CANDENTE COPPER CORP. (DNT)

INITIAL COVERAGE March 19th, 2012

CANDENTE COPPER CORP. (LSE: DNT) INVESTMENT RECOMMENDATION OVERWEIGHT + Cañariaco Norte 91.6% $ 1.83 Equity's Fair Value (US$ M) 237.17 Cañariaco Sur & Quebrada Verde - - Share's Fair Value (US$) 2.00 Others 8.4% $ 0.17 Fair Value $ 2.00 Share's Market Value (US$) 1.05 Shares Outstanding (M) 118.59 Investment Thesis Shares Oustanding - Fully diluted (M) 133.87 Market Capitalization (US$ M) 124.49 We initiate Candente Copper Corp. ’s (Candente Copper) coverage, Fair Value's Appraisal 90% recommending to overweight + its shares within the portfolios. We give a US$ 2.0 Trading: Main Stock Exchange TSX (DNT) fair value per share, obtained only taking into account Cañariaco Norte ’s Trading: Secondary Stock Exchange LSE (DNT) development, the company’s main project. The US$ 2.0 fair value is 90% higher Range 52 weeks (US$) 0.7 - 1.95 than than the market price of US$ 1.05 as of closing of March 16th, 2012. YTD Change 10.53%

LSE - Candente Copper (DNT) Our investment recommendation relies upon the following:

Thousand Volume Price US$ - Copper Leverage .- Copper represents 85.23% of Candente Copper’s total 2,500 2.5 resources, therefore, maintains a high correlation with the metal price 2,000 2 evolution. We believe that copper will have an interesting performance as 1,500 1.5 long as the global economy recovers from the current financial crisis and 1,000 1 strengthens the demand for base metals (See Chart 1) . 500 0.5

0 0 2007 2008 2009 2010 2011 2012 - The greatest project listed in Lima Stock Exchange (LSE) .- We calculate Source: Kallpa SAB and Bloomberg Cañariaco Norte’s total resources in 10.43B Lb Cu Eq , its development Chart 1. Candente Copper - Resource Mix by involves a US$ 1,437 Pre-Production CAPEX . We consider that Cañariaco metal Norte is the acquisition focus of great worldwide mining companies that are searching big scale copper projects. Copper Gold Silver - Reaching Feasibility .- Cañariaco Norte is currently in an advanced 85.23% 10.77% 4.00% development stage, looking forward to reach Feasibility in late 2012. It should be noted that the Feasibility Study ’s publishing is subject to the 85.23% granting of necessary permits by Ministerio de Energia y Minas (Ministry of Energy and Mines) in order to start a new drilling campaign in the project. We estimate Cañariaco Norte’s production start up in Q1 2016 , one year after it was stipulated in the Pre-Feasibility Study. It should be noted that Candente Copper is fully funded until reaching Feasibility (See Cañariaco 0% 20% 40% 60% 80% 100% Norte – Permits and Licenses).

Source: Candente Copper - Exploration potential.- Cañariaco Sur & Quebrada Verde satellite projects are Equity Research - Junior Mining outlined as Cu-Au porphyries located at only 1.5 and 3.5 km from Cañariaco Alberto Arispe , Head of Research Norte deposit, respectively, representing an interesting potential appraisal [email protected] for the Company. Subsequently to the granting of the drilling permits Telephone: 511 627-5225 previously mentioned, Management announced that it will start an aggressive drilling campaign in both projects, focused primarily in Cañariaco María Belén Vega , Senior Analyst Sur, in order to define if the mineralization corresponds to a Cañariaco [email protected] Norte’s extension or to a new mining deposit of similar structure. Telephone: 511 627-5220 Valuation Report Junior Mining - Candente Copper Corp.

Picture 1,2. Visit to Cañariaco project - Recent visit to the project. - In November 2011, we visited Cañariaco’s facilities in the department of Lambayeque. After appreciating the infrastructure and the communities adjacent to the project, as well as the proximity between Cañariaco Norte and Cañariaco Sur & Quebrada Verde satellite projects, we believe that Candente Copper is able to construct an open pit mine that will include Cañariaco Norte as well as its extensions.

- Arsenic level reduction in copper concentrates .- The Pre-Feasibility Study noted the economic viability for the production of copper, gold and silver concentrates with reduced arsenic levels. Therefore, the company included a new process of "partial oxidation of toasting" (roasting ) within Cañariaco Norte’s production chartflow, reducing one of the main concerns of Candente Copper’s investors and shareholders. This meant a US$ 150 million increase in the pre-production CAPEX (up to a total US$ 1,437 million) and mitigation of the risk of potential penalties in regard with the content of contaminating elements such as arsenic in the production of concentrates. In addition, this will offer Candente Copper better conditions when negotiating copper, gold and silver concentrates (See Cañariaco Norte – Production processes ).

- Mid/long term catalysts.- Source: Kallpa SAB (i) Granting of permits for the drilling campaigns’ in Cañariaco Norte, Cañariaco Sur & Quebrada Verde. (ii) Agreements with the communities for 3 years (renegotiation) for the granting of permits for the superficial usage of land. (iii) Publishing of Cañariaco Norte’s Feasibility Study. (iv) Start up and drilling results at Cañariaco Sur & Quebrada Verde.

- Financing risk .- We believe that one of Candente Copper’s main risks is its financing the project . For a company with a US$ 124.49 million market capitalization, funding US$ 1.5 billion represents a strong challenge. Among the alternatives outlined by Management, it is highlighted to develop Cañariaco Norte together with a worldwide strategic partner (Joint Venture) . Among other undiluted funding alternatives we outline: (i) Off-take copper contracts, (ii) Off-take gold and silver sub-products contacts; and, (iii) Debt issuance.

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Table 1. Main projects Project portfolio.- Tot. Resources Candente Copper’s portfolio includes the following projects: 1 Project Stage Metals B Lb Cu Eq Cañariaco Develop. - Cu, Au 10.43 Norte Pre - Feasib. A. Cañariaco Norte - Advanced development Cañariaco Sur Exploration Cu, Au - - Candente Copper’s main project - & Q. Verde B. Cañariaco Sur - Exploration 1. For the calculation of copper equivalent pounds (Lb Cu Eq), used Quebrada Verde - Exploration prices were US$ 1200, US$ 20 y US$ 2.50 for an ounce of gold, an ounce of silver and a pound of copper, respectively. Source: Kallpa SAB A. Cañariaco Norte Picture 3. Cañariaco Norte - Location Development stage (reaching its Feasibility Study) Location : Province of Ferreñafe, Lambayeque – Peru

Legend: Metals: Copper - Gold - Silver Cañariaco Proyect Project Operator : 100% owned by Candente Copper Corp.

El Molino Cañariaco Description.- Cañariaco Norte project is located in a prolific mining zone in La Granja Tantahuatay El Galeno Michiquillay northern Peru, in the province of Ferreñafe, department of Lambayeque, 700 km northeast Lima and 110 km northeast Chiclayo; at an average altitude of 3,000 meters above sea level (See Picture 3) .

Source: Kallpa SAB Mineralization.- The mining deposit is a copper and gold porphyry principally in the form of chalcopyrite and chalcocite, developed over 20 concessions and covering a total of 16,390 hectares. Cañariaco Norte deposit is located within a Picture 4. Mineralization & pit's surrounding area complex multi-stage intrusive breccia of approximately 1.7 km long and 1.1 km width. The copper, gold and silver mineralization is located in: i) intrusive pyroclastic rocks, ii) breccia rocks; and, iii) dacite and rhyolite volcanic rocks.

Discovery and previous explorations.- Between 1967 and 1970, Instituto Geologico, Metalurgico y Minero – INGEMMET (Geological, Metallurgical and Mining Institute) discovered high mineral copper grades in Cañariaco deposit during a regional stream sediment sampling program, in cooperation with a British Geological Survey team. Subsequently, three mineralization centers were

Source: Candente Copper delineated: i) Cañariaco Norte , ii) Cañariaco Sur ; and, iii) Quebrada Verde . Later, Placer Dome Exporation Inc. and Billiton Exploration and Mining Peru B.V. had the chance of acquiring the project in 1994 and 1999, respectively. They performed several exploration programs which included geological mappings, soil and rock Picture 5. Cañariaco Norte - Overview chip sampling, metallurgical surveys. However, they never executed their options and the property was returned to the Peruvian Government in both occasions. Subsequently, the mining site was put up for auction and Candente Copper acquired 100% of the project in February 2002.

Since 2004, Candente Copper has drilled more than 72K meters within the project in order to define a copper – gold porphyry of 8.7B Lb Cu Eq Measured & Indicated Resources and 1.7B Lb Cu Eq Inferred Resources , with excellent expansion potential through its two nearby satellites: Cañariaco Sur (at 1.5 km) & Quebrada Verde (at 3.5 km), 100% owned by Candente Copper. If demonstrated

Source: Kallpa SAB the economic viability of the development in such zones, it will be possible to use Cañariaco Norte’s facilities for the production of copper/gold concentrates from both satellite projects.

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Picture 6. Regional Infrastructure in Lambayeque Infrastructure.- - Access.- Cañariaco is accessible by road from Lima via the city of Chiclayo, through Panamericana highway (700 km, 11-hour trip) or through daily commercial airline flights. From Chiclayo, Cañariaco is accessed through Incahuasi highway (149 km, approximately 6-hour trip due to a highway in damaged conditions).

- Infrastructure.- The project requires minimal infrastructure. It is expected that when the mine is operating, it will have a mining camp for 600 people. The mine site facilities will be divided into three areas: i) the mine, ii) the plant, which will include buildings and structures for repair and maintenance

Source: Candente Copper of the mine and plant equipment; and, iii) the camp area, which will include facilities for personnel accommodations, administration and security. In addition, it will have other facilities and support services including site access, power supply and distribution, water supply, explosive storage, Picture 7. Cañariaco Norte - Facilities communication systems and waste disposal facilities. Copper concentrate will be transported by truck to Marine Terminal Muchik (MTM), a planned port developed by Lumina Copper Corp. It should be noted that Candente Copper will construct and operate its own concentrate receiving, reception and storage facilities at the terminal, but will share general services with Lumina Copper Corp.

- Water and power.- Fresh water for site services will be obtained by Cañariaco River, located 1 – 2 km from the project. In addition, electrical power will be supplied by a 220 KV overhead transmission line from the local

Source: Kallpa SAB electric substation at Carhuaquero, located 57 km from the mine.

Table 2. Resource estimation Resource estimation.- In March 2011, Candente Copper published Cañariaco Resource estimation - Cañariaco Norte Norte’s Pre-Feasibility Study in compliance with NI 43-101 Canadian classification NI 43-101 Technical Report - AMEC (2011) standards, prepared by AMEC Americas Ltd. (AMEC). The report showed at 0.3% Cu cut-off grade: Cañariaco Norte @ 0.3% Cu Cut-Off 1 Class MTCu % Au (g/t) B Lb Cu Eq i) Indicated & measured resources: 752.4 MT @ 0.45% Cu, 0.07 g/t Au and M&I 752.4 0.5 0.07 8.7 1.8 g/t Ag for a total of 8.7B Lb Cu Eq. Inferred 157.7 0.40.06 1.7 ii) Inferred resources: 157.7 MT @ 0.41% Cu, 0.06 g/t Au and 1.7 g/t Ag for a total of 1.7B Lb Cu Eq.

1. For the calculation of copper equivalent pounds (Lb Cu Eq), used prices were US$ 1200, US$ 20 y US$ 2.50 for an ounce of The study demonstrated the economic viability in developing Cañariaco project, gold, an ounce of silver and a pound of copper, respectively. whose main results are as follow: Source: Candente Copper, AMEC (2011) i) An open pit mine’s start up @ 95K TPD with a projected annual Picture 8. Operation's potential outline production of 263M Lb Cu, 39K Oz Au and 919K Oz Ag , at a strip ratio of 0.98:1 over 22 years of life of mine (LOM) .

ii) A US$/Lb 1.24 per copper pound operative cash cost which includes in- site and off-site costs, and 0.99 US$/Lb which in addition includes credits for both gold and silver sub-products. iii) A US$ 1.52 billion total CAPEX , which includes: i) US$ 1.44 billion pre- Source: Candente Copper production investment; and, ii) US$ 0.88 billion maintenance investment. iv) A US$ 912 million net present value (NPV), a 17.2% internal rate of return (IRR) and a 4.4 years payback period. It should be noted that these results have been adjusted after calculating the impact that the new Mining Royalty Law will have in the project.

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Picture 9. Production overview - Block Diagram Production process .- Cañariaco Norte’s process flowsheet is based on conventional crushing, milling and flotation processes. Due to initial problems in regard with the high arsenic levels in the project, it was designed an additional process that includes a partial oxidation of toasting “roasting” in order to reduce the arsenic levels in final concentrates. This meant a US$ 150 million increase in the US$ 1,437 pre-production CAPEX. This process reduces the arsenic level below the 0.3% impurity limit of final concentrates (before this process, the arsenic content was around 1%). It should be noted that arsenic in final concentrates equal or above this level generally incurs a penalty charge from smelters (See picture 9).

Feasibility Study.- The study started up in April 2011 and it is expected to be Candente Copper, together with AMEC, designed the inclusion of a completed by 2012. In order to culminate this study, it's necessary to perform new “roasting” process within Cañariaco Norte’s production additional drilling campaigns which are detailed in the Permits & Licenses section. flowchart in order to reduce the arsenic content in the production of concentrates. Therefore, final concentrates will contain acceptable Once the Feasibility Study is culminated, Candente Copper will start up the arsenic levels that will not cause penalties when commercializing project’s design and engineering (1 to 2 years) – in parallel with the them with foundries. Environmental Impact Assessment’s execution and approval – and, subsequently, the mine construction (2 to 2 ½ years), so we expect Cañariaco to start up its Source: Candente Copper, AMEC (2011) operations by Q1 2016.

Permits & Licenses.-

Picture 10. Drilling campaigns A. Permits pending on approval by MEM (Ministry of Energy & Mines) Candente Copper has submitted permit requests to Ministry of Energy & Mines (pending on approval) in order to start up new drilling campaigns in Cañariaco Norte as well as in Cañariaco Sur & Quebrada Verde. It should be noted that in order to culminate Cañariaco Norte’s Feasibility Study , it is necessary to perform three kinds of drillings: i) geotechnical analysis drilling programs and the design & engineering of an open pit mine and a tailing reprocessing plant, ii) metallurgical drillings, in order to analyze mineral grades, rock density and recovery grades; and, iii) in-fill drillings in order to improve the classification of current resources and reserves.

Source: Candente Copper B. Granting of permits for the superficial usage of land Candente Copper is currently in discussions with the communities for the superficial rights of land (3 years permit) for the facilities/mining camp as well as for the development of explorations and the Feasibility Study in Cañariaco Norte. To date, Candente Copper does not own titles (superficial rights) of land in Ferreñafe. The community of greatest influence is Cañaris (along with 37 holders), located approximately 10 km from the project and with a population of 13 thousand people. Its core activities are agriculture and farming for either subsistence or trade. However, Management pointed out as main obstacle for the negotiations the lack of organization within its inhabitants. Before 2009, Candente Copper negotiated with the communities and reached economic agreements, supplying them with funds, employment, schools, hospitals etc. It should be noted that Candente Copper is involved in several social assistance programs such as Save the Children, where they supply the inhabitants with funds and with access to education and health programs such as cataract surgery. Management points out that the communities’ main concern is the contamination, however, Candente Copper has pointed out their willing to respect world environmental standards in order to preserve the ecosystem where the operations will take place.

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Picture 11. Cañariaco Sur - Overview B. Cañariaco Sur & Quebrada Verde Exploration stage Location : Province of Ferrañafe, Lambayeque – Peru Metals: Copper- Gold - Molybdenum Operator: Candente Copper Corp.

Description .- Cañariaco Sur project is located 1.5 km northeast from Cañariaco Norte, in the province of Ferreñafe, department of Lambayeque. The proximity between Cañariaco Norte, Cañariaco Sur & Quebrada Verde provides an important potential economic value to Cañariaco Norte project due to sharing

Source: Kallpa SAB infrastructure and facilities.

Picture 12. Exploration potentials: Cañariaco Sur & Candente Copper has classified the project as a potential biotite-feldspar Quebrada Verde satellites porphyry with potassic alteration and high copper, gold and molybdenum grades. It should be noted that the mineralization in Cañariaco Sur is basically chalcopyrite and bornite, similar to the mineralization at Cañariaco Norte. Geophysical studies (Induced Polarization (IP) resistivity low and chargeability high, high magnetism anomalies, among others) point out a strong exploration potential; however, limited exploration activities have been carried out to date.

Cañariaco Sur was previously explored by BHP Billiton in 1999 and by Candente Copper (for the first time) in 2008. 2008’s exploration program consisted in 5 drillings, one of them intersected more than 350 meters @ 0.35% Cu, 0.15 g/t Au and 1.4 g/t Ag. In addition, a significant difference has been noted between Cañariaco Sur and Cañariaco Norte’s mineralization due to results that shows >0.1 g/t Au in Cañariaco Sur vs. <0.1 g/t Au in Cañariaco Norte.

The picture shows the proximity of Cañariaco Sur (1.5 km) & Quebrada Verde (3.5 km) projects to Cañariaco Quebrada Verde is located in the province of Ferrañafe - Lambayeque, 3.5 km Norte, Candente Copper's main project. Source: Candente Copper and 1.5 km from Cañariaco Norte and Cañariaco Sur, respectively. Quebrada Verde is a porphyry with high gold-copper mineralization grade and it presents strong geophysical anomalies such as large IP chargeability high centered on resistivity anomaly and magnetic high that covers a 0.8 km x 2 km area.

Cañariaco Sur and Quebrada Verde have potential for a deeper exploration since the anomalies show interesting results that are even stronger than the ones at Cañariaco Norte, which indicate a thinner layer of leached mineralization. Besides, given their proximity to Cañariaco Norte, they have the possibility of using Canañariaco Norte’s infrastructure for the development of both projects.

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Candente Copper – Valuation Candente Copper ’s valuation is carried using resource estimations in compliance with 43-101 Canadian requirements and figures regarding the development and operations’ start up that were provided by Management. As it was previously mentioned, of Candente Copper’s mining units, only Cañariaco Norte is susceptible of being valued using DCF methodologies. Thus, the equity’s value is only composed by: i) Cañariaco Norte’s discounted cash flows (DCF); and, ii) the valuation of Cañariaco Norte’s resources which are not included in the mining plan (valued as In Situ resources).

Cañariaco Norte – Valuation We value Cañariaco Norte’s total resources using DCF as well as In Situ methodologies. Thus, of a total of 10.43B Lb Cu Eq, we value:

A. DCF: ROM 6.5B Lb Cu + 1.5M Oz Au + 40.5M Oz Ag for a total of 9.68B Lb Cu Eq, incorporated in the mining plan. B. In Situ: 0.75B Lb Cu Eq not included in the mining plan and valued as In Situ resources.

A. Cañariaco Norte’s valuation, DCF @12.44% - US$ 192.89 million Cañariaco Norte’s operations start up is expected by Q1 2016, with an open pit mine @ 95K TPD and a 9.68B Lb Cu Eq total production. The model’s main assumptions are as follows:

Table 3. DCF Valuation - Main assumptions

Cañariaco project 100% owned by Candente Copper Operator Candente Copper Production start up Q1 2016 Life of mine (LOM) 22 years

Mineral - Mining Plan (MT) 1,447 Production Level (TPD) 95,000

Cu average grade (%) 0.40 Au average grade (g/t) 0.07 Ag average grade (g/t) 1.73 Stripping ratio 0.98:1 Cu average recovery (%) 89 Au average recovery (%) 55 Ag average recovery (%) 50 Cu annual average productuon(M Lb) 263.4 Au annual average production (K Oz) 38.8 Ag annual average production (K Oz) 919.7

Cash Cost Cu - (US$ / Lb) 1/ 1.24 Cash Cost Cu - (US$ / Lb) 2/ 0.99 CAPEX Pre-Production (US$ M) 3/ 1,437 CAPEX Maintenance (US$ M) 88 Total CAPEX (US$ M) 1,525

Cañariaco's value @ 12.44% (US$ M) 192.89

1/ It includes on-site and off-site costs, charges from mineral treatment and refining. 2/ It includes on-site and off-site costs, charges from mineral treatment, refining and credits for gold and silver sub-products. 3/ The US$ 1,437 million Pre-Production investment includes additional US$ 150 million corresponding to the incorporation of the "roasting" process that will reduce the arsenic levels in the production of copper, gold and silver concentrates. Source: KALLPA SAB.

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B. Cañariaco Norte’s valuation, In Situ - US$ 24.28 million Of Cañariaco Norte’s total resources, our assumptions include a 9.68B Lb Cu Eq production within the mining plan. Therefore, the 0.75B Lb Cu Eq remaining resources are valued In Situ. For the In Situ valuation, it is necessary to estimate the equivalent copper resources to be valued.

Investors constantly value companies when determining the price of their shares in secondary markets. Thus, to obtain the value that the market assigns to junior mining companies, we obtain the market capitalization of a sample of copper junior mining companies that are comparable to Candente Copper by the metals they produce, the size of their resources and even by the development status of their projects. This sample is detailed in Table 4.

Table 4. Sample of copper mining companies comparable to Candente Copper Market Cap. / Resources Market Cap. 1 Lb Cu Eq Company Main project Location (B Lb Cu Eq) (US$ M) (U$ cents) Abacus Mining & Exploration Corp. Ajax Canada 5.62 45.66 0.81 AQM Copper Inc. Zafranal Peru 4.34 41.97 0.97 Augusta Resources Corp. Rosemont Copper USA 10.29 409.99 3.98 Capstone Mining Corp. Cozamin Mexico 7.99 1114.43 13.95 Copper Fox Metals Inc. Schaft Creek Canada 13.81 522.15 3.78 Copper Mountain Mining Corp. Copper Mountain Canada 4.13 468.75 11.36 Coro Mining Corp. San Jorge Argentina 3.40 69.58 2.04 Curis Resources Ltd. Florence Copper USA 3.66 48.17 1.32 Hana Mining Ltd. Ghanzi Botswana 6.29 184.44 2.93 Imperial Metals Corp. Red Chris Canada 15.75 1215.03 7.71 Los Andes Copper Ltd. Vizcachitas Chile 11.13 60.36 0.54 Lumina Copper Corp. Taca Taca Argentina 19.95 602.75 3.02 Nevada Copper Corp. Pumpkin Hollow USA 8.18 320.81 3.92 Northern Dynasty Minerals Ltd. Pebble Project Canada 89.08 554.52 0.62 Pacific Booker Minerals Morrison Canada 3.61 3.04 0.08 Panoro Minerals Ltd. Antilla Peru 4.16 125.62 3.02 Quadra FNX Mining Ltd. Robinson USA 23.30 2896.46 12.43 Serengeti Resources Inc. Kwanika Canada 2.99 11.31 0.38 Taseko Mines Ltd. Gibraltar Canada 6.28 696.15 11.08 Western Copper Corp Casino Canada 27.17 155.85 0.57 Yellowhead Mining Inc. Harper Creek Canada 8.92 61.45 0.69 Candente Copper Corp Cañariaco Norte Perú 10.43 126.82 1.22

1. Prices as of closing of March 14th 2012. Average 4.06 The prices used for the calculation of copper equivalent pounds are: Max. 13.95 Copper 2.50 US$/Lb, Gold 1,200 US$/Oz and Silver 20 US$/Oz Min. 0.08 Source: Kallpa SAB, Bloomberg and companies

The sample shows that the market values a pound of copper in US$ 4.06 cents in average. Thus, we value Cañariaco Norte’s resources In Situ which are not included in the mining plan, 0.75B Lb Cu Eq at an average price of US$ 4.06 cents , and we incorporate a 20% discount since the resources have an inferred category. The resources’ value is US$ 24.28 million In Situ.

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Production 2016 2017 2018 projects - Development stages Cañariaco Norte Copper (M Lb) 300.1 326.2 293.6 Gold (K Oz) 46.8 52.7 46.8 Production EIA Construction Pre- Feasibility Silver (K Oz) 1,308.7 1,138.5 973.6 Feasibility Scoping Study Cañariaco Norte 1/ Cash Cost (US$/Lb) 1.24 1.24 1.24 Deposit Discovery 2/ Cañariaco Sur & Quebrada Verde Cash Cost (US$/Lb) 0.99 0.99 0.99

1/ 2/ & Includes on-site and off-site costs and charges from mineral treatment and Drilling refining. 2/ Also includes credits for gold and silver sub-products. Exploration Development Construction & Production

Cañariaco Norte - Model - US$ M 2016 2017 2018 Projects Stage / Status Location Income 803.56 870.31 781.71 Cañariaco Norte Develop. - Pre-Feasibility Lambayeque, Peru Cost of sales -372.13 -404.49 -364.04 Cañariaco Sur Exploration Lambayeque, Peru Gross profit 431 466 418 Quebrada Verde Exploration Lambayeque, Peru Operative expenses -6.00 -6.00 -6.00 EBITDA 425.43 459.82 411.67 Depreciation -76.31 -76.71 -77.11 EBIT 349.12 383.11 334.55

Resource estimation - Cañariaco Norte Resource mix by metal - Cañariaco Norte Technical Report NI 43-101, AMEC (2010) Copper Gold Silver Cañariaco Norte @ 0.3% Cu Cut-Off B Lb MT Cu % Au g/t Ag g/t Cu Eq 85.23% 10.77% Measured 338.1 0.50.08 2.0 4.2 4.00% Indicated 414.3 0.4 0.06 1.7 4.6 Inferred 157.7 0.40.06 1.7 1.7 0% 20% 40% 60% 80% 100%

Valuation components - Candente Copper (US$ M) Valuation components - Candente Copper Mine/Project Method. Value Disc. D. V./ Disc. Cañariaco N. - DCF Cañariaco N. - In Situ Others A. Cañariaco Norte DCF 192.89 1x 192.89 B. Cañariaco Norte In Situ 30.35 0.8 x 24.28 81.33% 10.24% C. Cañariaco Sur - - - D. Quebrada Verde - - - 8.43% E. Cash 20.00 Total (A+B+C+D+E) 237.17 0% 20% 40% 60% 80% 100%

Capital Structure US$ M Fair Value US$ M Debt - Equity 73.55 Equity - US$ M 237.17 Cash position 20.00 Shares outstanding - M 118.59 Shares outstanding - M 118.59 Fair Value - US$ 2.00 Options outstanding - M 15.28 Market Price - US$ 1.05 Shares Fully Diluted - M 133.87 Potential appraisal to FV - % 90.47%

Main shareholders Board & Management Name Position Experience 7% Board & Management Joanne Freeze Chairman & CEO Geology Institutional Sean Waller President & Director Mining 30% Amerigo Resources John Black Director Mining 59% Retail Andres Milla Director Finance George Elliott Director Finance 4% Wolf Nickel Director Metallurgy

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Appendix: Disclaimer

Analyst’s certification

The analyst that prepared this report hereby certifies that: i) the opinions and views expressed in this valuation report, in regard with the issuer and the company’s overview, reflected his/her personal opinion and ii) No part of his/her salary compensation was, is or will be related directly or indirectly to the recommendations expressed in this report. The economic compensations of the analyst who prepared this report are based in several factors, including but not limited to Kallpa Securities SAB’s profitability and the profits generated by its different areas, including investment banking. In addition, the analyst does not receive any kind of economic compensation from the companies he/she covers. This valuation report was prepared by Kallpa Securities SAB’s employees that maintain the position of Senior Analyst. Persons involved in the elaboration of this report are authorized to maintain shares. The analyst who prepared this report has recently visited the project’s facilities.

Share prices in this report are based on market prices as of closing of the day prior to the publication of this report, unless it is strictly stated.

General statement

This document is for informative purposes only. Under no circumstances it should be used / be considered as an offer of sale or an application of purchase of shares or any other securities mentioned in this document. The information herein has been obtained from sources which are believed to be reliable, but Kallpa Securities SAB does not guarantee the trustfulness or accuracy of the content of this report, or the future market values of shares or other securities mentioned in this document. The views and opinions expressed in this document constitute our opinion at the time of this report and are subject to change without any notice. Kallpa Securities SAB does not guarantee analysis updates before any change in the circumstances of the market. The products referred in this document may not be available for purchase in some countries.

Kallpa Securities SAB has reasonably designed policies to prevent or to control the exchange of non-public information used by areas such Research and Investment, Stock Market, among others.

Kallpa Securities SAB is sponsor of the company at Lima Stock Exchange’s Venture Capital and receives an economic compensation for the performing of that function. In addition, Kallpa Securities SAB has actively participated in the company's private placements in the last two years.

Kallpa Securities SAB does not maintain Trevali’s shares within its portfolio.

Definition of qualification ranges

Kallpa Securities SAB has 5 qualification ranges: Overweight +, Overweight, Maintaining, Underweight and Underweight - . The analyst will assign the coverage one of these ranges.

Underweight - < - 40% > + 40% Overweight + Underweight -20% a -40% +20% a +40% Overweight Neutral -20% a 0% +20% a 0% Neutral

The range assigned to each company covered by the analyst in these reports is based on the analysis/monitoring Kallpa Securities SAB has been developing for the company. In some cases, the analyst can express his/her short-term points of view to traders, vendors and some Kallpa Securities SAB’s clients but this point of view may differ in time by market volatility and other factors.

The fundamental value calculated by Kallpa SAB is based in one or more valuation methodologies commonly used by financial analysts, including but not limited to discounted cash flows, In Situ valuations or any other applicable methodology. It should be noted that the publication of a fundamental value does not imply any guarantee that the value will be achieved.

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KALLPA SECURITIES SOCIEDAD AGENTE DE BOLSA

Management Position Telephone Email address Alberto Arispe General Manager (511) 627 5225 [email protected]

Trading Enrique Hernández Head Trader (511) 627 5221 [email protected] Eduardo Fernandini Trader (511) 627 5223 [email protected] Javier Frisancho Trader (511) 627 5222 [email protected] Jorge Rodriguez Trader (511) 627 5222 [email protected] Hernando Pastor Representative (511) 627 5224 [email protected] Jose Antonio Avendaño Representative (511) 652 6452 [email protected] Daniel Berger Representative (511) 652 6453 [email protected]

Corporate Finance Ricardo Carrión Manager (511) 627 5226 [email protected]

Equity Research María Belén Vega Senior Analyst (511) 627 5226 [email protected] Marco Contreras Analyst (511) 627 5226 [email protected] Ricardo Barrera Assistant (511) 627 5226 [email protected] André Richter Assistant (511) 627 5226 [email protected]

Operations Elizabeth Cueva Manager (511) 627 5227 [email protected] Alex Rodriguez Analyst - Securities (511) 627 5227 [email protected] Alan Noa Analyst - Treasury (511) 627 5227 [email protected]

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