Insurance 1,375,000 Logistics 200,000 Office Supplies 200,000 Environmental Monitoring 300,000 Subtotal 5,390,100 Sustaining Capital @ 5% of Operating 269,500 Total G&A 5,659,600 Tonnage Milled (Year 1) 14,400,000 G&A Cost (US$/t) 0.39

The cost for G&A in Year 1 is $0.39/t of ore, but for the entire mine life averages $0.45/t of ore. The higher value is due to the G&A costs in Year ‐3 to Year ‐1 which is considered in the cash flow but has no ore tonnage applied to it as the process plant is not currently functional.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

24.2.6 Concentrate Transportation

The concentrate due to its high gold content will not be shipped in bulk, but rather put in tote bags and shipped in standard 20‐ft containers. An average of 122,000 tonnes of concentrate will be shipped annual from the site, but peaks at 143,000 tonnes in Year 2. This equates to 339 tonnes of concentrate daily.

A quotation obtained from a local logistics firm for the shipment of concentrate from the site to the port of Constanta. The concentrate would be trucked from site to Deva, loaded on trains, and then delivered by rail to the port of Constanta. The option of lining the containers with a PVC liner was considered; however, was a higher cost option. The final selection was the loading of concentrate into tote bags at the plant, then loading the tote bags into the shipping containers by plant staff. This option was chosen as it represented the lowest cost option at the level of detail considered in this study. The average cost for concentrate transportation was $32/t of concentrate.

24.2.7 Port Charges

Port charges consider the storage and loading of the containers in the yard and on the ship. It also includes the cost of independent testing of the concentrate and other costs associated with the business of selling the contract between Carpathian and the buyer. This cost has been estimated at $16/t of concentrate for the study.

24.2.8 Shipping

The final transport of the concentrate via ship to Spain has been estimated at $14/t of concentrate. This is based on current information for shipping rates.

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CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

25 ECONOMIC ANALYSIS

25.1 Discounted Cash Flow Analysis

The resources reported in Section 18 were used in the discounted cash flow analysis (DCF) for the RVP. Table 25‐1 outlines these.

Table 25‐1: RVP Production Tonnages and Grades

Ore Gold Copper Waste Mining (t) (g/t) (%) (t) Strip Ratio Open Pit Rovina 73,745,400 0.30 0.26 178,893,600 2.4 Colnic 67,313,600 0.67 0.10 109,234,800 1.6 Sub‐total 141,059,000 0.48 0.18 288,128,400 2.0 Underground Ciresata 124,372,300 0.86 0.17 ‐ ‐ Total 265,431,300 0.66 0.18 288,128,400 ‐

A trade‐off study had been completed early in the study to determine the production rate to bring forward for detailed analysis. That production rate is 40,000 t/d and is the basis for the discounted cash flow.

All prices quoted are in US$. If a value was quoted in Euros, an exchange rate of US$1.40 to €1.00 Euro was applied.

All pit design and underground development work was completed using what is termed Engineering Case metal prices. The DCF analysis was completed using higher metal prices, which for this report were termed Financial Base Case metal prices. The Financial Base Case metal prices Carpathian feels better reflect the current long‐term metal price sentiment based on discussions amongst investors and lenders. For comparison, the current three‐year rolling average prices from May 2007 to May 2010 have been also shown, which indicate the three‐year rolling average gold price is the same as the gold price used in the DCF. Table 25‐2 shows a comparison of all three sets of metal prices.

Table 25‐2: DCF Metal Prices

Engineering Financial Three Year Average Metal Unit Base Case Base Case May 2007 – 2010 Copper US$/lb 1.75 2.25 2.96 Gold US$/oz 750 900 900

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The financial base case metal prices are the ones considered for the DCF analysis.

The Rovina Project comprises three different deposits and as expected, the metallurgical responses are also different as indicated in the test work completed to date. Table 25‐3 shows the assumptions made for metallurgical recovery and concentrate grade based on the lock cycle test work completed.

Table 25‐3: Metallurgical Assumptions

Copper Recovery Gold Recovery Concentrate Grade Moisture Content Transit Losses Mining Location (%) (%) (%) (%) (%) Rovina 93.2 69.9 24.3 6.0 0.5 Colnic 91.7 67.9 13.6 6.0 0.5 Ciresata 89.4 66.9 18.7 6.0 0.5

The individual values for the concentrate look low, but the final product is a blend of the three deposits to make the final product. The average concentrate grade over the LOM is as follows:

 Gold Grade = 54 g/t  Copper Grade = 19.5%.

This is the reason that minimizing the transit losses by the use of tote bags is critical, as each gram of gold with a $900/oz gold price is equivalent to $28.94/t of concentrate. This is almost the cost of transportation of the concentrate from the site to the port.

According to Romanian regulations, a royalty of 4% has been applied to the Project.

Smelter terms are critical to any base metal project. They represent a significant cost to the operation and the details surrounding the terms can have significant impact on the overall project economics. For locations were originally considered as locations for shipment of the RVP concentrate, all located in Europe. These include:

 Freeport – Spain  Norddeutsche Affinerie – Germany  Boliden – Sweden  Former Outokumpu – Finland.

Practically, in operation lot shipments would be directed to all of the smelters to distribute the material. These smelters are considered due to their high gold accountability, which is critical for the high‐grade concentrate from the RVP. Table 25‐4 shows the terms used for the DCF.

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Table 25‐4: RVP Smelter Terms

Smelter Terms Unit Copper Concentrate % Payable/Minimum Deduction (%/%) 97.0/1.0 Treatment Charge (US$/dmt) 60.00 Refining Charge (US$/lb) 0.060 Penalties (US$/dmt) ‐ Gold – Average % Payable (%) 98.5 Gold – Refining Charge (US$/oz) 10.00

Smelter calculations are made on an annual basis in the DCF and any variation in the grade annually will affect the smelter terms and corresponding revenue. Table 25‐5 shows the results of the DCF for the 40,000 t/d production rate case.

Table 25‐5: Discounted Cash Flow Results

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The results indicated that the Project has a pre‐tax NPV of $316 million at a discount rate of 8% with an IRR of 15.7%. Payback is just under five years from the start of milling.

Table 25‐6 shows the revenue generated by each metal. This indicates that the Rovina project is generating over $5.1 billion from both the copper and gold. Gold represents approximately 65% of the revenue stream.

Table 25‐6: Metal Revenue

Net Value Metal Unit after Smelting, Refining, and Losses Copper (US$ M) 1,808.6 Gold (US$ M) 3,307.3 Total (US$ M) 5,115.9

Table 25‐7 shows the expected metal production and cash costs results from the DCF analysis.

Table 25‐7 Metal Production Statistics and Cash Cost Calculation

Metal Indicator Units Value Gold Average Annual Production oz 196,000 Initial 5 Year Average Annual Production oz 238,000 Total LOM Production Moz 3.72 Copper Average Annual Production Mlb 49.4 Initial 5 Year Average Annual Production Mlb 53.5 Total LOM Production Mlb 938 Cash Costs Gold Cash Cost without Copper Credit US$/oz 746 Gold Cash Cost with Copper Credit US$/oz 379 Cash Cost as a Co‐product Credit Gold US$/oz 483 Copper US$/lb 1.05 Gold Cash Cost with Copper Credit and Capital US$/oz 471 Cash Cost as a Co‐Product Credit with Capital Gold US$/oz 619 Copper US$/lb 1.34

The gold equivalent ounces produced annually depend upon the metal prices considered in addition to the grades processed. Table 25‐8 shows two sets of metal prices used. The first set of metal prices is for comparison to the NI 43‐101 resource that has been published to show the same comparison. The second set of metal prices match the Financial Base Case discussed in the DCF calculations.

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Table 25‐8: Gold Equivalent Ounces Produced Annually

Category Units NI 43‐101 Metal Prices Financial Base Case Gold Price $/oz 1.80 2.25 Copper Price $/lb 675 900 Gold Equivalent First Five Years Average oz/a 381,000 372,100 LOM Average oz/a 327,200 319,000 LOM Moz LOM 6.22 6.06

25.2 Sensitivity Analysis

The project financials were examined to their sensitivity to various inputs. These inputs included:

 metal prices  metal recovery  capital costs  operating cost

Figures 25‐1 and 25‐2 and Tables 25‐9 and 25‐10 shows the results of this analysis.

Figure 25‐1: Spider Graph of NPV @ 8%

$800

$700

$600 millions)

$500 ($

$400 8%

@ $300

Value $200

$100 Present $0 Net ‐$100

‐$200 ‐20% ‐10% Financial Base 10% 20%

Recovery Metal Prices Capital Cost Operating Cost

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Figure 25‐2: Spider Graph of IRR

30.0%

25.0% (%)

20.0% Return

of 15.0% Rate

10.0% Internal 5.0%

0.0% ‐20% ‐10% Financial Base 10% 20%

Recovery Metal Prices Capital Cost Operating Cost

Table 25‐9: Sensitivity Analysis – NPV at 8% Discount Rate

Sensitivity Unit Recovery Metal Prices Capital Cost Operating Cost ‐20% (US$ M) ‐91 119 390 468 ‐10% (US$ M) 113 100 353 392 Financial Base (US$ M) 316 316 316 316 +10% (US$ M) 512 536 280 241 +20% (US$ M) 657 752 243 165

Table 25‐10 Sensitivity Analysis – IRR

Sensitivity Unit Recovery Metal Prices Capital Cost Operating Cost ‐20% (%) 5.5 4.6 18.3 18.9 ‐10% (%) 10.9 10.6 16.9 17.3 Financial Base (%) 15.7 15.7 15.7 15.7 +10% (%) 19.9 20.4 14.5 14.0 +20% (%) 22.9 24.7 13.4 12.2

The recovery was increased until it reached 100% and then it was held at that value. It is this reason there is a slight dip in the +20% NPV and IRR graphs for recovery.

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As shown by the graphs, the Project is sensitive to both metal recovery and metal pricing. An increase of 10% to the recovery increases the NPV by $196 million. The same 10% increase to metal prices adds $220 million to the NPV value. The corresponding decrease in either recovery or metal prices drops the NPV by $203 million for recovery and $216 for metal prices.

The change in capital cost or operating cost at these percentages did not have as dramatic effect on the overall project economics.

The metal prices for the spider diagrams were adjusted in the equal percentages rather than holding one metal price fixed and the other adjusted. That type of analysis was completed but not graphed. The results of the variation of metal price on both NPV and IRR have been shown in Tables 25‐11 to 25‐14 for the three discount rates considered, 5%, 8%, and 10%. Metal prices were varied from $850/oz for gold up to $1,000/oz. The copper price was likewise varied from $1.75/lb up to present levels of $3.00/lb.

Table 25‐11: NPV at 5% Discount Rate

Gold Price (US$/oz) $850 $875 $900 $925 $950 $975 $1,000 1.75 230 282 334 385 437 489 541

2.00 348 399 451 503 555 607 659 2.25 465 517 569 621 673 725 777 (US$/lb)

2.50 583 635 687 739 791 842 894 Price 2.75 701 753 805 856 908 960 1,012 3.00 819 870 922 974 1,026 1,078 1,130 Copper

Table 25‐12: NPV at 8% Discount Rate

Gold Price (US$/oz) $850 $875 $900 $925 $950 $975 $1,000 1.75 66 105 144 182 221 260 299

2.00 152 191 230 269 308 347 386 2.25 239 278 316 355 394 433 472 (US$/lb)

2.50 325 364 403 442 481 520 559 Price 2.75 412 450 489 528 567 606 645 3.00 498 537 576 615 654 692 731 Copper

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Table 25‐13: NPV at 10% Discount Rate

Gold Price (US$/oz) $850 $875 $900 $925 $950 $975 $1,000 1.75 ‐9 24 56 89 122 154 187

2.00 63 95 128 161 193 226 258 2.25 134 167 200 232 265 297 330 (US$/lb)

2.50 206 238 271 304 336 369 401 Price 2.75 277 310 343 375 408 440 473 3.00 349 382 414 447 479 512 544 Copper

Table 25‐14: IRR

Gold Price (US$/oz) $850 $875 $900 $925 $950 $975 $1,000 $1.75 9.7% 10.7% 11.7% 12.6% 13.6% 14.5% 15.4%

$2.00 11.9% 12.8% 13.7% 14.6% 15.5% 16.4% 17.3% $2.25 13.9% 14.8% 15.7% 16.5% 17.4% 18.2% 19.1% (US$/lb)

$2.50 15.8% 16.7% 17.5% 18.4% 19.2% 20.0% 20.8% Price $2.75 17.6% 18.5% 19.3% 20.1% 20.9% 21.7% 22.5% $3.00 19.4% 20.2% 21.1% 21.9% 22.6% 23.4% 24.2% Copper

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26 PROJECT IMPLEMENTATION PLAN

The overall Project Implementation Plan (PIP) schedule for the Project is presented in Figure 26‐1 (note, Item nr. in the PIP Schedule are cross‐referenced to Permitting Schedule Figure 20‐1). Exploration at the recently discovered Ciresata porphyry deposit is not yet completed and indications are that it could be larger than presently defined; this would have a significant impact on project design and economics. The PIP envisions an early stage exploration program to define the size of the Ciresata deposit, optimise metallurgy, and further define geotechnical criteria for the Ciresata underground mine design (induced block cave). With these results and a new Resource Estimate, the present PEA would be updated in Q1 2011. Further drilling will likely be required to upgrade resource confidence to Measured and Indicated categories for use in a Feasibility Study planned for Q2 2011 through Q2 2012.

The environmental, socio‐economic studies and permitting process to obtain the Construction Permit will require 3.25 years. Carpathian initiated these studies in Q1 2010 as required for the Mining License application. A key aspect of the PIP is the parallel development of the final EIAR and the mining Feasibility Study. In the early stages of the EIAR, baseline studies and preliminary mine designs are adequate, but in the later stages the final mine design will be needed and a technical closure plan developed. This will require close coordination between the EIAR and Feasibility teams to ensure environmental, technical, and financials aspects of the Project are considered.

The PIP anticipates the mine Construction Permit to be issued in Q1 2013. To reach this objective the following milestones activities are to be completed:

 Q3 2010 Mining License granted (EIA and SIA studies in progress)  Q1 2011 PEA Update (new Ciresata Resource and metallurgy)  Q2 2012 Completion of the mining Feasibility Study  Q2 2012 Completion and submittal of definitive EIAR  Q3 2012 Approval of the PUG and PUZ land‐use rezoning  Q1 2013 Construction Permit granted.

To achieve this, it will be important that the permitting for the land‐use approval (PUG and PUZ) advances smoothly. A key aspect will be public consultation and relevant stakeholder engagement to develop a partnership with the community, which embraces the planned Project development. Essential to the requirements for the Construction Permit is acquisition of surface rights covering the proposed industrial zone. In addition to Carpathian’s present proactive stakeholder engagement policy, it will need to develop a fair and equitable surface rights acquisition policy in partnership with the local community.

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Following the feasibility study, a one‐year period of Finance arrangement is concluded with a Construction decision in Q1 2013. Construction and mine site development of the Project benefits from pre‐existing infrastructure relating to previous industrial and mining activities in the region. The PIP anticipates an ECPM period of 2.50 years and a construction period of 2.25 years. Operating permit studies would be concurrent with the later part of mine building and submitted for operating approval at end of construction in Q3 2015. Due to the long lead required for the underground development of Ciresata, Carpathian will need investigate obtaining a stand‐alone operating permit for underground development prior to operating approvals for the processing plant.

Figure 26‐1: Project Implementation Plan Schedule

General Implementation Plan for Rovina Valley Project 2010 2011 2012 2013 2014 2015 ID Task Name Time (yrs) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Exploration 1.75 ――――――― 1Resource increase drilling Ciresata 0.50 Drilling 2Resource + Metallurgy update 0.50 new inferred resource‐Metallurgy for PEA update 3 Feasibility Study drilling (Resource, Met, Geotech) 1.00 4Resource Estimate Update for feasibility Ciresata 0.25 new Measured+Indicated resource Environmental/Socioeconomic Studies Permitting 3.25 ――――――――――――― 1.25 yrs ――――― 5Mining License Pre FS/EIA/SIA and award from NAMR 0.75 NAMR approval 6Baseline EA and SA 1.25 Baseline EA‐SA 7 Definitive EIAR 2.25 EIAR 7.1 EIAR ARD/Hydrogeologic studies 0.75 ARD/Hydrology 7.2 EIAR TMF Studies 0.50 TMF 7.3 EIAR Mine closure plan 0.50 Closure Plan 7.4 SIAR 1.25 SIAR 8PUG and PUZ Land‐use re‐zoning studies 2.50 Local and County Government approvals 9TAC Review/Public Hearings 0.25 Government approval 10 Construction Permit submittal and approval 0.25 Construction Permitted 11 Mine Operating/Environmental Permits Studies 1.00 Environmental/Health and Safety 12 Operating Permits Granted 0.25 Operations Approved Engineering Studies/Mine development 5.00 ―――――――――――――――――――― 13 PEA Update 0.25 PEA Update 14 Feasibility Study 1.25 Feasibility Study 15 Financing 1.00 Financing 16 Construction decision 0.25 Construction decision 17 Basic Engineering/Site prep/ clearing and grubbing 0.75 Site prep 18 EPCM 2.50 EPCM 19 Plant Construction Period 2.25 Plant Construction 20 Infrastructure development (water/power) 0.50 Infrastructure 21 Open Pit Prestrip and ore stockpile 1.00 OP 22 Underground development and ore stockpile 2.25 UG 23 Plant commissioning‐concentrate production 0.25 Plant commissioning 24 Ramp‐up operations 0.50 Production ramp‐up

Legend Pre FS = Prefeasibility Study TMF = Tailings Management Facility EIA = Evironmental Impact Assessment SIAR = Social Impact Assessment Report SIA = Soicial Impact Assessment PUG = General Urbanisation Plan NAMR = National Agency of Mineral Resources PUZ = Zonal Urbanisation Plan EA = Environmental Assessment TAC = Technical Assessment Committee SA = Social Assessment PEA = Preliminary Economic Assessment EIAR = Environmentla Impact Assessment Report EPCM = Engineering, Procurement, Construction Management ARD = Acid rock drainage

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27 INTERPRETATIONS AND CONCLUSIONS

27.1 Geology

The Rovina Exploration Property is located in the Golden Quadrilateral Mining District of the South Apuseni Mountains in West Central Romania, approximately 300 km northwest of the city of Bucharest, the Capital City of Romania and 140 km East–Northeast of the City of Timisoara.

The Carpathian Property centered at approximately latitude 46°05' N and longitude 22° 54' E comprises one exploration licence and lies in the Development Region of Transylvania, within the County of Hunedoara. The property is controlled 100% through Carpathian’s wholly owned subsidiary, SAMAX Romania SRL, by an agreement with the Romanian government, which expires August 29th, 2009. Carpathian has the exclusive right to extend this term and was granted a three‐year extension in August 2009. The Rovina, Colnic, and Ciresata Porphyry deposits are the principal exploration targets on the Property.

The principal targets on the Rovina Property are related to the porphyry copper–gold mineral deposit model. Porphyry deposits in general are large, low to medium‐grade deposits in which primary (hypogene) sulphide minerals are dominantly structurally‐controlled and which are spatially and genetically related to felsic to intermediate porphyritic intrusions.

The Rovina, Colnic, and Ciresata Deposits are associated with porphyritic subvolcanic intrusives and lie within a Northeastern outlier of the 8 to 10 km diameter, Neogene‐aged, Brad–Barza volcanic field of the South Apuseni Mountains. Gold‐copper mineralization at the three deposits is hypogene with the weathering/oxidation profile poorly developed and usually < 10 m thick. Locally at Rovina, minor secondary Cu‐oxide minerals are observed in the upper 15 m.

The Rovina Cu‐Au deposit is hosted in a composite stock, primarily an amphibole–feldspar porphyry. Dimensions of the known mineralization are 930 m x 780 m, with a very strong vertical high‐grade core of approximately 200 m x 200 m associated with an inter‐mineral axial porphyry intrusion. Early‐stage potassic and magnetite alteration is associated with disseminated and stockwork‐vein hosted pyrite‐chalcopyrite. A post‐mineral phreato‐ magmatic breccia complex cuts part of the mineralised porphyry body. The deposit is open at depth only in the core area with indication of diminishing grade.

The Colnic Au‐Cu deposit is hosted in a composite porphyry stock, which includes microdiorite, diorite, and andesite rock types. The stock is variably potassic and magnetite altered, and intrudes an intensely phyllic‐altered complex of heterogeneous‐textured hornblende porphyry. Overprinting alteration types are common with part of the high‐grade zone in Rovina Valley coincident with a quartz‐stockwork‐related phyllic alteration overprint.

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In Rovina Valley, a series of late‐mineral dykes and breccias zones parallel to the trend of the valley cut early mineralization. Mineralization occurs as disseminated and stockwork‐vein hosted pyrite‐chalcopyrite. The mineralized portion of the porphyry has known dimensions of 1,168 m x 1,156 m, with a high‐grade area of 520 m x 330 m and remains open at depth.

The Ciresata Au‐Cu deposit is hosted equally in a ‘funnel‐shaped’ intrusive neck of amphibole‐feldspar porphyry and adjacent hornfelsed Cretaceous sediments. Early‐stage potassic and intense magnetite alteration effects both host rocks. Mineralization occurs as disseminated and stockwork‐vein hosted pyrite‐chalcopyrite. The mineralized portion of the porphyry is currently Inferred at 700 m x 700 m at depth with a barren cover of magnetite‐ altered amphibole‐feldspar porphyry > 50 m thick. Four narrow post‐to‐late mineral dykes cut the deposit. Grades generally increase with depth and the limited drilling completed to date has not closed‐off mineralization.

From 2004 to the present, Carpathian has completed geological, alteration and structural mapping (1:5,000 scale and 1:1,000 scale over the main prospects), ground magnetics, induced polarization and resistivity surveys, stream sediment and soil geochemical surveys and diamond drilling. Carpathian’s work has demonstrated the geologic potential for Au‐rich porphyry deposits on the Rovina property.

Carpathian drilling on the Rovina Property used in the resource estimate totals 61,716 m in 155 holes, distributed between Rovina 53 holes, Colnic 87 holes, and Ciresata 15 holes.

PEG reviewed Carpathian’s logging and sample collection procedures, and is of the opinion that core logging is efficient and of sufficient detail to be utilized in resource estimation. Core sampling procedures follow standard industry practices with a QC/QC program exceeding industry standard. Despite the fact that the performances of the QA/QC samples in the 2007‐2008 drill campaign indicates that closer monitoring will be necessary in the future, PEG is of the opinion that the QA/QC samples are acceptable for resource estimation purposes

PEG through site visits, collection of independent character samples, and a database audit prior to mineral resource estimation performed data verification. PEG found the database to be exceptionally well maintained and error free and usable in mineral resource estimation.

The in situ bulk density of the rock types was based on 829 specific gravity determinations collected at a rate of 1 determination per 66 m at Rovina, 1 in 80 at Colnic and 1 in 99 at Ciresata. PEG is of the opinion that the specific gravity determinations are representative of the in situ bulk density of the rock types.

Mineral resources at Rovina, Colnic, and Ciresata were classified using logic consistent with the CIM definitions referred to in National Instrument 43‐101. At Rovina and Colnic the mineralization, density and position of the drill holes satisfies sufficient criteria to be classified into the Indicated and Inferred categories with minor amount of Measured in the

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core area of the deposit. At Ciresata, the mineralization satisfies sufficient criteria to be classified into the Inferred category only.

This independent mineral resource estimate and review conducted by PEG supports the 17 November 2008 disclosure by Carpathian of the mineral resource statement for the Rovina Property.

27.2 Geotechnical

The preliminary engineering geology of the Rovina, Colnic, and Ciresata Deposits has been summarized to provide a basis for scoping level mine planning and preliminary economic assessments. BGC has developed a basic description of the expected geo‐materials of the resource area from available maps, geologic descriptions by Carpathian, core hole data, and field review. The two preliminary geotechnical units for mine design are the sediments and Intrusives. The rock mass rating and strengths determined for the sediments of the Rovina and Colnic Deposits are very similar. The ratings and strengths are also similar for the intrusive rocks in these two areas. The intrusive rocks and the sedimentary rocks from the Ciresata deposit; however, are different from those at the other deposits and have been evaluated separately.

Relatively limited data is available regarding the rock mass strength and the geologic structure in the Rovina, Colnic, and Ciresata Deposits. The main limitations to the data were as follows:

 the entire core available for inspection has already been cut in half; in order to conduct accurate geotechnical investigations the core should be intact  in general, the geomechanical properties of the sedimentary rocks in the Rovina and Colnic Deposits are not well defined, as relatively few drill holes have encountered the sediments in these areas  limited geomechanical core logging data was available for the three areas, and only a small amount of surface mapping information could be collected due to the poor quality of the outcrops and restricted access to the outcrops  structural geologic information was sparse for the three resource areas.

However, sufficient data has been compiled regarding geotechnical strengths of the primary rock types (i.e., sedimentary and igneous rocks) to provide a range of potential pit wall angles for use in the preliminary economic assessment.

In order to develop the slope design angles presented in this report, numerous assumptions had to be made about the potential primary controls on slope stability, the geology, the strength of the rock mass, the groundwater pressures and the potential failure mechanism as follows:

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Structural controls at the interramp scale will likely exist in the Rovina area for southwest dipping slopes in the sedimentary host rocks. In order to avoid undercutting bedding in the sediments, it is recommended that interramp slope angles be limited to 40° in the northeast walls of potential open pits developed in the sedimentary rocks. However, overall slope heights greater than about 400 m will be limited by rock mass strengths, and will require wall angles flatter than 40°. Aggressive depressurization of the sedimentary rocks will be required, should pore pressures exist in these rocks.

For the Colnic Area, structural controls due to bedding orientations and the potential presence of northeast dipping faults in the sediments could limit interramp slope angles to 33° for the south‐southwest wall. Interramp slope angles for the northeast wall should be limited to 45° for slope heights less than 300 m. If slope heights of greater than 300 m are being considered in the sediments, slope angles flatter than 45° will be required due to the potential for rock mass failure in these materials.

Based on rock mass strengths, relatively steep (49° to 58°) overall pit wall angles appear to be feasible in the intrusive rocks under “partially saturated” conditions for pit wall heights between 300 m and 500 m. These design slope angles can be applied to the Rovina and Colnic deposit areas. However, the potentially achievable overall slope angles assume that there is no structural control on the potential failures.

27.3 Mining

27.3.1 Open Pit Mining

The project has indicated positive economics for a 40,000 t/d operation with two open pits (Rovina and Colnic) and an underground mine (Ciresata). The project has a NPV of $316 million with an 8% discount rate. The IRR for the Project is 15.7% on a pre‐tax basis. The payback period is just less than five years with payback occurring in the fifth year from start of milling operations.

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The total mine will produce a total of 265.4 Mt grading 0.18% Cu and 0.66 g/t Au. The open pit will produce 141.1 Mt grading 0.18% Cu and 0.48 g/t Au. This is approximately 53% of the LOM ore tonnage. The open pit waste tonnage totals 288.1 Mt for a strip ratio of 2:1.

Open pit mining commences in Year ‐1 and is complete in Year 18. The final year of processing, Year 19, will be completed with removal of a low‐grade stockpile that had been built up with material from the open pits. The open pit mine will be running at approximately 18,400 t/d until Year 16, when the underground operation is scheduled to be completed. At this time, the open pit will increase its output to maintain the mill feed at 40,000 t/d, supplemented by reclaim material from the low‐grade stockpile.

Production in the pit will be accomplished with three diesel rotary drills (200 mm), two electric hydraulic shovels (21 m3), and a large front‐end loader (20 m3) as backup. Waste will be hauled by a fleet of approximately 8 – 180 tonne haulage trucks, with a peak of 11 units in Year 6 to Year 9. The LOM operating cost is expected to be $1.14/t of material moved.

The rock is assumed to be non‐acid generating. Waste material will be stored in four main areas: the Baroc Valley, south end of the Rovina valley; the Rovina valley just to the north of the Colnic pit and to the east; and partial backfill of the Colnic pit. The mining schedule has been designed to accelerate the Colnic pit in advance of Rovina to allow the higher strip ratio later phases of Rovina to use the Colnic pit for a waste location. This assists greatly in the final reclamation of the mine. Additional work on this sequence may enhance the amount of material backfilled in the pit via accelerating mining in Colnic and stockpiling.

Additional detailed geotechnical information is required in the entire pit to determine more accurately final wall slope angles. This may have the benefit of reducing overall waste tonnage mined.

Condemnation drilling needs to be completed in all areas currently proposed for waste storage. Work has been completed in a portion of the Baroc Valley, but further work is required to the south of this and around the Colnic pit.

27.3.2 Underground Mining

The entire portion of material considered for underground material comprises Inferred Mineral Resources that are too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. The operational plan described in this study is preliminary in nature and there is no certainty that the operational Life of Mine Plans can be realized.

The level of study undertaken is considered equivalent to a scoping or order of magnitude study with estimation accuracy of around +40%/‐25%. Considerable additional detailed planning and design is required to confirm the development and production schedules and

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cost estimates. However, PEG believes the study reflects a reasonable assessment of the underground mining potential based on the current information and data available.

PEG believes that with the current geometry and available geotechnical information, there is potential to mine Ciresata using Vertical Crater Retreat (VCR) and induced block cave. VCR is a common mining technique employed in Canada to provide a low cost mining method if the orebody is conducive. PEG believes that Ciresata is a deposit for which this will work. The induced block cave is just drill and blast assisted block caving to ensure the block cave will occur. Geotechnical information at this time indicates that the rock has caving potential.

Access to the Ciresata deposit is from two different locations: the conveyor gallery and the portal on the surface near the Ciresata deposit.

The conveyor gallery will connect the bottom of the Ciresata deposit to the plant site in the Baroc valley, 6 km away. This will also be the primary ore conveyance method. Construction of the conveyor gallery will commence in Year ‐3 at a point half way along the length just on the outskirts of Bucureşci with a portal located there. Once the alignment of the conveyor had been reached from this portal, the gallery would be advanced towards the base of the deposit reaching it in Year ‐1. The portal in the Baroc valley would be initiated in Year ‐2 and advance towards the middle where the initial alignment was developed. This advance would connect to the initial development in Year ‐1. Once the connection had been completed, the conveyor and crusher would be installed at Ciresata.

Development occurs beneath the deposit to allow ore release. Once the conveyor gallery is complete, the development continues upwards to join the upper level development as well as an ore pass connecting the two.

An upper high‐grade zone of ore exists in the deposit that is targeted to be mined via a portal on the surface near Ciresata. This portal would later serve a role as ventilation but initially it is to develop the upper high‐grade section for ore release and also provide levels for the induced block cave. The small quantity of ore mined prior to plant operation will be trucked to the plant, stockpiled, and then used as feed in Year 1. This was approximately 145,400 tonnes. The upper zone is developed using a VCR method, but without backfilling. The ore material recovered is passed to an ore shoot that connects the upper part of the mine to the crushing station and conveyor at the base of the mine.

Ore is produced in the underground mine at approximately 21,600 t/d from Year 1 to Year 16 when the current underground resource will be completed. The Ciresata mine will release 124.4 Mt of ore grading 0.17% Cu and 0.86% g/t Au or 47% of the total mine feed. The LOM operating cost is expected to average $6.62/t of ore with a direct capital cost of $123 million.

PEG observed that the Ciresata deposit model is currently flat at the base. This is the bottom boundary of the model generated and not necessarily representative of the actual ore body geometry at depth. Further drilling is required to define the deposit, particularly at depth.

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Presently the development for the induced block cave is developed in “barren” material; however, it is reasonable to assume that the Ciresata deposit does not just end as a flat level at the ‐195 level. Given additional ore below this level, the design proposed would change to accommodate any additional ore material or at a minimum, the development potentially could provide ore material during its construction.

Additional geotechnical work is required to assist in detailing the design for Ciresata. The amount of "inducing" required will be determined by this analysis.

PEG also observed that all three deposits occurred in a straight line running northeast to southwest. The conveyor gallery parallels this orientation. With knowledge of the given deposits, PEG considers it a distinct possibility to encounter additional mineralization along the length of the conveyor gallery. This should be targeted from an exploration perspective to fully examine impacts on the conveyor gallery and its alignment.

27.4 Metallurgy and Process Design

27.4.1 Metallurgy

A series of metallurgical test programs have examined the metallurgical response of several composite samples from the Rovina, Colnic, and Ciresata Deposits. A relatively straightforward flotation flowsheet has been developed to process these composites.

Grindability testwork conducted to date is preliminary in nature, but has produced Bond Ball Mill Work Indices ranging from 13.6 kWh/t to 17.3 kWh/t and the composites are therefore thought to be moderately hard, and somewhat typical of porphyry mineralisation. Some samples from Colnic and Rovina have displayed a tendency to form a viscous pulp at the target grind and examination of this should form part of the ongoing grindability program.

Flotation testwork has tested a variety of different reagents, grinds, and pulp conditions. Bulk and sequential rougher flotation has been compared and regrinding of rougher concentrate to various grinds has also been tested. A target grind of 80% ‐75 µm appears to provide the best balance between grinding cost and recovery, although this relationship should be verified as the metallurgical program progresses. Bulk flotation of sulphides with a mixed xanthate/dithiophosphate collector and MIBC frother gave a low‐sulphur tailing stream and a rougher concentrate with good recoveries of copper, sulphur and gold.

Copper mineralization consists almost exclusively of chalcopyrite, and not surprisingly, flotation response is generally excellent at the target grind of 80% ‐75 µm. A small percentage of chalcopyrite appears to be very fine grained and locked in silicate gangue; this varies between deposits and is approximately 8% for Ciresata, 4% for Colnic, and 5% for Rovina.

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A very preliminary examination of gold mineralogy has been performed on samples from Colnic and Ciresata and gold grains were observed to range from 49 to 1 µm in size. At the target grind, gold is either liberated or associated with chalcopyrite, pyrite, or silicate gangue. Significant losses of gold to rougher tailings were observed to occur for Ciresata samples despite very efficient recovery of sulphides, and this suggests that a higher percentage of silicate‐encapsulated fine gold is more prevalent in this deposit. Losses of gold to rougher tails were generally 23% for Ciresata, 11% for Colnic, and 16% for Rovina. Other than through the application of finer grinds, this gold is considered “unrecoverable” by flotation and therefore dictates the maximum gold recovery for each deposit.

Regrinding of rougher concentrates to approximately 20 µm, results in sufficient liberation of copper and gold from silicate gangue to allow saleable final concentrate grades. The cleaner circuit configuration and pulp conditions are designed to inhibit the flotation of silicate gangue and pyrite, although locked cycle testing highlighted the influence of rougher circuit collectors on pyrite flotation. Initial locked cycle tests suffered from increasingly large recirculation of pyrite‐rich middling streams and thus overall test instability. This was remedied using lower collector dosages, in particular the water‐soluble dithiophosphate 3418A.

Recovery of copper to final concentrate is not considered to be particularly challenging for the Rovina Valley ores, but the same cannot be said for gold. In particular, the latest (2010) testwork demonstrated how for the Ciresata deposit, a larger fraction of gold appears to be associated with (and locked within) pyrite. Gold losses to the cleaner tailings can be substantial if pyrite is depressed too thoroughly. For this reason, final locked cycle tests on the Rovina Valley samples focussed not only on the achievement of stable mass balances within the cleaner circuit, but also on the recovery of slightly higher percentages of pyrite to the final concentrate. The effect of additional pyrite on final concentrate copper grade is significant, but the additional gold recovery does pay for the additional transportation and treatment charges associated with the lower grade copper concentrates. Marketing studies have verified the saleability of these concentrates.

Minor (deleterious) element analysis of the locked cycle test products highlighted a high (but not penalty) zinc concentration in the Colnic flotation concentrate (1.6%), and this should be monitored as testwork progresses. In practice, the blending with low zinc concentrates from Rovina and Ciresata would dilute this element to acceptable (sub‐penalty) levels.

Table 27‐1 shows a summary of predicted grade/recovery data for each deposit.

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Table 27‐1: Metallurgical Prediction – Summary

Head Assay Concentrate Assay Recovery to Concentrate Deposit Cu, % Au, g/t Cu, % Au g/t Cu, % Au, g/t Rovina 0.25 0.27 24.3 20 93.2 69.9 Colnic 0.11 0.70 13.6 63 91.7 67.9 Ciresata 0.16 0.94 18.7 82 89.4 66.9

27.4.2 Process Design

The concept for concentrate haulage using tote bags in shipping containers is viable and practical. However, further examination of the entire transport network and costing needs to be completed. Efficiencies with respect to loading PVC lined shipping containers versus a tote bag system need to be reviewed to ensure all potential issues are addressed.

Standard reagents comprising potassium amyl xanthate, sodium isopropyl xanthate, methyl isobutyl carbinol (MIBC), and milk of lime for pH control are employed in the flotation process and added as required throughout the circuit. The use of cyanide is not required to achieve the stated recoveries.

27.5 Infrastructure and Site Layout

The infrastructure and the site plan design are based on information from published data and from previous work on similar operations. Several assumptions have been made in the costing of this portion of the Project and subsequent testing will provide more accurate data for refining the site plan design and associated infrastructure costs.

The site for the mill and operations was chosen for the following reasons:

 relative proximity to the two open pit locations  site is on top of a relatively flat height of land  proximity to existing electrical infrastructure and water sources.

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For the purpose of this study, water sources required for operations will be supplied by nearby wells, recycle water from the tailings area, and water from mine dewatering operations.

The current concept for tailings accommodates the required volume with room for expansion. PEA level work has been completed on the location selection and condemnation drilling needs to be completed. Geotechnical, environmental and socio‐economic studies have not been completed on the chosen location for this report. This work must commence for future studies.

This study assumed that the electrical power source will from existing nearby infrastructure which is readily available.

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28 RECOMMENDATIONS

28.1 Geology

Following the site visit, audit of the Project database and review of the QA/QC program, PEG recommends the following:

 Carpathian should unify, as much as it is possible, the naming and coding of the lithological and alteration units in the database in order to facilitate the configuration of the general mining package and to establish greater consistency. This work will facilitate movement of staffs between the deposits with minimum re‐training as the Project moves forward.  The performance of the magnetic compass of the down hole survey tool used by Carpathian appear to perform adequately however, the purchase of an instrument not affected by magnetism should be investigated. This is especially true for Ciresata where the drilling is deeper and subject to greater deviation.  Carpathian needs to monitor the QA/QC more closely and re‐submit sample batches that show an unusual failure rate in the standard and blanks combined with the coarse and pulp duplicates that shows unusual grade variations.

Following the completion of the mineral resource estimates at the Rovina, Colnic, and Ciresata Deposits, PEG recommends the following:

 Additional drilling is required at Ciresata to complete the delineation of the lithological and alteration contacts affecting the grade distribution in the model. Effort should also focus on a greater understanding of the grade distribution at or near the dike boundaries. This is especially important at Ciresata because of the bulk underground method envisioned, which typically require more precision on the locations of the ore/waste boundaries and the correct location of major fault that may affect the mine plan.  At Rovina, drilling needs to focus on the Inferred blocks near surface to ensure that all blocks within the reach of a potential open pit have sufficient coverage to be upgrade to the Indicated resource category in preparation for a possible pre‐feasibility study in the future.  A similar recommendation also applies for Colnic, with a secondary focus in understanding the distribution of the dike swarm at depth to increase the underground potential of the deposit.  With additional drilling, future resource models should revisit the interpolation plan in order to manage the higher grade frequently observed along the dike boundaries at

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Colnic and Ciresata. One possible enhancement could be to have an expanded domain of 5 m to 8 m along each dike boundary and interpolate these separately.  While closely spaced grade data is required in sufficient quantity to enable modelling of well‐structured directional variogram models. At Colnic the lithological‐alteration domain combination complicates the variography, especially in the lower grade fringe units. With additional drilling, the lithological/alteration model should be re‐evaluated and every attempt should be made to combine any units that are genetically close.

28.1.1 Infill Resource‐Definition Drilling and Step‐out Drilling

The main objectives of this drilling program in the context of the results from this PEA study would be:

 upgrade all existing resources that are determined minable to confidence categories suitable for prefeasibility‐feasibility studies  delineate limits of mineralization, especially at Ciresata  provide new assay and geologic data through detailed drill‐core logging and interpretation to address any weaknesses in the current resource models  provide sufficient data for an updated mineral resource estimate.

At the Ciresata porphyry, 32 HQ/NQ drill holes with an average of 620 m length for a total of approximately 20,000 m is recommended to infill and for limited step‐out drilling. This drilling is expected to increase the resource category and further delineate the porphyry body. PEG has been made aware that a portion of this drilling has already been completed for Ciresata in 2009‐2010, which targeted the mineralization at depth

Carpathian will need to in‐fill drill at Rovina and Colnic to upgrade confidence level from Inferred to Indicated in the area covered by the open pit. An allocation of 15 infill drill holes at an approximate average length of 350 m for 5,000 m total is provided for this purpose.

28.1.2 Reconnaissance Drilling

Other porphyry targets in the Rovina project area should be evaluated and ranked by Carpathian’s generative exploration program. Drill testing of these targets, especially in vicinity of existing deposits, is recommended. The Ciresata area is particularly prospective. Secondary exploration targets on the Rovina property, the Cordurea and Valisoara‐Porcurea prospects should be drill‐tested with a few scout holes providing it does not pull available resources from the Rovina project. A total of 5,000 m of diamond drilling, approximately 12 drill holes, has been allocated for reconnaissance drilling.

In total, approximately 30,000 m to 35,000 m of core (amount to be determined on results during the program) is budgeted, distributed between the Colnic, Rovina, and Ciresata

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Porphyry bodies with 5,000 m of this to be allocated to reconnaissance drilling at proximal exploration targets (Table 28‐1). A provision for 20% QA/QC sampling is built into the analytical costs with additional 10% contingencies. The total drilling and analytical costs are approximately US$5.9 million excluding in‐country cost of labour, employee, office and all associated ancillary costs and capital equipment purchases. The objectives of the program are to ensure the data collected in the drilling programs are of a nature and standard that can be used for further resource estimations.

Table 28‐1 Recommended Drill Budget

Estimated Cost Description Details (US$) Ciresata Step‐out and In‐fill 20,000 @ US$160/m 3,200,000 Rovina and Colnic In‐fill 5,000 @ US$160/m 800,000 Reconnaissance Drilling 5,000 @ US$160/m 800,000 Analytical Costs Includes provision for 20% QA/QC 540,000 samples, and independent sampling. Analytical costs of US$15.00 per sample, 36,000 total of samples Approximate 10% Contingency 534,000 Total 5,874,000

28.2 Geotechnical

The data available at this stage of study varies in reliability. Estimates of engineering properties are provided with ranges where possible and sensitivity analyses are encouraged for geotechnical design based on these data. The interpretations of this report are preliminary and require addition validation and testing with higher quality data before they can be applied to more intensive design studies.

For prefeasibility design studies, a higher level of confidence will be required and the preliminary geotechnical model presented will need to be updated with additional high quality data. A series of recommended data collection and interpretation tasks are outlined below. These recommendations could be completed in phases using a combination of BGC/PEG staff, Carpathian staff, and/or other contractors.

Outcrop Mapping

Mapping of additional exposed rock outcrop along drill roads or other access roads will provide important data on discontinuity orientation, character, and continuity, which are all critical for rock excavation design. In addition, further information on the character and thickness of the overburden and/or oxidized rocks should be collected.

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Geotechnical Core Logging

Dedicated geotechnical core holes should be drilled targeting the proposed mining excavation for all three deposits. These holes would mainly target waste rock outside of the ore zone to determine the geotechnical properties of the rock mass forming the pit walls or the underground mining development areas. The core holes should be drilled using a triple tube core barrel. Core orientation techniques should be employed to determine sub‐surface geologic discontinuity information that can be compared with surface information.

The existing core hole database does not provide sufficient geotechnical data to characterize the rock mass of the resource area according to standard rock mechanics techniques. Thus, BGC recommends that the core logging procedures be modified to provide additional data (rock hardness grade and UCS), as well as complete parameters for RMR’ (Bieniawski, 1976) and Q’ (Barton, 1974) rock mass characterization systems.

Point Load Testing

Experiences at other mining properties and published literature have indicated that alteration may have a significant impact on the intact strength of the rocks of the resource area. The potential for further division of the geotechnical units according to alteration may be evaluated through a point load‐testing program. The point load test is a simple and rapid method of determining an index value, which can be related to the intact strength of a rock sample. This index may be used to relatively compare intact strength variation according to alteration.

Carpathian could undertake a point load‐testing program as part of its next exploration‐ drilling program. The added effort is minimal, requiring the rental or purchase of a point‐ load test‐machine, the selection of samples according to lithology and alteration type, and completing the testing itself. BGC can provide further support in developing the testing specifications and database to store the results. Staff can also be supplied to undertake the required work, if needed.

Discrepancies between estimated of UCS from field hardness grade, point load testing and laboratory testing will need to be resolved in the next phase of work.

Laboratory Testing

Uniaxial compressive strength testing, triaxial compressive strength testing, direct shear testing of discontinuities, and index testing of discontinuity infill should be conducted on select samples to provide a basis for geotechnical analysis and design parameters. These samples should be collected from dedicated geotechnical drill holes to ensure the appropriate materials are sampled, and to avoid conflicts with exploration sampling and assaying.

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Hydrogeologic Evaluations

Hydrogeological testing (packer testing) and instrumentation (i.e., piezometers) should be installed in select holes to provide basic data for groundwater modelling and excavation dewatering/depressurization simulations. This information will be useful in subsequent geotechnical evaluations, to determine the feasibility of dewatering the proposed pits and the underground excavations.

28.3 Mining

28.3.1 Open Pit Mining

ARD testing needs to be completed on samples of all waste and low‐grade ore material to ensure that no long‐term waste storage issues exist. The impact on the final waste storage designs then needs to be completed.

Geotechnical work needs to be updated to a Pre‐Feasibility level as the property progresses. The updated criteria will then need to be incorporated into the pit designs at Rovina and Colnic. Foundation analysis also needs to be completed for the waste dumps, particularly in the Rovina Valley above and below the Colnic pit, and in the Baroc Valley. The results of the foundation work will have to be incorporated into the final waste storage designs.

Rock strength parameters also need to be collected to allow blasting analysis work to be completed. The fragmentation size possible will then be used in the design of the primary crusher and other milling functions.

Condemnation drilling will have to be completed in all waste storage locations to ensure that economic material does not exist. Work to date in the Baroc valley has indicated that while mineralization does occur, it is not economic to mine.

Detailed work needs to be completed on the creek in the Rovina valley. Flow measurements and expected flow rates need to be determined to properly size the creek diversion around the Colnic pit.

Comprehensive labour costing should be completed to determine if the labour cost estimates will change and if so by how much.

28.3.2 Underground Mining

Additional geotechnical work is required to determine the energy requirements of the induced block cave, if at all. If the rock has the potential to cave easily, it could have a positive impact by reducing the "induced" component.

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Detailed drilling along the length of the conveyor gallery needs to be completed to properly determine the costs of the gallery construction, which may be impacted by faulting, poor ground, or another mineral deposit.

Old underground workings exist immediately to the west of the Ciresata deposit. Additional information should be obtained on these to determine if they could be used to speed access to the Ciresata deposit, reducing the development time required.

Detailed scheduling of the induced cave needs to be completed to properly estimate the grade release from the cave. With proper geotechnical inputs on the rock properties and the lithological boundaries, computer programs that can accurately model expected grades from drawpoints over the LOM exist. A program such as Gemcom's PCBC will help reduce the risk associated with variable feed grade by accurately predicting results prior to construction.

Groundwater levels need to be determined as part of the geotechnical program to properly size any pumping that may be required.

For the next stage, in order to improve the economics for the underground aspects, the following trade‐off studies should be taken into consideration:

28.4 Metallurgy and Processing

28.4.1 Metallurgy

Several composite samples have been tested at bench scale for each of the three RVP Deposits. The latest work (2010) at SGS in Lakefield, Ontario, was specifically conducted to provide stable locked cycle test results on which to make reliable predictions of metallurgical performance.

As the Project advances towards production, the following work is recommended:

 A thorough program of grindability testing is strongly encouraged, to better support the process design of the large SAG/Ball Mill circuit. A normal feasibility program of composite and variability testing, including JKSimMet or SPI analysis for SAG modelling is recommended.

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 Further improvement to the flotation flowsheet is considered probable and further examination of different mixed‐collector regimes is strongly encouraged. This is particularly true of the Ciresata deposit, where gold recoveries could likely be improved through advances in pyrite flotation control.  A geometallurgical‐mapping program should be undertaken to further evaluate variability in the deposits and identify zones within each that may require further investigation and optimization.  A program of work to develop the primary grind vs. copper/gold recovery is recommended, as the current grind of 70 µm is considered quite fine for a deposit of this size, grade, and nature.  A program of work to develop a headgrade vs. recovery relationship for each deposit will allow refinement of revenue predictions within the economic model.  The synergies associated with flotation of blended composites (production period composites) should be studied further  A study of the settling and filtration characteristics of the flotation concentrate products is required to properly specify and size equipment in these areas.  Although this is not deemed to be an issue (with very low pyrrhotite concentrations), the self‐heating (pyrophoric) properties of the final concentrate products should be verified.  The effect of recycled process water on the flotation process should be investigated in subsequent locked cycle testing.  To advance the metallurgy to a feasibility level, the piloting of average mill feed composites should be considered. The sensitivity of cleaner separations to recycled reagent concentrations should be completely understood.

28.4.2 Processing

At the feasibility study level, a detailed cost/benefit analysis of grinding circuit options should be conducted, including source of mill supply with possible associated costs and risks, one versus two grinding lines, tonnage ramp‐up requirements, and a transportation study.

Detailed costing of the concentrate handling system needs to be completed to ensure losses are minimized of the high value concentrate. Handling methods need to be considered in detail to ensure that additional cost may not be incurred by a particular method.

28.5 Infrastructure and Site Layout

Additional testing and data is required to define further the infrastructure and site layout requirements and associated costs in the following areas:

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 detailed topographical information to provide more detail for infrastructure design including power line layout, road design and building placement  geotechnical testing and data to further develop construction requirements for the mine/mill site  hydrogeology testing to determine the effect on infrastructure requirements  bathymetry information and water quality testing on water sources surrounding the mine site to determine available volumes and quality of water required to support the mine and mill complex.

Studies with respect to geotechnical, environmental impact, and socio‐economic need to be completed on the proposed tailings site location. Examination of other potential locations needs to be considered and costed to ensure that the current location is truly the best location.

28.6 Environmental and Socioeconomics

Carpathian should continue with its stakeholder engagement programs and utilize the in‐ progress EIA and SIA studies for the Mining License application as the foundation for the EIAR. Key topics to be addressed are characterization of ARD and metal leaching potential and development of mitigation measures if required, hydrologic studies of surface and groundwater, TMF options including location and technology of emplacement, impact assessment on nearby communities and mitigation measures. To advance the Project in a timely manner, the mining technical, environmental technical and social studies should advance in parallel to the extent possible; this will require feedback and cooperation between all the study groups. For the permitting process, all studies should be placed in the context of eventually meeting the requirements for the PUG and PUZ approval (Land use designation) and the final EIAR (Construction Permit). Many of these studies can be used for both purposes.

Broad‐based community support will be important for obtaining the necessary public and government approvals, and for eventually obtaining surface rights. Carpathian should continue with its current public consultation program and involve the local community as much as appropriate in the Project planning phases. This engagement should be viewed as a continuous process and is well in advance of the required public meetings for the PUG and PUZ, and EIAR approvals. Carpathian should continue and expand local community capacity‐ building projects as an active partner, and encourage requisition of outside sources of funding. In addition, Carpathian should work with the local city council to update its Strategic Long‐term Community Development Plan with new baseline data, and encourage the concepts of sustainability framework for new proposed projects.

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29 REFERENCES

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Alderton, D.H.M. and Fallick, A.E., 2000: The Nature and Genesis of Gold‐Silver‐ Tellurium Mineralization in the Metaliferi Mountains of Western Romania, in Economic Geology Vol. 95/Number 3, May 2000.

André‐Mayer, A‐S., Leroy, J.L., Marcoux, E., and Lerougec, C., 2001: Fluid Inclusions and Sulphur Isotopes of the Valea Morii Ore Deposit (Apuseni Mountains, Romania): Telescoping between Porphyry and Low‐sulfidation Epithermal Ore Deposits?: 13 p. http://hal.ccsd.cnrs.fr/docs/00/08/96/99/PDF/Andre‐Mayer‐CRAS‐ 2001.pdf#search=%22valea%20morii%20gold%22, accessed 28 June 2007.

Armstrong, R., 2006: Petrographic Report: unpublished internal report from London Natrural History Museum, Londan, U.K. to Carpathian Gold Inc., cited in Ruff, 2007.

Armstrong, R., 2008: Petrographic Report: unpublished internal report from London Natrural History Museum, Londan, U.K. to Carpathian Gold Inc.

AstonEco SRL, 2008; SAMAX Romania CSR strategy workshop report, 15 May 2008. Internal report to Carpathian Gold Inc.

AstonEco SRL, 2009; SAMAX Romania stakeholder manual, version 0.6.1, third working draft, 25 May 2009; internal report to Carpathian Gold Inc.

Borcos M., and Vlad S., 1994: Plate Tectonics and Metallogeny in the East Carpathians and Apuseni Mountains: IGCPP Project No. 356, Bucharest: June 7‐19, 1994, 43 p. Cited in Seghedi, I., 2004. Geological Evolution of the Apuseni Mountains with Emphasis on the Neogene Magmatism – a Review in N.J. Cook & C.L. Ciobanu (Eds.), 2004: Au‐Ag‐ telluride Deposits of the Golden Quadrilateral, Apuseni Mts., Romania: Guidebook of the International Field Workshop of IGCP project 486, Alba Iulia, Romania, 31 August–7 September 2004, IAGOD Guidebook Series 11.

Bucureşci City Council, 2006; Strategy plan for long‐term development of the Bucureşci area, commissioned by the Bucureşci City Council.

Carpathian Gold Inc., 2006: Romania Locations: Carpathian Gold website, http://www.carpathiangold.com/site06/nbspnbspProjects/Romania/tabid/68/Default.aspx; accessed 28 June 2007.

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Carpathian Gold Inc., 2009; Corporate Social Responsibility Manual, version 0.9.2, final draft for review, December 2009.

CIA World Factbook, 2006: The World Fact Book: Romania, June 2006 update, http://www.cia.gov/cia/publications/factbook/geos/ro.html, accessed 28 June 2007.

Cinits, R.A. 2006a: A Review of the Colnic Au–Cu Porphyry Deposit and QA/QC Procedures, AMEC (Perú) S.A. in‐house memo RC‐013‐06 prepared for Carpathian Gold Inc., June 2, 2006.

Cinits, R.A., 2006b: Technical Report on the Apuseni–Rovina Property: report prepared for Carpathian Gold Inc. by AMEC Perú S.A., effective date 1 September 2006.

Cioflica, G., Savu, H., Borcos, M., Stefan, A., and Istrate, G., 1973: Alpine Volcanism and Metallogenesis in the Apuseni Mountains. Symposium on Volcanism and Metallogenesis, Excursion Guide 3AB, IGG, Bucharest, 70 p. Cited in Seghedi, I., 2004. Geological Evolution of the Apuseni Mountains with Emphasis on the Neogene Magmatism – a Review in N.J. Cook & C.L. Ciobanu (Eds.), 2004: Au‐Ag‐telluride Deposits of the Golden Quadrilateral, Apuseni Mts., Romania: Guidebook of the International Field Workshop of IGCP project 486, Alba Iulia, Romania, 31 August to 7 September 2004, IAGOD Guidebook Series 11.

Clarke, J. and Kiddie, A., 2007: Petrographic Report: unpublished internal report from Cygnus Consulting Inc., Montreal, Canada to Carpathian Gold Inc.

Damian, G., 2006: Petrographic Report: unpublished internal report to Carpathian Gold Inc., cited in Ruff, 2006.

Damian, G., 2008: Petrographic Report: unpublished internal report from North University, Baia Mare, Romania, to Carpathian Gold Inc.

EcoTerra SRL, 2008; Regulations for authorizing the exploitation activity of a mineral resources deposit, as per Romanian legislation. Internal report to SAMAX SRL, 24 September 2008.

Eurogold Limited, 2006a: Details of Mining Operations and Exploration: Eurogold website, http://www.eurogold.com.au/html/operations.html#Details%20operations; accessed 28 June 2007.

Eurogold Limited, 2006b: Gold in the Carpathian Mountains: Eurogold website, http://www.eurogold.com.au/html/operations.html, accessed 28 June 2007.

European Goldfields Ltd., 2006c: Reserves Announced for Certej Project: unpublished release to Toronto Stock Exchange, 10 April 2006, 5 p.

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European Goldfields Ltd., 2006d: Clear Path for Permits at Certej: unpublished release to Toronto Stock Exchange, 2 August 2006, 4 p.

European Goldfields Ltd., 2006e: Certej Project, Romania: European Goldfields website, http://www.egoldfields.com/goldfields/projects.jsp?ref=8, accessed 28 June 2007.

European Goldfields Ltd., 2007: Certej Project, Romania, Turning the corner: European Goldfields website, http://www.egoldfields.com/goldfields/projects.jsp?ref=8, accessed 28 June 2007.

Gabriel Resources Ltd, 2006: Rosia Montana project: Gabriel Resources website, http://www.gabrielresources.com/prj‐rosia.htm, accessed 28 June 2007.

Golder Associates Canada Ltd., 2007; Position paper for development of the Rovina License, Romania. Report to Carpathian Gold, 22 March 2007.

Golder Associates Europe Ltd., 2007; Romania trip summary and recommendations going forward for Carpathian Gold – Rovina License. Technical Memorandum to Carpathian Gold, 3 July 2007.

Grancea L., Cuney, M., and Leroy, J.L., 2001: Mineralized versus barren intrusions: a melt inclusion study in Romania’s Gold Quadrilateral: Earth and Planetary Sciences vol 333, p. 705–710.

Ianovici, V., Giusca, D., Ghitulescu, T.P., Borcos, M., Lupu, M., Bleahu, M., and Savu, H. 1969: Evolutia Geologica a Muntilor Metaliferi. Ed. Acad. Rep. Soc. România, 741 p. Cited in Seghedi, I., 2004. Geological Evolution of the Apuseni Mountains with Emphasis on the Neogene Magmatism – a Review in N.J. Cook & C.L. Ciobanu (Eds.), 2004: Au‐Ag‐telluride Deposits of the Golden Quadrilateral, Apuseni Mts., Romania: Guidebook of the International Field Workshop of IGCP project 486, Alba Iulia, Romania, 31 August–7 September 2004, IAGOD Guidebook Series 11.

IBP Publishing and Conferences, 2006: Romanian Business Digest, March 2006: 296 p. http://rbd.doingbusiness.ro/home.htm, accessed 28 June 2007.

Long, S.D., 2005, Assay Quality Assurance/Quality Control Program for Drilling Projects at the Pre‐Feasibility to Feasibility Report Level (4th edition), AMEC Mining Consulting Group.

Manske, S.L. and Hedenquist, J.W., 2006: Rosia Montana, Romania: Europe’s Largest Gold Deposit, SEG Newsletter Number 64, Society of Economic Geologists.

Milieukontact Oost‐ Europa, 2006: Romania: Milieukontact website, http://www.milieukontakt.nl/index.php?show=general&country_id=11, accessed 28 June 2007.

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Milu, V., Milesi, J.P. and Leroy, J.L., 2004: Rosia Poieni Copper Deposit, Apuseni Mountains, Romania: Advanced Argillic Overprint of a Porphyry System: Mineralium Deposita, Volume 39: p. 173–188.

Patrick, D.J., and Jackson, T., 2004: Technical Review of a Portfolio of Properties in Romania for European Goldfields Ltd by A C A Howe International Limited: unpublished report to Toronto Stock Exchange, 10 March 2004, 237 p.

Richards, J.P., 2000: Lineaments Revisited: SEG Newsletter Number 42, Society of Economic Geologists.

Romania Official Monitor, 2005; HG nr. 1059 din 08/09/2005, Part I nr. 860 from 23/09/2005, art. 1, pt. I Order MEC/2007.

Romanian Center for Culture and Archaeology‐Deva 2009; Archaeology diagnosis report from the Rovina mining project. Report to SAMAX Romania SRL, 28th January 2009.

Rossetti. P., Colombo, F., Cioflica, G., and Lupulescu, M., 1999: Relationships between Porphyry Type and Epithermal Deposits in the Valea Morii Nova Mine (Apuseni Mountains, Romania): Fluid Inclusions Preliminary Data: Symposium H01 Geodynamic Control of Ore Deposit Formation in the Alpine‐Carpathian‐Dinari‐Balkan Region, 28th March to 1st April, 1999 Strasbourg, France, Journal of Conference Abstracts Volume 4 Number 1.

Rosu, E., Seghedi, I., Alderton, D., Szakács, A., Pécskay, Z., Panaiotu, C., and Nedelcu, L., 2004: Extension‐related Miocene Calc‐alkaline Magmatism in the Apuseni Mountains, Romania: Origin of Magmas: Schweizerische Mineralogische und Petrographische Mitteilungen, Vol 84, p. 153–172.

Ruff, R., 2006: Rovina–Colnic Prospect Geology: unpublished internal document, Carpathian Gold Inc., 21 September 2006. 9 p.

Ruff, R., 2007: Colnic Porphyry Geology and Exploration, Rovina Exploration License, South Apuseni Mountains, Romania, July 2007: unpublished internal report, Carpathian Gold Inc., 40 p.

S.C. Rosia Montana Gold Corporation S.A., 2004: Project Presentation Report: unpublished Technical Report to Toronto Stock Exchange, 196 p.

Sillitoe, R.H., 2000: Gold‐Rich Porphyry Deposits: Descriptive and Genetic Models and their Role in Exploration and Discover, in Gold in 2000, Reviews in Economic Geology, Vol. 13, Society of Economic Geologists.

Sinclair, W.D., 2006: Consolidation and Synthesis of Mineral Deposits Knowledge ‐ Porphyry Deposits: report posted to Natural Resources Canada website 30 January 2006, 14 p., http://gsc.nrcan.gc.ca/mindep/synth_dep/porph/index_e.php, accessed 28 June 2007.

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Steblez, W., 2001: The Mineral Industries of Bulgaria and Romania, 2001, http://minerals.usgs.gov/minerals/pubs/country/2001/buromyb01.pdf accessed 28 June 2007.

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Tamas C., 2002: “Breccia Pipe” Structures Associated with Some Hydrothermal Ore Deposits in Romania. Ph.D. Thesis, Univ. Babes‐ Bolyai, Cluj‐Napoca (in Romanian), 186 p. Cited in Seghedi, I., 2004. Geological Evolution of the Apuseni Mountains with Emphasis on the Neogene Magmatism – a Review in N.J. Cook & C.L. Ciobanu (Eds.), 2004: Au‐Ag‐telluride Deposits of the Golden Quadrilateral, Apuseni Mts., Romania: Guidebook of the International Field Workshop of IGCP project 486, Alba Iulia, Romania, 31 August to 7 September 2004, IAGOD Guidebook Series 11.

Udubasa, G., Rosu, E., Seghedi, I., and Ivascanu, M.P., 2001: The “Golden Quadrangle” in the Metaliferi Mountains, Romania: What Does This Really Mean? Rom. J. Mineral Deposits 79/2: 24‐34. Cited in Seghedi, I., 2004. Geological Evolution of the Apuseni Mountains with Emphasis on the Neogene Magmatism – a Review in N.J. Cook & C.L. Ciobanu (Eds.), 2004: Au‐Ag‐telluride Deposits of the Golden Quadrilateral, Apuseni Mts., Romania: Guidebook of the International Field Workshop of IGCP project 486, Alba Iulia, Romania, 31 August–7 September 2004, IAGOD Guidebook Series 11.

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Warries, H., Cloutt, B., Palich, B., De Visser, J., Gossage, B., and Monaghan, B., 2006: Certej Gold Silver Project, Romania, Technical Report by RSG Global on behalf of European Goldfields Limited and Deva Gold S.A.: unpublished report to Toronto Stock Exchange, 26 April 2006, 139 p.

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30 CERTIFICATES OF QUALIFIED PERSONS

30.1 Certificate of Mario Colantonio, P.Eng.

I, Mario Colantonio, of Timmins, Ontario, do hereby certify that as one of the authors of this Preliminary Economic Assessment – NI 43‐101 Technical Report, Rovina Valley Project, dated 21 May 2010, I hereby make the following statements:

 I am an Engineering Manager/Principal with Porcupine Engineering Services Inc. with a business address at #200‐81 Shamrock Ave, PO Box 1348, South Porcupine, ON, P0N 1H0.  I am a graduate of Queens University, Civil Engineering Program, 1985, and I have practiced my profession continuously since then.  I am a member in good standing of the Association of Professional Engineers of Ontario, Registration No. 8869554.  I have conducted a site visit at the Rovina Valley Project on 22 to 27 September 2008.  I have read the definition of “qualified person” set out in National Instrument 43‐101 (NI 43‐101) and certify that, by reason of my education, affiliation with a professional association (as defined in NI 43‐101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purpose of NI 43‐101.  My relevant experience with respect to Project Infrastructure includes the design and construction review of mining and milling infrastructure systems throughout 23 years working as a consulting engineer in the mining industry. I have held the position of engineering manager for consulting engineering firms in Northern Ontario for the last 12 years and in that role have overseen the work of teams of mechanical, electrical, civil and structural engineers on several mine and mill projects.  I am responsible for the preparation of Sections 1.6, 1.7, 20.0, 24.1.5, 24.2.6, 24.2.7, 24.2.8, 27.5, 28.5, and 29.0 of this technical report titled “Preliminary Economic Assessment – NI 43‐101 Technical Report, Rovina Valley Project,” dated 21 May 2010.  As of the date of this Certificate, to my knowledge, information, and belief, this Technical Report contains all scientific and technical information required to be disclosed to make the technical report not misleading.  I am independent of the Issuer as defined by Section 1.4 of the Instrument.  I have read NI 43‐101 and the Technical Report has been prepared in compliance with NI 43‐101 and Form 43‐101F1. Signed and dated this 21st day of May 2010 at Barrie, Ontario. “Original Document signed and sealed by Mario Colantonio, P.Eng.” Signature

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30.2 Certificate of Pierre Desautels, P.Geo.

I, Pierre Desautels, of Barrie, Ontario, do hereby certify that as one of the authors of this Preliminary Economic Assessment – NI 43‐101 Technical Report, Rovina Valley Project, dated 21 May 2010, I hereby make the following statements:

 I am a Principal Geologist with PEG Mining Consultants Inc., with a business address at 92 Caplan Avenue, Suite 610, Barrie, Ontario, L4N 0Z7.  I am a graduate of Ottawa University (B.Sc. Hons., 1978), and I have practiced my profession continuously since then.  I am a member in good standing of the Association of Professional Geoscientists of Ontario, Registration #1362.  I have conducted a site visit at the Rovina Valley Project on 26 to 30 August 2008.  I have read the definition of “qualified person” set out in National Instrument 43‐101 (NI 43‐101) and certify that, by reason of my education, affiliation with a professional association (as defined in NI 43‐101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purpose of NI 43‐101.  My relevant experience with respect to resource modelling includes 29 years experience in the mining sector covering database, mine geology, grade control, and resource modelling. I was involved in numerous projects around the world in both base metals and precious metals deposits.  I am responsible for the preparation of Sections 1.1, 1.2, 4.0, 5.0, 6.0, 7.0, 8.0, 9.0, 10.0, 11.0, 12.0, 13.0, 14.0, 15.0, 17.0, 27.1, 28.1, and 29.0 of this technical report titled “Preliminary Economic Assessment – NI 43‐101 Technical Report, Rovina Valley Project,” dated 21 May 2010.  As of the date of this Certificate, to my knowledge, information, and belief, this Technical Report contains all scientific and technical information required to be disclosed to make the technical report not misleading.  I am independent of the Issuer as defined by Section 1.4 of the Instrument.  I have read NI 43‐101 and the Technical Report has been prepared in compliance with NI 43‐101 and Form 43‐101F1.

Signed and dated this 21st day of May 2010 at Barrie, Ontario.

“Original Document signed and sealed by Pierre Desautels, P.Geo.”

Signature

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30.3 Certificate of Eric Harkonen, P.Eng., MBA

I, Eric Harkonen, of Barrie, Ontario, do hereby certify that as one of the authors of this Preliminary Economic Assessment – NI 43‐101 Technical Report, Rovina Valley Project, dated 21 May 2010, I hereby make the following statements:  I am a Principal Project Manager/Mine Engineer with PEG Mining Consultants Inc., with a business address at 92 Caplan Avenue, Suite 610, Barrie, Ontario, L4N 0Z7.  I am a graduate of Queens University, B.Sc. in Mining Engineering, 1992 and McMaster University, MBA 1994.  I am a member in good standing of the Association of Professional Engineers of Ontario, Registration #100089655.  I have practiced my profession continuously since graduation.  I have conducted a site visit at the Rovina Valley Project on 22 to 27 September 2008.  I have read the definition of “qualified person” set out in National Instrument 43‐101 (NI 43‐101) and certify that, by reason of my education, affiliation with a professional association (as defined in NI 43‐101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purpose of NI 43‐101.  My relevant experience with respect to Project Management includes sixteen years of diverse experience in the mining industry in both operational and consulting roles as a Senior Project Manager and managed several small‐scale single discipline to large‐scale multi‐disciplinary projects.  I am responsible for the preparation of Sections 1.0, 1.11, 2.0, 3.0, 22.0, 23.0, 24.1.6, 24.1.7, 24.1.8, 24.1.9, 26.0, 28.6, and 29.0 of this technical report titled “Preliminary Economic Assessment – NI 43‐101 Technical Report, Rovina Valley Project,” dated 21 May 2010.  As of the date of this Certificate, to my knowledge, information, and belief, this Technical Report contains all scientific and technical information required to be disclosed to make the technical report not misleading.  I am independent of the Issuer as defined by Section 1.4 of the Instrument. Eric Harkonen’s direct relative (wife Donna Harkonen) owns 50,000 shares of Carpathian Gold Inc. in an RRSP purchased on 1 April 2008, (prior to the commencement of the PEA). The ownership of these shares has been fully disclosed to Carpathian Gold Inc. and do not constitute an issue for independence.  I have read National Instrument 43‐101 and the Technical Report has been prepared in compliance with National Instrument 43‐101 and Form 43‐101F1. Signed and dated this 21st day of May 2010 at Barrie, Ontario. “Original Document signed and sealed by Eric Harkonen, P.Eng., MBA”

Signature

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30.4 Certificate of Gordon Zurowski, P.Eng.

I, Gordon Zurowski, of Stouffville, Ontario, do hereby certify that as one of the authors of this Preliminary Economic Assessment – NI 43‐101 Technical Report, Rovina Valley Project, dated 21 May 2010, I hereby make the following statements:

 I am a Principal Mine Engineer with PEG Mining Consultants Inc., with a business address at 92 Caplan Avenue, Suite 610, Barrie, Ontario, L4N 0Z7.  I am a graduate of University of Saskatchewan, B.Sc. Geological Engineering, 1989, and I have practiced my profession continuously since then.  I am a member in good standing of the Association of Professional Engineers of Ontario, Registration #100077750.  I have conducted a site visit at the Rovina Valley Project in July 2007.  I have read the definition of “qualified person” set out in National Instrument 43‐101 (NI 43‐101) and certify that, by reason of my education, affiliation with a professional association (as defined in NI 43‐101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purpose of NI 43‐101.  My relevant experience with respect to the Mine Design portion of the Hackett River Preliminary Economic Assessment includes the design and evaluation of open pit mines for the last 20 years  I am responsible for the preparation of Sections 1.4.1, 1.4.2, 1.8, 1.9, 1.10, 18.0, 19.2, 19.3, 21.0, 24.1.1, 24.1.2, 24.1.3, 24.1.8, 24.1.9, 24.2.1, 24.2.2, 24.2.3, 24.2.5, 25.0, 27.3.1, 27.3.2, 28.3.1, 28.3.2, and 29.0 of this technical report titled “Preliminary Economic Assessment – NI 43‐101 Technical Report, Rovina Valley Project,” dated 21 May 2010.  As of the date of this Certificate, to my knowledge, information, and belief, this Technical Report contains all scientific and technical information required to be disclosed to make the technical report not misleading.  I am independent of the Issuer as defined by Section 1.4 of the Instrument.  I have read NI 43‐101 and the Technical Report has been prepared in compliance with NI 43‐101 and Form 43‐101F1.

Signed and dated this 21st day of May 2010 at Barrie, Ontario.

“Original Document signed and sealed by Gordon Zurowski, P.Eng.”

Signature

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30.5 Certificate of H. Warren Newcomen, M.S., P.Eng., P.E.

I, Warren Newcomen, of Kamloops, British Columbia, do hereby certify that as one of the authors of this Preliminary Economic Assessment – NI 43‐101 Technical Report, Rovina Valley Project, dated 21 May 2010, I hereby make the following statements:

 I am an Engineer with BGC Engineering Inc. with a business address at #503‐11315 Summit Drive, Kamloops, British Columbia, V2C 5R9.  I am a graduate of the University of British Columbia and the University of California at Berkeley, and I have practiced my profession continuously since then.  I am a member in good standing of the Association of Professional Engineers of British Columbia, Registration No. 16123.  I am a BGC representative and I have conducted a site visit at the Rovina Valley Project from 15 to 19 September 2008.  I have read the definition of “qualified person” set out in National Instrument 43‐101 (NI 43‐101) and certify that, by reason of my education, affiliation with a professional association (as defined in NI 43‐101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purpose of NI 43‐101.  My relevant experience with respect to the Project includes open pit slope and underground designs for the: Cortez Hills Project, Nevada; Donlin Creek Project, Alaska; Galore Creek Project, BC; Golden Bear Project, BC; Goldstrike Mine, Nevada; Palabora Mine, South Africa; New Afton Project, BC; KSM Project, BC, Max Molybdenum Mine, BC.  I am responsible for the preparation of Sections 1.3, 19.1, 27.2, 28.2, and 29.0 of this technical report titled “Preliminary Economic Assessment – NI 43‐101 Technical Report, Rovina Valley Project,” dated 21 May 2010.  As of the date of this Certificate, to my knowledge, information, and belief, this Technical Report contains all scientific and technical information required to be disclosed to make the technical report not misleading.  I am independent of the Issuer as defined by Section 1.4 of the Instrument.  I have read NI 43‐101 and the Technical Report has been prepared in compliance with NI 43‐101 and Form 43‐101F1.

Signed and dated this 21st day of May 2010 at Barrie, Ontario.

“Original Document signed and sealed by Warren Newcomen, M.S., P.Eng.”

Signature

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30.6 Certificate of Andy Holloway, P.Eng.

I, Andy Holloway, of Peterborough, Ontario, do hereby certify that as one of the authors of this Preliminary Economic Assessment – NI 43‐101 Technical Report, Rovina Valley Project, dated 21 May 2010, I hereby make the following statements:

 I am a Principal Process Engineer with PEG Mining Consultants Inc., with a business address at 92 Caplan Avenue, Suite 610, Barrie, Ontario, L4N 0Z7.  I am a graduate of the University of Newcastle in Tyne, England, B.Eng. (Hons.), 1989, and I have practiced my profession continuously since then.  I am a Professional Engineer licensed by Professional Engineers Ontario (Membership Number 100082475).  I have conducted a site visit at the Rovina Valley Project on 22 to 27 September 2008.  I have read the definition of “qualified person” set out in National Instrument 43‐101 (NI 43‐101) and certify that, by reason of my education, affiliation with a professional association (as defined in NI 43‐101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purpose of NI 43‐101.  My relevant experience with respect to mineral processing and metallurgy includes 19 years experience in the mining sector covering mineral processing, process plant operation, design engineering, and management. I have been involved in numerous projects around the world in both base metals and precious metals deposits.  I am responsible for the preparation of Sections 1.5.1, 16.1, 27.4.1, 28.4.1, and 29.0 of this technical report titled “Preliminary Economic Assessment – NI 43‐101 Technical Report, Rovina Valley Project,” dated 21 May 2010.  As of the date of this Certificate, to my knowledge, information, and belief, this Technical Report contains all scientific and technical information required to be disclosed to make the technical report not misleading.  I am independent of the Issuer as defined by Section 1.4 of the Instrument.  I have read NI 43‐101 and the Technical Report has been prepared in compliance with NI 43‐101 and Form 43‐101F1.

Signed and dated this 21st day of May 2010 at Barrie, Ontario.

“Original Document signed and sealed by Andy Holloway, P.Eng.”

Signature

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30.7 Certificate of Al Hayden, P.Eng.

I, Alfred S. Hayden, P.Eng, residing at 284 Rushbrook Drive, Newmarket, Ontario as one of the authors of this Preliminary Economic Assessment – NI 43‐101 Technical Report, Rovina Valley Project, dated 21 May 2010, do hereby certify that:

 I am currently President of EHA Engineering Ltd. with a business address at Box 2711, Postal Station B, Richmond Hill, Ontario, L4E 1A7.  I am a graduate of the University of British Columbia, 1967, and I have practiced my profession continuously since then.  I am a Professional Engineer and Designated Consulting Engineer in good standing of the Association of Professional Engineers of Ontario, Registration No. 18898015.  I have not conducted a site visit at the Rovina Valley Project.  I have read the definition of “qualified person” set out in National Instrument 43‐101 (NI 43‐101) and certify that, by reason of my education, affiliation with a professional association (as defined in NI 43‐101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purpose of NI 43‐101.  I am responsible for the preparation of Sections 1.5.2, 16.2, 24.1.4, 24.2.4, 27.4.2, 28.4.2 and parts of 24.1.8 and 24.1.9 of this technical report titled “Preliminary Economic Assessment – NI 43‐101 Technical Report, Rovina Valley Project,” dated 21 May 2010.  As of the date of this Certificate, to my knowledge, information, and belief, this Technical Report contains all scientific and technical information required to be disclosed to make the technical report not misleading.  I am independent of the Issuer as defined by Section 1.4 of the Instrument.  I have read NI 43‐101 and the Technical Report has been prepared in compliance with NI 43‐101 and Form 43‐101F1.

Signed and dated this 21st day of May 2010 at Barrie, Ontario.

“Original Document signed and sealed by Al Hayden, P.Eng.”

Signature

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APPENDIX A – METALLURGY AND PROCESSING

Appendix |A 21/05/2010

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APPENDIX B – DRAWINGS B1‐GEOTECHNICAL

DRAWING 1 ‐ OVERVIEW MAP

DRAWING 2A ‐ REGIONAL GEOLOGY

DRAWING 2B ‐ GEOLOGY LEGEND

DRAWING 3 ‐ ROVINA OUTCROP MAP

DRAWING 4 ‐ COLNIC OUTCROP MAP

DRAWING 5 ‐ CIRESATA OUTCROP MAP

DRAWING 6 ‐ REPRESENTATIVE ROVINA CROSS‐SECTION

DRAWING 7 ‐ REPRESENTATIVE COLNIC CROSS‐SECTION

DRAWING 8 ‐ REPRESENTATIVE CIRESATA CROSS‐SECTION

DRAWING 9 ‐ DESIGN ROCK MASS STRENGTH CURVES

DRAWING 10 ‐ DESIGN CHART FOR OVERALL SLOPE ANGLE BASED ON ROCK MASS FAILURE

DRAWING 11 ‐ STABILITY CHART FOR UNDERGROUND OPENING DESIGNS IN CIRESATA DEPOSIT B2‐INFRASTRUCTURE

SITE MILL LAYOUT

ROVINA SITE LAYOUT

COLNIC SITE LAYOUT

CIRESATA SITE LAYOUT

TAILINGS SITE LAYOUT

CIRESATA SITE ELEVATION

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APPENDIX C – GEOTECHNICAL

FIELD DATA AND GEOMECHANICAL SUMMARY TABLES

STRUCTURAL GEOLOGIC INFORMATION AND ROCK MASS FABRIC STEREONETS

REPRESENTATIVE CROSS‐SECTIONS

POINT LOAD TESTING RESULTS

ROCK MASS CLASSIFICATION SYSTEMS AND SUPPLEMENTARY DATA

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APPENDIX D – MINING

Appendix |D 21/05/2010

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APPENDIX E – CAPITAL AND OPERATING COSTS

Appendix |E 21/05/2010

CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

APPENDIX F – MARKETS AND SMELTER

CARPATHIAN CONCENTRATES

Appendix |F 21/05/2010

CARPATHIAN GOLD INC. PRELIMINARY ECONOMIC ASSESSMENT - NI 43-101 TECHNICAL REPORT ROVINA VALLEY PROJECT, SOUTH APUSENI MOUNTAINS, WEST-CENTRAL ROMANIA

APPENDIX G – FINANCIAL ANALYSIS

Appendix |G 21/05/2010