NI 43-101 TECHNICAL REPORT on the YAURICOCHA MINE Yauyos Province, Peru

NI 43-101 TECHNICAL REPORT ON THE YAURICOCHA MINE Yauyos Province, Peru

PREPARED FOR

Dia Bras Exploration Inc. 333 Bay Street Suite 2900 Bay Adelaide Center Toronto, Ontario M5H 2T4

Effective Date October 10, 2012 Report Date October 19, 2012

Prepared by Donald E. Hulse, P.E., RM-SME Christopher E. Kaye, FAusIMM Anthony Hammond, RM-SME Patrick F. Daniels, RM-SME

Dia Bras Exploration, Inc. Certificate of Author Forms Yauricocha Mine NI 43-101 Technical Report

DONALD E. HULSE, P.E. Principal Mining Engineer Gustavson Associates, LLC 274 Union Boulevard, Suite 450 Lakewood, Colorado 80228 Telephone: 720-407-4062 Facsimile: 720-407-4067 Email: [email protected]

CERTIFICATE of AUTHOR

I, Donald E. Hulse do hereby certify that:

1. I am currently employed as Vice President and Principal Mining Engineer by Gustavson Associates, LLC at: 274 Union Boulevard Suite 450 Lakewood, Colorado 80228

2. I am a graduate of the Colorado School of Mines with a Bachelor of Science in Mining Engineering (1982), and have practiced my profession continuously since 1983. 3. I am a registered Professional Engineer in the State of Colorado (35269). I am also a Registered Member of the Society of Mining, Metallurgy and Exploration (1533190RM). 4. I have worked as a mining engineer for a total of 29 years since my graduation from university; as an employee of a major mining company, a major engineering company, and as a consulting engineer. I have performed resource estimation and mine planning on over 30 gold deposits for over 10 mining companies in three countries working as a consultant as well as an engineer or engineering manager for the projects 5. 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 purposes of NI 43-101. 6. I am responsible for Sections 1 through 12, 14, 17.1.5, 17.24, 17.23, 20, and 23 through 27 of the technical report entitled “NI 43-101 Technical Report on the Yauricocha Mine, Yauyos Province, Peru”, dated October 19, 2012, with an effective date of October 10, 2012, (the “Technical Report”), and am also responsible for the overall organization and content of the document. I visited the project site April 10, 2012 for three days as well as March 21-24, 2011. 7. I prepared a previous report on the Yauricocha property, “NI 43-101 Technical Report on the Yauricocha Project, Yauyos Peru” dated May 25, 2011. 8. I am independent of the issuer applying all of the tests in Section 1.5 of National Instrument 43-101.

October 19, 2012 i Dia Bras Exploration, Inc. Certificate of Author Forms Yauricocha Mine NI 43-101 Technical Report

9. I have read National Instrument 43-101 and Form 43-101, and the Technical Report has been prepared in compliance with that instrument and form. 10. I consent to the filing of the Technical Report with any stock exchange and other regulatory authority and any publication by them for regulatory purposes, including electronic publication in the public company files on their websites accessible by the public, of the Technical Report. 11. As of the date of this certificate, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Dated this 19th day of October, 2012

Signature of Qualified Person

Donald E. Hulse Printed Name of Qualified Person

October 19, 2012 ii Dia Bras Exploration, Inc. Certificate of Author Forms Yauricocha Mine NI 43-101 Technical Report

Christopher E. Kaye, MAusIMM Principal Process Engineer Mine and Quarry Engineering Services, Inc. (MQes) 1730 S. Amphlett Boulevard, Suite 200 San Mateo, California 94402

CERTIFICATE of QUALIFIED PERSON

I, Christopher Edward Kaye do hereby certify that:

1. I am currently employed as Principal Process Engineer by Mine and Quarry Engineering Services, Inc. (MQes) at: 1730 S. Amphlett Boulevard, Suite 200 San Mateo, California 94402

2. I am a graduate of the University of Queensland, Australia with a B. Eng. in Chemical Engineering in 1984, and have practiced my profession continuously since 1985. 3. I am a Fellow of the Australasian Institute of Mining and Metallurgy in Australia. 4. I have worked as a process engineer in the minerals industry for over 25 years. I have been directly involved in the mining, exploration and evaluation of mineral properties internationally for precious and base metals. 5. 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 purposes of NI 43-101. 6. I am responsible for Sections 13 and 17.1, 17.1.1, 17.1.2, 17.1.2.1, 17.1.2.2, 17.1.2.3, 17.1.3, 17.1.3.1, 17.1.3.2, 17.1.4, 17.2, 17.2.1, 17.2.2, 17.2.3, 17.4 (metallurgy portion) and 17.5(metallurgy portion) of the technical report entitled “NI 43-101 Technical Report on the Yauricocha Mine, Yauyos Province, Peru”, dated October 19, 2012, with an effective date of October 10, 2012, (the “Technical Report”), I visited the project site March 22-24, 2011. 7. MQes was retained by Gustavson Associates LLC on behalf of Dia Bras Exploration Inc. to prepare relevant sections of a Technical Report on the Yauricocha Property, Yauyos Province, Peru in accordance with National Instrument 43-101. The report is based on our review of project files and information provided by Dia Bras Exploration Inc., Sociedad Minera Corona S.A. and discussions with company personnel. I prepared a previous report on the Yauricocha property, “NI 43-101 Technical Report on the Yauricocha Project, Yauyos Peru” dated May 25, 2011. 8. I am independent of the issuer applying all of the tests in Section 1.5 of National Instrument 43-101.

October 19, 2012 iii Dia Bras Exploration, Inc. Certificate of Author Forms Yauricocha Mine NI 43-101 Technical Report

9. I have read National Instrument 43-101 and Form 43-101, and the Technical Report has been prepared in compliance with that instrument and form. 10. As of the date of this certificate, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Dated this 19th day of October, 2012

Signature of Qualified Person

Christopher E. Kaye Printed Name of Qualified Person

October 19, 2012 iv Dia Bras Exploration, Inc. Certificate of Author Forms Yauricocha Mine NI 43-101 Technical Report

Anthony D. Hammond Associate Mining Engineer Principal Mining Engineer Gustavson Associates, LLC 274 Union Boulevard, Suite 450 Lakewood, Colorado 80228 Telephone: 720-407-4062 Facsimile: 720-407-4067

CERTIFICATE of AUTHOR

I, Anthony D. Hammond do hereby certify that:

1. I am currently employed as Associate Mining Engineer by Gustavson Associates, LLC at: 274 Union Boulevard Suite 450 Lakewood, Colorado 80228

2. I am a graduate of the South Dakota School of Mines and Technology with a Master of Science in Mining Engineering (1987), and have practiced my profession continuously since 1982. 3. I am a Registered Member of the Society of Mining, Metallurgy and Exploration (1307620). 4. I have worked as a mining engineer in the minerals industry for over 27 years. I have been directly involved in the mining, exploration and evaluation of mineral properties internationally for precious and base metals. 5. 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 purposes of NI 43-101. 6. I am responsible for Sections 15, 16 and portions of Sections 21.4 of the technical report entitled “NI 43-101 Technical Report on the Yauricocha Mine, Yauyos Province, Peru”, dated October 19, 2012, with an effective date of October 10, 2012, (the “Technical Report”), and am also responsible for the overall organization and content of the document. 7. I have not had prior involvement with the properties that are the subject of the Technical Report. 8. I am independent of the issuer applying all of the tests in Section 1.5 of National Instrument 43-101.

October 19, 2012 v Dia Bras Exploration, Inc. Certificate of Author Forms Yauricocha Mine NI 43-101 Technical Report

Dated this 19th day of October, 2012

Signature of Qualified Person

Anthony D. Hammond Printed Name of Qualified Person

October 19, 2012 vi Dia Bras Exploration, Inc. Certificate of Author Forms Yauricocha Mine NI 43-101 Technical Report

PATRICK F. DANIELS Principal Mining Engineer Gustavson Associates, LLC 274 Union Boulevard, Suite 450 Lakewood, Colorado 80228 Telephone: 720-407-4062 Facsimile: 720-407-4067 Email: [email protected]

CERTIFICATE OF AUTHOR

I, Patrick F. Daniels, do hereby certify that:

1. I am currently employed Principal Mining Engineer by Gustavson Associates, LLC at:

274 Union Boulevard, Suite 450 Lakewood, CO, USA, 80228

2. I am a graduate of the Colorado School of Mines with a Bachelor of Science in Mining Engineering (1986), and have practiced my profession continuously since 1986.

3. I am a Registered Member of the Society of Mining, Metallurgy and Exploration (728800RM).

4. I have worked as an mining engineer for a total of 26 years since my graduation from university. My relevant experience includes work in mining, engineering companies, a major mining equipment manufacturer and as a consulting engineer. I have been directly involved in the mining, exploration and evaluation of mineral properties internationally for precious and base metals.

5. 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 purposes of NI 43-101.

6. I am responsible for the preparation of Sections 21.1-21.3 and Section 22 of the technical report entitled “NI 43-101 Technical Report on the Yauricocha Mine, Yauyos Province, Peru”, dated October 19, 2012, with an effective date of October 10, 2012. I did not visit the property that is the subject of this Technical Report.

7. I have not had prior involvement with the property that is the subject of the Technical Report.

8. I am independent of the issuer applying all of the tests in section 1.5 of National Instrument 43-101.

October 19, 2012 vii Dia Bras Exploration, Inc. Certificate of Author Forms Yauricocha Mine NI 43-101 Technical Report

9. I have read NI 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that instrument and form.

10. I consent to the filing of the Technical Report with any stock exchange and other regulatory authority and any publication by them for regulatory purposes, including electronic publication in the public company files on their websites accessible by the public, of the Technical Report.

11. As of the date of this certificate, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Dated this 19 the Day of October, 2012.

Signature of Qualified Person

Patrick F. Daniels Printed Name of Qualified Person

October 19, 2012 viii Dia Bras Exploration, Inc. Table of Contents Yauricocha Mine NI 43-101 Technical Report

TABLE OF CONTENTS

SECTION TITLE PAGE NO. CERTIFICATE OF AUTHOR ...... VII 1. SUMMARY ...... 1 1.1 GEOLOGY AND MINERALIZATION ...... 1 1.2 PROPERTY POSITION ...... 2 1.3 EXPLORATION STATUS ...... 2 1.4 MINERAL RESOURCES AND MINERAL RESERVES ...... 2 1.5 MINING ...... 6 1.6 METALLURGY ...... 8 1.7 OPERATING COST AND CAPITAL ...... 9 1.8 ECONOMIC ANALYSIS ...... 10 1.9 INTERPRETATIONS AND CONCLUSIONS ...... 11 1.10 RECOMMENDATIONS ...... 12 2. INTRODUCTION AND TERMS OF REFERENCE ...... 13 2.1 EFFECTIVE DATE ...... 13 2.2 SOURCES OF INFORMATION ...... 14 2.3 PERSONAL INSPECTION ...... 14 2.4 UNITS ...... 14 3. RELIANCE ON OTHER EXPERTS ...... 17 4. PROPERTY DESCRIPTION AND LOCATION ...... 18 4.1 PROPERTY LOCATION ...... 18 4.2 MINING CONCESSIONS ...... 19 4.2.1 Concessions Held by S.M. Corona ...... 19 4.2.2 Mining Rights Option Agreement ...... 24 4.3 LAND SURFACE AGREEMENTS ...... 24 4.3.1 Lease agreement: Huacuypacha ...... 24 4.3.2 Lease agreement: Queka and Cachi Cachi ...... 24 4.3.3 Easement agreement executed with the Rural Community of Laraos ...... 25 4.4 ROYALTIES AND ENCUMBRANCES ...... 25 4.4.1 Debt ...... 25 4.4.2 Royalties and Special Tax ...... 25 4.5 ENVIRONMENT LIABILITIES AND PERMITTING ...... 26 4.5.1 Principal Permits ...... 26 5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ...... 28

5.1 ACCESSIBILITY ...... 28 5.2 CLIMATE ...... 28 5.3 LOCAL RESOURCES ...... 28 5.4 INFRASTRUCTURE ...... 28 5.5 PHYSIOGRAPHY ...... 28 5.6 VEGETATION ...... 29 5.7 PROPERTY POSITION ...... 29 6. HISTORY ...... 30 7. GEOLOGICAL SETTING AND MINERALIZATION ...... 31

7.1 REGIONAL SETTING ...... 32 7.2 LOCAL GEOLOGY ...... 33

October 19, 2012 ix Dia Bras Exploration, Inc. Table of Contents Yauricocha Mine NI 43-101 Technical Report

7.2.1 Goyllarisquizga Formation ...... 33 7.2.2 Jumasha Formation ...... 33 7.2.3 Celendín Formation ...... 33 7.2.4 Casapalca Red Beds ...... 33 7.2.5 Intrusions ...... 33 7.2.6 Metamorphism ...... 34 7.2.7 Structure ...... 34 7.2.7.1 Folds ...... 34 7.2.7.2 Fractures ...... 35 7.2.7.3 Contacts ...... 35 7.2.7.4 Breccias ...... 35 7.3 MINERALIZATION ...... 37 7.4 MINERALIZED BODIES (BRECCIA CHIMNEYS AND PIPES) ...... 39 7.5 VEINS ...... 39 7.6 MINA CENTRAL...... 40 7.7 CACHI-CACHI MINE ...... 43 7.8 ÉXITO MINE ...... 44 7.9 IPILLO MINE ...... 45 7.10 VICTORIA MINE ...... 45 8. DEPOSIT TYPES ...... 47

8.1 PRINCIPAL SULFIDE MINERALS ...... 47 8.1.1 Pyrite ...... 47 8.1.2 Marcasite ...... 47 8.1.3 Enargite ...... 47 8.1.4 Chalcopyrite ...... 47 8.1.5 Bornite ...... 48 8.1.6 Covellite and Idaite ...... 48 8.1.7 Tetrahedrite and Tennantite ...... 48 8.1.8 Galena ...... 48 8.1.9 Sphalerite ...... 48 8.1.10 Geocronite (Pb 14(Sb, As)6 S 23) ...... 48 8.2 GANGUE MINERALS ...... 48 8.2.1 Quartz ...... 48 8.2.2 Specularite and Siderite ...... 48 8.2.3 Calcite ...... 48 8.2.4 Fluorite ...... 48 8.2.5 Barite ...... 49 8.2.6 Magnetite ...... 49 8.3 SUPERGENE ENRICHMENT AND OXIDATION ...... 49 8.4 CONTROLS ON MINERALIZATION ...... 49 8.5 CONCLUSIONS ...... 50 9. EXPLORATION ...... 52 9.1 VICTORIA AREA ...... 52 9.2 IPILLO AREA ...... 52 9.3 ADRICO GOLD PROSPECT ...... 53 9.4 ONGOING EXPLORATION ...... 53 10. DRILLING ...... 54

10.1 DRILLING EQUIPMENT ...... 54 11. SAMPLE PREPARATION, ANALYSES, AND SECURITY...... 55

11.1 SAMPLE PREPARATION PROCEDURES ...... 55 11.1.1 Equipment and Materials ...... 55

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11.1.2 Sample Reception ...... 55 11.1.3 Procedure ...... 56 11.2 CONTROL OF THE SAMPLES ...... 57 11.3 ANALYTICAL PROCEDURES ...... 57 11.4 ASSAY DATABASE ...... 57 12. DATA VERIFICATION ...... 58

12.1 VERIFICATION OF THE QUALITY CONTROL PROGRAM ...... 58 13. MINERAL PROCESSING AND METALLURGICAL TESTING ...... 61 13.1 PROCESS DESCRIPTION ...... 61 13.2 METALLURGICAL PERFORMANCE...... 61 13.3 FORECAST METALLURGICAL RECOVERIES ...... 63 13.3.1 Polymetallic and Copper Ore Feed ...... 63 13.3.1 Lead Oxide Feed ...... 67 14. MINERAL RESOURCE ESTIMATE ...... 68 14.1 DATA USED FOR GRADE ESTIMATION ...... 68 14.2 DENSITY ...... 69 14.3 METHOD USED IN MINERAL RESOURCE ESTIMATION ...... 69 14.3.1 Volume Estimation ...... 69 14.3.2 Grade Estimation ...... 71 14.3.3 Dilution ...... 71 14.3.4 Grade Correction Factors Mine to Mill ...... 71 14.4 MINERAL RESOURCE ESTIMATION ...... 72 15. MINERAL RESERVE ESTIMATE ...... 74

15.1 RESERVE CLASSIFICATION ...... 74 15.2 TONNAGE FACTOR - MINE RECOVERY ...... 74 15.3 CUT-OFF EVALUATION ...... 74 15.4 MINERAL RESERVES ESTIMATION ...... 75 16. MINING METHODS ...... 78

16.1 MINING OPERATIONS AT YAURICOCHA ...... 78 16.2 GEOTECHNICAL CHARACTERISTICS ...... 80 16.3 GEOMECHANICAL CHARACTERISTICS ...... 81 16.4 EXCAVATION DESIGN PARAMETERS ...... 81 16.5 PRODUCTION PLAN ...... 83 16.6 DEVELOPMENT SCHEDULE ...... 85 17. RECOVERY METHODS ...... 87

17.1 PROCESS DESCRIPTION ...... 87 17.1.1 Crushing, Screening and Fine Ore Storage ...... 87 17.1.2 Polymetallic Circuit ...... 87 17.1.2.1 Polymetallic Circuit Grinding ...... 87 17.1.2.2 Copper-Lead Flotation and Separation ...... 87 17.1.2.3 Zinc Flotation ...... 88 17.1.3 Lead Oxide Circuit ...... 88 17.1.3.1 Sulphide Flotation ...... 88 17.1.3.2 Oxide Flotation ...... 88 17.1.4 Thickening and Filtration ...... 89 17.1.5 Reagents, Grinding Media and Power ...... 89 17.1.5.1 Reagent Data ...... 89 17.1.5.2 Power ...... 90 17.2 METALLURGICAL PERFORMANCE...... 90

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17.2.1 Concentrates Production ...... 91 89.30 92 17.2.2 Combined Concentrates Grades ...... 96 17.2.3 Gold ...... 96 17.2.4 Impurity Elements ...... 96 17.3 OPERATING COSTS ...... 97 17.4 CONCLUSIONS ...... 97 17.5 RISKS AND OPPORTUNITIES ...... 97 18. PROJECT INFRASTRUCTURE ...... 99 19. MARKET STUDIES AND CONTRACTS ...... 102 19.1.1 Markets ...... 102 19.1.2 Metal Sales ...... 102 19.1.3 Contractual Treatment Charges and Refining Charges ...... 102 20. ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT ...... 103 20.1.1 Protected Natural Areas ...... 103 21. CAPITAL AND OPERATING COSTS ...... 105

21.1 CAPEX FOR MAJOR INFRASTRUCTURE...... 105 21.2 CONTINGENCY AND WORKING CAPITAL ...... 105 21.3 CAPITAL COST ESTIMATE ...... 105 21.4 OPERATING COST ESTIMATES (OPEX) ...... 108 21.4.1 Mining OPEX ...... 108 21.4.2 Processing Plant and Freight OPEX ...... 111 21.4.3 Freight Costs ...... 113 21.4.4 General and Administration OPEX ...... 113 21.4.5 Worker’s Profit Sharing ...... 113 21.4.6 OPEX Summary ...... 113 22. ECONOMIC ANALYSIS ...... 115

22.1 SUMMARY ...... 115 22.1.1 Basis of Evaluation ...... 115 22.1.2 Royalty and Special Tax ...... 116 22.1.3 Sensitivity Analysis ...... 119 22.1.4 Conclusions ...... 120 23. ADJACENT PROPERTIES ...... 121 24. OTHER RELEVANT DATA AND INFORMATION ...... 122 25. INTERPRETATION AND CONCLUSIONS ...... 123 26. RECOMMENDATIONS ...... 126 27. REFERENCES ...... 127

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LIST OF FIGURES FIGURE PAGE

FIGURE 1-1 YAURICOCHA OPERATIONS SENSITIVITY GRAPH ...... 11 FIGURE 4-1 YAURICOCHA MINE LOCATION MAP ...... 18 FIGURE 4-2 CORONA CONTROL OF MINERAL CONCESSIONS ...... 21 FIGURE 4-3 MINERALIZED ZONES ON THE YAURICOCHA PROPERTY ...... 22 FIGURE 4-4 INFRASTRUCTURE ON THE YAURICOCHA MINE ...... 23 FIGURE 7-1 YAURICOCHA STRATIGRAPHIC COLUMN ...... 31 FIGURE 7-2 PLAN OF YAURICOCHA AREA SURFACE GEOLOGY ...... 36 FIGURE 7-3 MINERALIZED ZONES ON THE YAURICOCHA MINE ...... 38 FIGURE 7-4 NORTHERN SECTOR OF MINA CENTRAL ...... 41 FIGURE 7-5 SOUTHERN SECTOR OF MINA CENTRAL ...... 42 FIGURE 8-1 NS CROSS SECTION ...... 50 FIGURE 12-1 YAURICOCHA MINE DAILY QUALITY CONTROL RESULTS COPPER ...... 58 FIGURE 12-2 YAURICOCHA MINE DAILY QUALITY CONTROL RESULTS SILVER ...... 59 FIGURE 12-3 YAURICOCHA MINE DAILY QUALITY CONTROL RESULTS LEAD ...... 59 FIGURE 12-4 YAURICOCHA MINE DAILY QUALITY CONTROL RESULTS ZINC ...... 60 FIGURE 13-1 SILVER HEAD GRADES BY ORE TYPE ...... 61 FIGURE 13-2 BASE METAL HEAD GRADES BY ORE TYPE ...... 62 FIGURE 13-3 RECOVERIES BY METAL AND FEED TYPE ...... 62 FIGURE 13-4 AG AND CU RECOVERIES FROM POLYMETALLIC (PM) FEED ...... 64 FIGURE 13-5 PB AND ZN RECOVERIES FROM POLYMETALLIC (PM) FEED ...... 65 FIGURE 13-6 AG AND CU RECOVERIES FROM COPPER ORE FEED ...... 66 FIGURE 13-7 SILVER RECOVERY FROM PM FEED INTO ZINC CONCENTRATE ...... 67 FIGURE 14-1 PROJECTION OF MINERALIZED BODY LIMITS BELOW DECREASING LEVEL LIMITS ...... 70 FIGURE 14-2 PROJECTION OF MINERALIZED BODY LIMITS BELOW INCREASING LEVEL LIMITS ...... 70 FIGURE 16-1 YAURICOCHA GENERAL MINING FLOWSHEET ...... 79 FIGURE 17-1 POLYMETALLIC CIRCUIT PRODUCTS, PM ORE...... 95 FIGURE 17-2 CONCENTRATES PRODUCED BY ORE TYPE ...... 95 FIGURE 18-1 LOCATION OF THE TWO SHAFTS ...... 99 FIGURE 18-2 PLAN VIEW OF MINING AREA ...... 100 FIGURE 21-1 PRODUCTIVITY BY MINING METHOD ...... 109 FIGURE 21-2 MINE COST ELEMENTS ...... 110 FIGURE 21-3 COST ELEMENTS AS A PERCENTAGE OF TOTAL COST ...... 111 FIGURE 21-4 PROCESSING COST ELEMENTS ...... 112 FIGURE 21-5 PROCESSING COST AS A PERCENTAGE OF TOTAL COST ...... 112 FIGURE 22-1 YAURICOCHA OPERATIONS SENSITIVITY GRAPH ...... 119

LIST OF TABLES TABLE PAGE

TABLE 1-1 SILVER EQUIVALENT CALCULATION VALUES ...... 3 TABLE 1-2 YAURICOCHA MEASURED RESOURCES ...... 4 TABLE 1-3 YAURICOCHA INDICATED RESOURCES ...... 4 TABLE 1-4 YAURICOCHA MEASURED AND INDICATED RESOURCES ...... 4 TABLE 1-5 YAURICOCHA INFERRED RESOURCES ...... 4

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TABLE 1-6 YAURICOCHA PROVEN RESERVES ...... 5 TABLE 1-7 YAURICOCHA PROBABLE RESERVES ...... 5 TABLE 1-8 YAURICOCHA PROVEN AND PROBABLE RESERVES ...... 5 TABLE 1-9 MINING METHODS AT YAURICOCHA ...... 6 TABLE 1-10 COST BY MINING METHOD ...... 7 TABLE 1-11 MINE PRODUCTION PLAN 2012-16...... 7 TABLE 1-12 ANNUAL OPERATING COST ESTIMATE ...... 9 TABLE 1-13 ANNUAL CAPITAL EXPENDITURE ESTIMATE ...... 9 TABLE 1-14 ESTIMATED RECOMMENDATIONS BUDGET ...... 12 TABLE 4-1 MINING CONCESSIONS ...... 19 TABLE 4-2 EBIT MARGIN RATES ...... 26 TABLE 4-3 LIST OF PRINCIPAL PERMITS ...... 27 TABLE 6-1 EXPLORATION ADVANCE, MINERAL INVENTORY AND MINE PRODUCTION ...... 30 TABLE 7-1 STRATIGRAPHIC COLUMN ...... 31 TABLE 7-2 CACHI-CACHI MINE CONCESSIONS ...... 44 TABLE 7-3 EXITO MINE CONCESSIONS ...... 45 TABLE 7-4 IPILLO MINE CONCESSIONS ...... 45 TABLE 7-5 VICTORIA MINE CONCESSIONS ...... 46 TABLE 10-1 YAURICOCHA EXPLORATION AND DEVELOPMENT DRILLING...... 54 TABLE 11-1 MINERALIZED BODIES WITH DRILL DATA ...... 57 TABLE 13-1 METAL RECOVERY ESTIMATION COEFFICIENTS ...... 63 TABLE 13-2 LEAD OXIDE CIRCUIT HISTORIC PERFORMANCE ...... 67 TABLE 14-1 MINERAL RESOURCE DATA LIST ...... 68 TABLE 14-2 DILUTION CORRECTION ...... 71 TABLE 14-3 GRADE ADJUSTMENT FOR MINE-MILL RECONCILIATION ...... 71 TABLE 14-4 SILVER EQUIVALENT CALCULATION VALUES ...... 72 TABLE 14-5 MEASURED RESOURCES ...... 73 TABLE 14-6 INDICATED RESOURCES ...... 73 TABLE 14-7 MEASURED AND INDICATED RESOURCES ...... 73 TABLE 14-8 INFERRED RESOURCES ...... 73 TABLE 15-1 MINE RECOVERY FACTORY ...... 74 TABLE 15-2 CUT OFF WEIGHT AVERAGE ...... 75 TABLE 15-3 MINING METHOD ABBREVIATIONS ...... 75 TABLE 15-4 YAURICOCHA PROVEN MINERAL RESERVES ...... 76 TABLE 15-5 YAURICOCHA PROBABLE MINERAL RESERVES ...... 76 TABLE 15-6 YAURICOCHA PROVEN + PROBABLE MINERAL RESERVES ...... 76 TABLE 15-7 SILVER EQUIVALENT CALCULATION VALUES ...... 77 TABLE 16-1 MAJOR MINE EQUIPMENT ...... 78 TABLE 16-2 GEOMECHANICAL UNITS ...... 81 TABLE 16-3 EXCAVATION DESIGN PARAMETERS BY GEOMECHANIC UNITS ...... 82 TABLE 16-4 MONTHLY PRODUCTION BY MINING METHOD ...... 83 TABLE 16-5 MINE PRODUCTION PLAN BY ORE TYPE ...... 84 TABLE 16-6 MINE DEVELOPMENT SCHEDULE FOR PRODUCTION PREPARATION AND EXPLORATION ...... 86 TABLE 17-1 REAGENT USAGE 2011...... 89 TABLE 17-2 POWER CONSUMPTION ...... 90 TABLE 17-3 POWER USAGE 2008 - 2011...... 90 TABLE 17-4 POLYMETALLIC CIRCUIT PRODUCTS, PM ORE ...... 92 TABLE 17-5 POLYMETALLIC CIRCUIT PRODUCTS, COPPER ORE ...... 93

October 19, 2012 xiv Dia Bras Exploration, Inc. Table of Contents Yauricocha Mine NI 43-101 Technical Report

TABLE 17-6 LEAD OXIDE CIRCUIT PRODUCTS, PBOX ORE ...... 94 TABLE 17-7 IMPURITY ELEMENTS IN CONCENTRATES ...... 96 TABLE 17-8 MILL OPERATING COSTS ...... 97 TABLE 21-1 ANNUAL CAPITAL COSTS ...... 106 TABLE 21-2 MINING METHODS AT YAURICOCHA ...... 108 TABLE 21-3 MINING COST BY MINING METHOD ...... 109 TABLE 21-4 ANNUAL OPERATING COSTS ...... 114 TABLE 22-1 IMPURITY ELEMENTS AVERAGE VALUES (JUNE 2012) ...... 116 TABLE 22-2 EBIT MARGIN RATES ...... 117 TABLE 22-3 YAURICOCHA MINE ECONOMIC MODEL ...... 118 TABLE 26-1 ESTIMATED RECOMMENDATIONS BUDGET ...... 126

October 19, 2012 xv Dia Bras Exploration, Inc. Summary Yauricocha Mine NI 43-101 Technical Report

1. SUMMARY

Gustavson Associates, LLC (Gustavson) was commissioned by Dia Bras Exploration, Inc. (Dia Bras or Company) to prepare a National Instrument 43-101 Technical Report to report the advance of the Yauricocha Mine (or the Mine) which is located in the eastern part of the Department of Lima, Peru The purpose of this report is to present the mineral resource and reserve estimates, and economic evaluation for the Mine.

The Mine has been in continuous commercial production since 1948, first under the direction of Cerro de Pasco. In 2002, the Yauricocha unit was privatized and purchased by Sociedad Minera Corona S.A. Sociedad Minera Corona S.A. was purchased by Dia Bras in 2011.

This report was prepared to comply with public reporting obligations according to and in compliance with NI 43-101 Standards of Disclosure for Mineral Projects, and Definition Standards for Mineral Resources and Mineral Reserves according to the Canadian Institute of Mining, Metallurgy and Petroleum (CIM). The interpretations and conclusions reported here are based on technical data available prior to the effective date of this report, October 10, 2012.

The production decision was not based on a feasibility study of Mineral Reserves demonstrating economic viability. There is an increased uncertainty and economic and technical risks of failure associated with this production decision. Production and economic variables may vary considerably, due to the absence of a complete and detailed site analysis according to and in compliance with NI 43-101 Standards of Disclosure specific risk analysis.

1.1 Geology and Mineralization Yauricocha is one of a small group of mineral districts which, due to events of history and circumstance, has allowed a single entity to control an entire mineral district. The Yauricocha district as identified in 2012 consists of multiple carbonate replacement deposits, at least one skarn, and some expressions of epithermal precious metal veins which have not been explored in sufficient detail to allow individual consideration within this document. Comments herein made regarding the characteristics of the Yauricocha district apply directly to the Sociedad Minera Corona Yauricocha Mine. Most of the stratigraphy, structure, magmatism, volcanism and mineralization in Peru are spatially- and genetically-related to the tectonic evolution of the Andean Cordillera. The ore deposits of the Yauricocha district are spatially and genetically related to the Yauricocha stock, a Miocene intrusion of granodioritic to quartz monzonitic composition.

The principal mineralization of the Yauricocha district is located near the western margin of the Yauricocha stock. The deposit consists of vertically elongate pipes composed largely of pyrite and other sulfide minerals that replace limestone of the Jumasha Formation. There are currently 28 mineralized bodies with the majority of mineral resources and reserves contained in four of the deposits: Antacaca, Cuye, Rosaura, and Catas.

October 19, 2012 1 Dia Bras Exploration, Inc. Summary Yauricocha Mine NI 43-101 Technical Report

1.2 Property Position The Yauricocha mine is located in the Alis district, Yauyos province, department of Lima approximately 12 km west of the Continental Divide and 60 km south of the Pachacayo railway station. The active mining area within the mineral concessions is located at coordinates 421,500m east by 8,638,300m north on UTM Zone 18L on the South America 1969 Datum, or latitude and longitude of 12.3105⁰ S and 75.7219⁰ W. It is geographically in the high zone of the eastern Andean cordillera, very close to the divide and within one of the major sources of the River Cañete. The mine is at an average altitude of 4,600 masl. Figure 4-1 shows the project location.

The Company is currently the title holder of five (5) mining concessions with a combined area of 19,957.7174 hectares (ha) (Table 4-1): Fiorela I, Indira I, El Caudal I, El Caudal M.R. and Acumulación Yauricocha; and one beneficiation concession called Planta de Beneficio Yauricocha Chumpe, with an area of 148.5000 ha and an installed capacity of 1,350 m3/day. According to the General Mining Law of Peru, the Mining Rights are irrevocable and for an undefined period provided that the owner of such Rights fulfills and complies with all the obligations and duties established in the Law.

1.3 Exploration Status

During 2012, Sociedad Minera Corona S.A. will conduct the following exploration programs:

• 15,000 meters (m) of exploration drilling throughout the Yauricocha Mine • A 6,900 meters of in-fill drilling at the Yauricocha Mine’s Antacaca, Rosaura and Catas deposits with the objective to better delineate the polymetallic, copper and oxide deposits at depth and along strike • A magnetic and induced polarization survey along the Yauricocha Fault • Drilling at the Adrico gold mine • New access is being built in order to access the deeper lead oxide, copper and polymetallic deposits. The access will serve the Mascota, Cuye, Catas, Antacaca, Rosaura and Antacaca Sur deposits and the ore extracted through the Klepetko Tunnel

Exploration work in other areas such as Ipillo (silver, zinc, lead) and Carmencita (silver, lead oxides) will commence when the Company has completed negotiations with local authorities for surface access.

1.4 Mineral Resources and Mineral Reserves The effective date of the resource and reserve estimates is January 1, 2012. Traditional underground estimation methods are used for mineral resources at Yauricocha. These are polygonal methods used in the longitudinal section with careful geologic controls and factors which have been established and refined over the 40 years of continuous exploitation. Gustavson has

October 19, 2012 2 Dia Bras Exploration, Inc. Summary Yauricocha Mine NI 43-101 Technical Report

audited the work and accepts responsibility for the resource estimate. These resource and reserve estimates are CIM compliant.

Data used in estimation of resources and reserves consist of drift, sublevel, stope, raises and exploration drilling samples. The grades are assigned within the volume defined by the Yauricocha geologists, to provide the average grade of the block. The resulting average grade is adjusted for dilution and further adjusted by reconciliation with Plant data from the previous two years. Table 1-1 through 1-4 summarizes the mineral reserve inventory at the end of 2011. The proven and probable reserves are inclusive of the measured and indicated resources. Tables 1-5 through 1-7 summarize the Yauricocha mineral reserves.

The following assumptions are used for the estimation of both resources and reserves.

AgEq= (Ag *Pag* Rag/31.1035)+(Pb*Ppb*Rpb*22.05)+(Cu*Pcu*Rcu*22.05)+(Zn*Pzn*Rzn*22.05) (Pag* Rag) Where the symbols represent

Table 1-1 Silver Equivalent Calculation Values

Grade Price Recovery Metal Symbol Price Units Symbol Symbol

Silver Ag g/t 26.28 $/tOz Pag Rag

Copper Cu % 3.491 $/lb Ppb Rpb

Lead Pb % 0.9988 $/lb Pcu Rcu

Zinc Zn % 0.9531 $/lb Pzn Rzn

Copper Lead Lead Recovery Polymetallics Bodies Oxides Sulfides

Rag 65.50% 29.50% 12.50% 66.10%

Rpb 61.72% 58.09% 6.85% 32.80%

Rcu 90.09% 11.44% 20.50% 55.92%

Rzn 85.95% 6.71% 11.34% 87.92%

Quality and grade are estimates and are rounded to reflect the fact that the resource estimate is an approximation.

Mineral resources are not mineral reserves and do not demonstrate economic viability. There is no certainty that all or any part of the mineral resource will be converted to mineral reserves.

October 19, 2012 3 Dia Bras Exploration, Inc. Summary Yauricocha Mine NI 43-101 Technical Report

Table 1-2 Yauricocha Measured Resources

MEASURED RESOURCES METAL CONTENT ORE TYPES tonnes (t) AgEq (gpt) Ag(gpt) Pb(%) Cu(%) Zn(%) Au (gpt) Ag(kg) Ag (oz*106) Pb(t) Cu(t) Zn(t) Au(g) Polymetallic Ores 1,026,840 374.66 85.02 1.86 0.70 4.33 0.47 87,302 2.807 19,099 7,188 44,462 478,487 Copper Ores 117,130 376.97 86.29 0.38 2.08 1.21 0.40 10,107 0.325 445 2,436 1,417 46,852 Oxide Ores 475,560 776.66 323.11 8.23 0.23 0.98 2.36 153,658 4.940 39,139 1,094 4,660 1,122,322 TOTALS 1,619,530 492.87 155.02 3.62 0.66 3.12 1.02 251,067 8.072 58,683 10,718 50,540 1,647,661

Table 1-3 Yauricocha Indicated Resources

INDICATED RESOURCES METAL CONTENT ORE TYPES tonnes (t) AgEq (gpt) Ag(gpt) Pb(%) Cu(%) Zn(%) Au (gpt) Ag(kg) Ag (oz*106) Pb(t) Cu(t) Zn(t) Au(g) Polymetallic Ores 1,717,320 261.37 46.16 0.97 0.61 2.87 0.55 79,278 2.549 16,605 10,442 49,334 950,994 Copper Ores 296,180 382.44 66.15 0.34 2.08 0.83 0.99 19,592 0.630 1,007 6,154 2,463 292,083 Oxide Ores 489,860 758.79 318.53 9.23 0.23 0.46 1.95 156,035 5.017 45,214 1,105 2,253 955,227 Copper Oxide Ores 58,500 468.57 19.25 0.54 3.19 2.49 0.40 1,126 0.036 314 1,866 1,454 23,384 TOTALS 2,561,860 375.21 99.94 2.46 0.76 2.17 0.87 256,031 8.231 63,139 19,566 55,504 2,221,688

Table 1-4 Yauricocha Measured and Indicated Resources

MEASURED + INDICATED RESOURCES METAL CONTENT ORE TYPES tonnes (t) AgEq (gpt) Ag(gpt) Pb(%) Cu(%) Zn(%) Au (gpt) Ag(kg) Ag (oz*106) Pb(t) Cu(t) Zn(t) Au(g) Polymetallic Ores 2,744,160 303.76 60.70 1.30 0.64 3.42 0.52 166,580 5.356 35,704 17,629 93,796 1,429,482 Copper Ores 413,310 380.89 71.86 0.35 2.08 0.94 0.82 29,699 0.955 1,452 8,591 3,880 338,935 Oxide Ores 965,420 767.59 320.79 8.74 0.23 0.72 2.15 309,693 9.957 84,353 2,198 6,914 2,077,549 Copper Oxide Ores 58,500 468.57 19.25 0.54 3.19 2.49 0.40 1,126 0.036 314 1,866 1,454 23,384 TOTALS 4,181,390 420.78 121.28 2.91 0.72 2.54 0.93 507,098 16.303 121,822 30,284 106,044 3,869,349

Table 1-5 Yauricocha Inferred Resources

INFERRED RESOURCES METAL CONTENT ORE TYPES tonnes (t) AgEq (gpt) Ag(gpt) Pb(%) Cu(%) Zn(%) Au(gpt) Ag(kg) Ag(oz*106) Pb(t) Cu(t) Zn(t) Au(g) Polymetallic Ores 444,740 302.92 64.91 1.96 0.44 3.83 0.28 28,868 0.928 8,702 1,937 17,047 126,152 Copper Ores 624,880 231.02 27.40 0.10 1.46 0.32 0.59 17,122 0.550 640 9,126 2,013 369,336 Oxide Ores 204,710 698.43 288.33 9.17 0.17 0.11 1.77 59,024 1.898 18,778 342 233 361,927 High Grade Gold Ores 520,000 142.05 0.34 0.00 0.00 0.00 2.16 177 0.006 0 0 0 1,123,200 (Adrico) TOTALS 1,794,330 276.38 58.62 1.57 0.64 1.08 1.10 105,191 3.382 28,119 11,405 19,294 1,980,615

October 19, 2012 4 Dia Bras Exploration, Inc. Summary Yauricocha Mine NI 43-101 Technical Report

Reserves from the Ipillo and Victoria Mines are conditional to negotiations with the local community and permit from the authority. Other than that, Gustavson knows of no existing environmental, permitting, legal, socio-economic, marketing, political, or other factors that might materially affect the mineral reserve estimate.

Table 1-6 Yauricocha Proven Reserves

PROVEN RESERVES ZONE tonnes (t) AgEq (gpt) Ag(gpt) Pb(%) Cu(%) Zn(%) Au(gpt) CACHI CACHI & MINA 1,013,350 534.04 189.40 4.46 0.52 2.40 1.29 CENTRAL Polymetallic Ores 517,350 353.69 87.40 1.83 0.64 3.98 0.38 Copper Ores 48,610 328.86 73.80 0.18 1.96 0.62 0.41 Oxide - Mascota Lower Levels 428,730 755.77 317.00 7.75 0.23 0.66 2.50 High Grade Oxides 18,660 974.27 385.40 13.04 0.23 3.41 1.12 MINA IPILLO (Polymetallic) 0 MINA VICTORIA (Copper Ore) 0 TOTALS 1,013,350 534.04 189.40 4.46 0.52 2.40 1.29

Table 1-7 Yauricocha Probable Reserves

PROBABLE RESERVES ZONE tonnes (t) AgEq (gpt) Ag(gpt) Pb(%) Cu(%) Zn(%) Au(gpt) CACHI CACHI & MINA 3,024,310 373.24 97.10 2.33 0.73 2.60 0.80 CENTRAL Polymetallic Ores 2,295,920 287.29 52.00 1.10 0.68 3.21 0.53 Copper Ores 254,970 379.80 63.90 0.22 2.06 0.86 1.05 Oxide - Mascota Lower Levels 437,440 774.22 332.20 9.29 0.24 0.17 2.06 High Grade Oxides 35,980 935.67 348.00 10.62 0.24 6.07 0.96 MINA IPILLO (Polymetallic) 65,830 503.88 119.50 1.14 1.06 5.45 1.15 MINA VICTORIA (Copper Ore) 59,450 367.79 80.60 0.83 1.98 0.80 0.49 TOTALS 3,149,590 375.86 97.20 2.27 0.76 2.63 0.80

Table 1-8 Yauricocha Proven and Probable Reserves

TOTAL PROVEN + PROBABLE RESERVES ZONE tonnes (t) AgEq (gpt) Ag(gpt) Pb(%) Cu(%) Zn(%) Au(gpt) CACHI CACHI & MINA CENTRAL 4,037,660 413.79 120.20 2.86 0.67 2.55 0.93 Polymetallic Ores 2,813,270 299.84 58.50 1.24 0.67 3.35 0.51 Copper Ores 303,580 371.25 65.50 0.21 2.04 0.82 0.95 Oxide - Mascota Lower Levels 866,170 765.02 324.70 8.53 0.23 0.42 2.28 High Grade Oxides 54,640 949.65 360.80 11.45 0.24 5.16 1.02 MINA IPILLO (Polymetallic) 65,830 503.88 119.50 1.14 1.06 5.45 1.15 MINA VICTORIA (Copper Ore) 59,450 367.79 80.60 0.83 1.98 0.80 0.49 TOTALS 4,162,940 414.56 119.70 2.81 0.70 2.57 0.92

October 19, 2012 5 Dia Bras Exploration, Inc. Summary Yauricocha Mine NI 43-101 Technical Report

1.5 Mining Mining at Yauricocha is accomplished by various extraction methods, principally sublevel caving and overhand cut and fill stoping. The larger mineralized bodies are both thicker (10-20 m) and longer along strike and down dip and the ore minerals are held in semi consolidated rocks that ravel easily with minor provocation by blasting. The smaller bodies are also in poor rock, however they can be of quite high metal grades, averaging over 10 ounce/tonne (oz/t) silver and 10% lead. During cut and fill stoping the mine uses timber in square sets to maintain the level open for safe access (mostly through breasting) and then fills the lower level after mining the upper level.

In 2011, 81% of the ore was mined by Mechanized Sub Level Caving and 19% by other methods including manual caving and cut and fill. In the sub-level caving method, approximately 70% of the production results from self-caving, the remaining 30% has to be drilled and blasted.

New access to the lower orebodies is being constructed over 3 years starting in 2012 and will have a cost of approximately $26 million.

In 2011, the total ore production at the Yauricocha Mining Unit was 819,993 tonnes, averaging 68,333 tonnes per month and 2,278 tonnes per day. Of the total ore production, 81% was mined utilizing the mechanized sub-level caving method, 6% utilizing the conventional sub-level caving, 10% by means of ascending cut and fill with waste rock backfill and 3% with conventional square sets. This is summarized in Table 1-8.

Mining cost for 2011 was $40.01/tonne. By far, the largest cost (40%) is associated with preparation and exploration.

Table 1-9 Mining Methods at Yauricocha Production Subtotal Total Mining Method Mechanization Tonnes/day % % Conventional 5,406 7.9 Overhand Cut and Fill 10 Mechanized 1,423 2.1 Conventional 4,317 6.3 Sub Level Caving 86.8 Mechanized 55,062 80.5 Square Set Conventional 2,125 3.2 3.2 Total 68,333 100 100

October 19, 2012 6 Dia Bras Exploration, Inc. Summary Yauricocha Mine NI 43-101 Technical Report

Table 1-10 Cost by Mining Method

Description Conventional Mechanized Conventional Sub Mechanized Sub Square Cut and Fill Cut and Fill Level Caving Level Caving Set

Productivity (tonne/man-shift) 4.80 6.10 7.4 20.1 1.80 Preparation (Cost $/tonne) 16.86 5.54 5.01 3.46 5.89 Exploitation (Cost $/tonne) 22.41 17.18 12.82 10.68 39.58 Services (Cost $/tonne) 9.63 3.67 1.38 0.92 13.78 Total (Cost $/tonne) 48.89 26.39 19.20 15.06 59.25

Table 1-10 summarized the mine production plan developed in this Technical Report.

Table 1-11 Mine Production Plan 2012-16

2012 2013 2014 2015 2016 Total

Au(g/t) 1.14 1.06 0.54 1.02

October 19, 2012 7 Dia Bras Exploration, Inc. Summary Yauricocha Mine NI 43-101 Technical Report

2012 2013 2014 2015 2016 Total

Grand Total (tonnes): 804,000 826,500 918,000 932,830 681,610 4,162,940 Ag(oz/t) 4.13 3.94 3.47 2.64 3.37 3.49 Ag(g/t) 141.70 135.13 118.93 90.58 115.65 119.66 Pb(%) 3.05 3.33 2.44 2.16 3.27 2.81 Cu(%) 0.58 0.68 0.95 0.62 0.63 0.70 Zn(%) 3.14 3.17 2.41 2.02 2.16 2.57 Au(g/t) 0.97 0.94 0.92 0.90 0.88 0.92 Metal Content Ag (kg) 113,928 111,686 109,180 84,496 78,828 498,118 Ag(oz) 3,662,782 3,590,700 3,510,139 2,716,534 2,534,334 16,014,488 Pb(lbs) 54,117,505 60,599,506 49,475,475 44,406,734 49,093,074 257,692,294 Cu(lbs) 10,204,625 12,344,414 19,238,337 12,765,922 9,527,182 64,080,479 Zn(lbs) 55,706,285 57,776,060 48,781,284 41,463,864 32,455,951 236,183,444 Au(g) 783,548 776,829 844,533 835,882 600,123 3,840,914 Au(oz) 25,191 24,975 27,152 26,874 19,294 123,485

1.6 Metallurgy Three types of material are mined at Yauricocha: polymetallic (PM), containing payable silver, lead, copper and zinc; copper material, containing payable copper and silver; and lead oxide material (PbOx), containing payable silver and lead. The Chumpe Mill treats these materials using crushing grinding and flotation to produce the following concentrates:

1. Lead sulphide concentrate. 2. Copper concentrate (polymetallic). 3. Copper concentrate (Campana). 4. Zinc concentrate. 5. Lead Oxide concentrate.

Available data indicate that, with expansions and process modifications taken into account, the mill performance has been stable for several years, with recoveries affected more by relatively minor changes in ore grade than by other factors. As long as process inputs such as mill tonnages, tenors and mineralogical characteristics remain constant, metallurgical recoveries and performance are not expected to change significantly.

Silver and gold assays being reported contain calculation and unit conversion errors. It is recommended these are addressed immediately.

Reported operating costs, not including equipment depreciation charges, amounted to $7.0 million or $8.36/tonne treated in 2010 and $7.7 million or $9.48/tonne treated in 2011. Cost increases since 2011 were principally in the areas of consumables.

October 19, 2012 8 Dia Bras Exploration, Inc. Summary Yauricocha Mine NI 43-101 Technical Report

1.7 Operating Cost and Capital Operating Costs for the continuing Yauricocha Operations were estimated from historic cost reports and projected levels of future operations, utilizing continuous around-the-clock production in the mine and the processing plant. Administration will be staffed on day-shift only. The following table shows the estimated typical annual operating costs for the Yauricocha Mine.

Table 1-12 Annual Operating Cost Estimate Operating Cost Summary 2012 2013 2014 2015 2016 Tonnes of Ore 838,301 826,500 918,000 932,830 539,950 Operating Costs/Year (000's) Mining Costs $26,964 $26,919 $29,500 $29,934 $18,422 Processing Costs 7,953 7,841 8,709 8,850 5,123 Freight Costs 3,965 3,853 3,852 3,209 2,165 Operating Cost Contingency 1,944 1,931 2,103 2,100 1,286 Administrative Costs 3,128 3,084 3,425 3,480 2,015 Closure Operating Costs 809 809 809 809 809 Employee Profit Sharing 5,341 4,349 3,953 593 1,378 Total Operating Costs $50,104 $48,784 $52,351 $48,975 $31,196

Operating Costs/Metric Tonne Mining Costs $32.17 $32.57 $32.13 $32.09 $34.12 Processing Costs 9.49 9.49 9.49 9.49 9.49 Freight Costs 4.73 4.66 4.20 3.44 4.01 Operating Cost Contingency 2.32 2.34 2.29 2.25 2.38 Administrative Costs 3.73 3.73 3.73 3.73 3.73 Closure Operating Costs 0.96 0.98 0.88 0.87 1.50 Employee Profit Sharing 6.37 5.26 4.31 0.64 2.55 Total Operating Costs/MT $59.77 $59.02 $57.03 $52.50 $57.78

Yauricocha Capital Costs were estimated to support continuing operations and include an allowance for closure costs at the end of known resources. Costs were originally estimated by Yauricocha Operations personnel and reviewed by Gustavson Associates. Total continuing capital cost for the Yauricocha Operations is summarized in Table 1-13.

Table 1-13 Annual Capital Expenditure Estimate Capital Cost Summary 2012 2013 2014 2015 2016 Capital Costs/Year (000's) M ine 3,698 16,641 7,608 4,626 2,300 Electrical Mech Maint 215 1,045 25 0 0 Concentrate Plant 746 4,540 4,697 3,623 0 Health & Safety 41 30 0 0 71 Enviro, Sustainability, & Closure 1,376 1,700 570 120 120 Geology 1,937 2,196 1,416 1,286 1,436 Capital Contingency 1,202 3,923 2,147 1,448 589 Total Capital Costs 9,215 30,075 16,463 11,104 4,516

October 19, 2012 9 Dia Bras Exploration, Inc. Summary Yauricocha Mine NI 43-101 Technical Report

1.8 Economic Analysis This study shows a production of 6.8 million oz of silver, 68.5 thousand tonnes of lead, 70 thousand tonnes of zinc, 17.6 thousand tonnes of copper, and about 22.4 thousand ounces of gold from 4.2 million tonnes of ore during the next five years. This produces before-tax NPV at 8% discount rate of $193 million and an after-tax NPV at 8% discount rate of $145.8 million.

The contributing factors to a lower predicted cash flow than previous years are increased capital costs, increased mining costs, a significant increase of royalty based on margin, and lower ore grades. There are heavy capital expenditures from 2013 to 2014 for the new access to lower orebodies. There is a drop in cash flow in 2015, mostly caused by lower polymetallic ore head grades which accounts for about 69% of the ore production.

Further exploration is in process. The reported polymetallic reserves are depleted before the end of the 5 year mine plan.

The Base Case for the Yauricocha operations anticipates mining the currently defined resources and reserves over 5 years and is forecast based upon the three year trailing average of metals prices and upon the operating costs and capital costs consistent with recent operations. 4.2 million tonnes of material are projected to be mined during this time with a projected Before-Tax Net Present Value at 8% (“NPV-8”) of $193 million and an After-Tax Net Present Value at 8% (“NPV-8”) of $145.8 million. The after-tax results are considered the base case.

There is no IRR or payback period, as the mine is in operation, therefore there is no initial capital required for start-up.

All reserves will be processed at the operation’s current flotation mill with resultant concentrates of copper, lead oxides, lead sulfides and zinc transported off-site under processing contracts with the operation’s sole customer. Mining is all underground, with processing and tailings storages nearby.

The Yauricocha Operation is most responsive to changes in the price of metals. In the Base Case (After Tax), an increase in the average metals prices of 10% would increase the NPV by about 19% to approximately $173.8 million, shown in in Figure 1-1. An increase of 20% would result in an NPV of $201.4 million, an increase of about 38%.

The operations are also sensitive to variations in Operating Costs. In the Base Case, an increase in the average Operating Costs (mining, process plant, freight, operating cost contingency of 5%, administration, closure operating cost and employee profit sharing) of 10% would decrease the NPV by 11% to approximately $129.9 million, see Figure 1-1. An increase of 20% would result in an NPV of $112.7 million, a decrease of 23%.

October 19, 2012 10 Dia Bras Exploration, Inc. Summary Yauricocha Mine NI 43-101 Technical Report

The operations are less sensitive to variations in the Capital Costs. In the Base Case, an increase in the average capital program, including contingency, of 10% would decrease the NPV by 3% to approximately $141.7 million, see Figure 22-1. An increase of 20% would result in an NPV of $137.6 million, a decrease of 6%.

Figure 1-1 Yauricocha Operations Sensitivity Graph

1.9 Interpretations and Conclusions Yauricocha is a successful, ongoing mining and concentrating operation, and is one of the principal assets of Dia Bras,

Yauricocha has historically performed exploration drilling, although the work done to date has focused on expansion of the known mineralized bodies and within the immediate vicinity. Greenfield exploration has been restricted to surface mapping. Although there is potential for expansion, there are insufficient data at this time to quantify these as resources except in the Victoria and Ipillo Mines listed below. Exploration activities in 2011 focused mostly in the Victoria and Ipillo areas of the project.

Traditional underground estimation methods are used for mineral resources at Yauricocha. These are polygonal methods used in the longitudinal section with careful geologic controls and factors which have been established and refined over the 40 years of continuous mining.

October 19, 2012 11 Dia Bras Exploration, Inc. Summary Yauricocha Mine NI 43-101 Technical Report

rocks that ravel easily with minor provocation by blasting. The smaller bodies are also in poor rock, however they can be of quite high metal grades, averaging over 10 oz/tonne silver and 10% lead. During cut and fill stoping the mine uses timber in square sets to maintain the level open for safe access (mostly through breasting) and then fills the lower level after mining the upper level.

1.10 Recommendations Recommendations for 2012 consist of improvements in the following areas: exploration, mine infill drilling, permitting, mine development and metallurgical testing and evaluation.

In the area of exploration, the Company should consider the design and implementation of a relational database system to gather and store its exploration data, upgrading its QA/QC practices and utilization of the already purchased mining software for the evaluation of mineral resources.

The execution of the 2012 infill drilling is of importance for the delineation of additional resources at depth and along strike in the Mina Central.

Completion of metallurgical studies can help to resolve the persistent low silver recovery in the oxide circuit, as well as the economic viability of reprocessing the tailings containing high values of silver utilizing hydrometallurgical processes.

The budget for this work is shown in Table 1-14. This work can be completed in one phase.

Table 1-14 Estimated Recommendations Budget

Task Cost Software Implementation and Training $100,000 Surface Drilling $2,000,000 Underground Drilling $3,000,000 Geophysics $250,000 Metallurgical Testwork $250,000 Total $5,600,000

October 19, 2012 12 Dia Bras Exploration, Inc. Introduction and Terms of Reference Yauricocha Mine NI 43-101 Technical Report

2. INTRODUCTION AND TERMS OF REFERENCE

Gustavson Associates, LLC (Gustavson) was commissioned by Dia Bras Exploration, Inc. (Dia Bras or Company) to prepare a National Instrument 43-101 Technical Report to report the advance of the Yauricocha Mine (or the Mine), which is located in the eastern part of the Department of Lima, Peru The purpose of this report is to present the mineral resource and reserve estimates, and economic evaluation for the Mine.

The Mine has been in continuous commercial production since 1948, first under the direction of Cerro de Pasco. In 2002, the Yauricocha unit was privatized and purchased by Sociedad Minera Corona S.A.

The Qualified Persons responsible for this report are:

• Mr. Donald Hulse, P.E., V.P. and Principal Mining Engineer for Gustavson, is a Qualified Person as defined by NI 43-101. Mr. Hulse acted as project manager during preparation of this report and is specifically responsible for report 1 through 12, 14, 20, and 23 through 27. • Mr. Patrick Daniels, Principal Mining Engineer for Gustavson, is a Qualified Person as defined by NI 43-101. Mr. Daniels is specifically responsible for report Sections 18, 19 21 and 22. • Christopher E. Kaye, Principal Process Engineer, Mine and Quarry Engineering Services, Inc., is a Qualified Person as defined by NI 43-101. Mr. Kaye is specifically responsible for report Sections 13 and 17. • Anthony D. Hammond, Hammond Swayne LLC, is a Qualified Person as defined by NI 43-101. Mr. Hammond is specifically responsible for report Sections 21.1-21.3 and Section 22.

2.1 Effective Date The effective date for this report is October 10, 2012.

October 19, 2012 13 Dia Bras Exploration, Inc. Introduction and Terms of Reference Yauricocha Mine NI 43-101 Technical Report

2.2 Sources of Information The information, opinions, conclusions, and estimates presented in this report are based on the following:

• Information and technical data provided by Dia Bras; • Review and assessment of previous investigations; • Assumptions, conditions, and qualifications as set forth in the report; and • Review and assessment of data, reports, and conclusions from other consulting organizations.

In addition to the above, Carlos Villanueva – General Manager – Yauricocha Mine – S.M. Corona, provided capital and operating costs, along with concentrate sales information for the Yauricocha Mine.

These sources of information are presented throughout this report and in Section 26 – References. The qualified persons are unaware of any material technical data other than that presented by Dia Bras.

2.3 Personal Inspection Messrs. Donald E. Hulse P.E. and Christopher E. Kaye, qualified persons, visited the site on March 22, 23 and 24, 2011 in the company of Mr. Carlos Villanueva of S.M. Corona and Mr. Thomas Robyn of Dia Bras. Mr. Hulse inspected the core stored on site and performed an extensive tour of the existing underground workings and Mr. Kaye inspected the processing plant. Mr. Hulse visited again on April 9-13, 2012 and reviewed production records, mine plans and core from new drilling.

2.4 Units All measurements used in the Yauricocha Mine are in metric units and all references to dollars are United States dollars:

Common Units: Above mean sea level ...... amsl Cubic foot ...... feet3 Cubic inch ...... in3 Cubic yard ...... yd3 Day ...... d Degree ...... ° Degrees Fahrenheit ...... °F Foot ...... feet, ft Gallon ...... gal Gallons per minute (US) ...... gpm Grams per tonne ...... g/t,g/tonne Greater than ...... >

October 19, 2012 14 Dia Bras Exploration, Inc. Introduction and Terms of Reference Yauricocha Mine NI 43-101 Technical Report

Hectare ...... ha Hour ...... h Inch ...... " Kilo (thousand) ...... k Less than ...... < Megavolt-ampere………………………………………………mva Micrometre (micron) ...... µm Milligram ...... mg Ounces per tonne ...... oz/t Parts per billion ...... ppb Parts per million ...... ppm Percent ...... percent Peruvian Sol ...... S/. Pound(s) ...... lb Short ton (2,000 lb) ...... st Silver Equivalent Grade……………………………………g/t,g/tonne Specific gravity ...... SG Square foot ...... feet2 Square inch ...... in2 Tonne ...... tonne Metric ton ...... tonne Yard ...... yd Year (US) ...... yr Metric Conversion Factors (divided by): Short tons to tonnes ...... 1.10231 Pounds to tonnes ...... 2204.62 Ounces (Troy) to tonnes ...... 32,150 Ounces (Troy) to kilograms ...... 32.150 Ounces (Troy) to grams ...... 0.03215 Ounces (Troy)/short ton to grams/tonne ...... 0.02917 Acres to ha ...... 2.47105 Miles to kilometres ...... 0.62137 Feet to metres ...... 3.28084 Abbreviations: Absolute Relative Difference ...... ARD Adsorption Desorption Refining ...... ADR Acid Rock Drainage ...... ARD American Society for Testing and Materials...... ASTM Atomic Absorption Spectrometry ...... AAS Canadian Institute of Mining and Metallurgy ...... CIM Carbon-in-Column ...... CIC Diamond Drill ...... DD Environmental Assessment ...... EA Environmental Impact Statement ...... EIS Finding of No-Significant Impact ...... FONSI Fleet Performance Calculator ...... FPC Global Positioning System ...... GPS

October 19, 2012 15 Dia Bras Exploration, Inc. Introduction and Terms of Reference Yauricocha Mine NI 43-101 Technical Report

Gold Standard Royalty ...... GSR Induced Polarization ...... IP Inductively Coupled Plasma ...... ICP Internal Rate of Return ...... IRR Megavolt-ampere……………………………………………MVA Metallic Screen Fire Assay ...... MSFA Mine and Quarry Engineering Services ...... MQes Mine Development Associates ...... MDA Mount Diablo Base Meridian ...... MDBM National Environmental Policy Act of 1969 ...... NEPA NI 43-101 ...... NI 43-101 Nearest Neighbor ...... NN Net Present Value ...... NPV Net Smelter Royalty ...... NSR Ounces per short ton gold ...... OPT Au Preliminary Economic Assessment ...... PEA Probability Assigned Constrained Kriging ...... PACK Record of Decision ...... ROD Reverse Circulation ...... RC/RCV Rock Quality Designation ...... RQD Selective Mining Unit ...... SMU Silver Equivalent Grade……………………………….…….AgEq Universal Transverse Mercator ...... UTM

October 19, 2012 16 Dia Bras Exploration, Inc. Reliance on Other Experts Yauricocha Mine NI 43-101 Technical Report

3. RELIANCE ON OTHER EXPERTS

During preparation of this report, Gustavson relied in good faith on information provided by Daniel Abramovich – Attorney with Payet Rey Cauvi Abogados, Lima, Peru, Peruvian counsel for Dia Bras for the analysis of mining concession and permit status for the Yauricocha Mine, (Sections 4.2 through 4.5). Mr. Javier Bahena Geologist supplied information on property ownership (Sections 4.2 and 4.3) and environmental information (Section 4.3).

Fernando Piccini, Chief Financial Officer and Paolo Durand, Head of Financial Planning of DIA BRAS Exploration Inc. provided information regarding the calculation of Peruvian Royalties and Special Taxes (Section 22.1.2).

Gustavson did not independently verify the status of the property ownership or mineral tenure, and is unaware of any material technical data other than that provided by Dia Bras.

October 19, 2012 17 Dia Bras Exploration, Inc. Property Description and Location Yauricocha Mine NI 43-101 Technical Report

4. PROPERTY DESCRIPTION AND LOCATION

4.1 Property Location The Yauricocha Mine is located in the Alis district, Yauyos province, department of Lima approximately 12 km west of the Continental Divide and 60 km south of the Pachacayo railway station. The active mining area within the mineral concessions is located at coordinates 421,500 m east by 8,638,300 m north on UTM Zone 18L on the South American 1969 Datum, or latitude and longitude of 12.3105⁰ S and 75.7219⁰ W. It is geographically in the high zone of the eastern Andean cordillera, very close to the divide and within one of the major sources of the River Cañete, which discharges into the Pacific Ocean. The mine is at an average altitude of 4,600 m amsl. Figure 4-1 shows the project location.

Figure 4-1 Yauricocha Mine Location Map

October 19, 2012 18 Dia Bras Exploration, Inc. Property Description and Location Yauricocha Mine NI 43-101 Technical Report

4.2 Mining Concessions 4.2.1 Concessions Held by S.M. Corona The Company is currently the title holder of five (5) mining concessions with a combined area of 19,960 ha (Table 4-1): Fiorela I, Indira I, El Caudal I, El Caudal M.R. and Acumulación Yauricocha; and one beneficiation concession called Planta de Beneficio Yauricocha Chumpe, with an area of 148.5000 ha and an installed capacity of 1,350 m3/day. These concessions have been recognized by the Peruvian government and are defined by U.T.M. coordinates. In 2008 the various prior concessions were unified into the Accumulation Yauricocha.

Pursuant to the information provided by the Company, the only active mining concession is Acumulación Yauricocha (Figure 4-2). Registration rights and other applicable duties have been fully paid by the Company, pursuant to the information provided by the Company and available in the Mining Geological and Metallurgical Institute (“Ingemmet”) (Instituto Geológico Minero y Metalúrgico).

Required annual reports have been filed and approved by the mining authority, as confirmed by the Company and confirmed in the Ministry of Energy and Mines. This is supported by an analysis of the permit and claim status by Daniel Abramovich, with Payet Rey Cauvi Abogados, Lima Peru Peruvian counsel for Dia Bras.

According to the second paragraph of Article 10 of the General Mining Law of Peru, the Mining Rights are irrevocable and for an undefined period provided that the owner of such Rights fulfills and complies with all the obligations and duties established in the Law. The causes for extinction or termination of the Mining Rights are very specific and are enumerated in the General Mining Law of Peru in Articles 58 to 65.

Table 4-1 Mining Concessions

Mining Concession Code Approval Resolution Ha

Acumulación Yauricocha 010000105L R.P. 1477-2008/INGEMMET/PCD/PM 18,777.9238 Indira I 010921895 R.J. 6646-96-RPM 196.0841 El Caudal I 010050496 R.J. 01911-2000-RPM 83.7095 El Caudal M.R. 010925195 R.J. 4020-96-RPM 100.0000 Fiorela I 010400505 R.J. 0955-2006/INACC/J 800.0000 Total 19,957.7174

Included within the above area is a processing site concession with an area of 148.5000 ha with a permitted capacity of 2,500 dry tonnes/day. This has been authorized by Resolution No. 279- 2010-MEM-DGM/V on July 14, 2010.

Notwithstanding the above, in accordance with the information available in Ingemmet, there are eleven (11) metallic mining concessions that appear registered in the name of the Company.

October 19, 2012 19 Dia Bras Exploration, Inc. Property Description and Location Yauricocha Mine NI 43-101 Technical Report

However, according to the information provided by the Company, it has transferred six (6) mining concessions: Danubio S.R., Polonia S.R., Viena S.R., Isabel S.R., Pachitea and Pachitea Tercera. Said transfers have yet to be informed to Ingemmet and yet to be registered before Public Registry at the name of the buyer. Concessions controlled by S.M. Corona are shown in Figure 4-2.

October 19, 2012 20 Dia Bras Exploration, Inc. Property Description and Location Yauricocha Mine NI 43-101 Technical Report

Figure 4-2 Corona Control of Mineral Concessions

October 19, 2012 21 Dia Bras Exploration, Inc. Property Description and Location Yauricocha Mine NI 43-101 Technical Report

Figure 4-3 Mineralized Zones on the Yauricocha Property

October 19, 2012 22 Dia Bras Exploration, Inc. Property Description and Location Yauricocha Mine NI 43-101 Technical Report

Figure 4-4 Infrastructure on the Yauricocha Mine

October 19, 2012 23 Dia Bras Exploration, Inc. Property Description and Location Yauricocha Mine NI 43-101 Technical Report

4.2.2 Mining Rights Option Agreement On March 7, 2011, the Company entered with six (6) members of De la Matta family, into an option agreement for the acquisition of ten (10) mining rights. The price to be paid for the option right –as a whole- is $500,000. The Company has two (2) years, counted since the last mining right is registered in the Public Registry, to exercise its option right in order to acquire all or any of said mining rights.

In that regard, three (3) of the ten (10) mining rights have not yet been registered in the Public Registry. According to information provided by the Company, it would register the agreement in the entries of the mining rights if and only if the grantor completes registry of all ten (10) mining rights.

The price to be paid by the Company for the transfer of such mining rights, as a whole, is $6,000,000.

4.3 Land Surface Agreements The Company has in place several land surface agreements by means of which the title holders of the land surfaces within the area of the Acumulación Yauricocha mining concession, grants the Company the right to use the superficial surface and execute mining activities. The agreements entered by the Company in this regard, are the following:

4.3.1 Lease agreement: Huacuypacha The Company has entered into a lease agreement with Mr. Abdon Vilchez Melo, regarding the surface land within the real property named Huacuypacha, located in Tinco, district of Alis, province of Yauyos, Department of Lima. This land is not registered in the Public Registry. By means of this agreement, the Company acquired the right to use said land.

This agreement has been renewed in three opportunities. The term of the agreement expires on December 31, 2013.

4.3.2 Lease agreement: Queka and Cachi Cachi The Company has entered into a lease agreement with the Family Varillas, in relation to land containing 56 ha located in district of Alis, province of Yauyos, Department of Lima. This land is not registered in the Public Registry.

By means of this agreement, the landowner granted the use of the referred land in favor of the Company for a total payment of S/.31,500. In addition to the payment obligation, the Company has assumed the obligation to take care of all the environmental liabilities that its activities could generate.

October 19, 2012 24 Dia Bras Exploration, Inc. Property Description and Location Yauricocha Mine NI 43-101 Technical Report

This agreement has been amended in two opportunities. The term of the agreement expired on March 7, 2012.

4.3.3 Easement agreement executed with the Rural Community of Laraos The Company has entered into a use easement agreement with the Rural Community of Laraos, by means of which it has granted in favor of the Company a use easement right over the lands in the areas named Éxito, Kilkasa, El Paso, Victoria, Ipillo and others, which are located over Acumulación Yauricocha and others mining rights that belong to the Company. By means of this agreement the Company may remove lands from the serving lands in order to develop its mining activities and execute any infrastructure implementation in accordance to its operational needs. The annual payment for the right granted is S/. 6,000.

Private Settlement and Beneficial Use Agreement

The Company has entered into a private settlement and beneficial use agreement with the Rural Community of San Lorenzo de Alis, by means of which: (i) the Community recognizes the right of the Company to use an area of its property of 676.6870 ha, and the Company recognizes the Community as the owner of such area; and, (ii) the Community grants an usufruct right over the referred area of 676.6870 ha in favor of the Company for a term of thirty (30) years counted since the execution of the agreement. This right of usufruct has been registered before the Public Registry of Lima, Office of Cañete.

The Company must pay an annual payment of S/. 100,000. By means of this agreement the Company holds all the rights to, among other things, practice mining activities in general; and build, install and develop any kind of infrastructure in order to execute its mining activities.

The term of this agreement expires on August 2, 2037. However, Company may terminate the agreement at any time, provided that it would be obliged to execute the corresponding Plan for Closure of Mines.

4.4 Royalties and Encumbrances 4.4.1 Debt For the purchase of Minera Corona, Dia Bras Peru S.A.C. borrowed $150 million in an agreement with Banco de Credito de Peru on May 24, 2011. All current obligations of debt service have been met and this Technical Report supports the cash flows and reporting requirements that are necessary to continue meeting these obligations.

4.4.2 Royalties and Special Tax In 2011, the Peruvian Congress passed a new Mining Law effective in 2012. Under this law, a Special Tax and Royalty is introduced which applies to the operating margin of producing mining companies. The margin rates for a given interval of EBIT are as follows:

October 19, 2012 25 Dia Bras Exploration, Inc. Property Description and Location Yauricocha Mine NI 43-101 Technical Report

Table 4-2 EBIT Margin Rates

EBIT Margin Special Mining Tax Mining Royalty Margin Rate Margin Rate 0.00% 0.00% 0.00% 0.00% 0.00% 10.00% 2.00% 1.00% 10.00% 15.00% 2.40% 1.75% 15.00% 20.00% 2.80% 2.50% 20.00% 25.00% 3.20% 3.25% 25.00% 30.00% 3.60% 4.00% 30.00% 35.00% 4.00% 4.75% 35.00% 40.00% 4.40% 5.50% 40.00% 45.00% 4.80% 6.25% 45.00% 50.00% 5.20% 7.00% 50.00% 55.00% 5.60% 7.75% 55.00% 60.00% 6.00% 8.50% 60.00% 65.00% 6.40% 9.25% 65.00% 70.00% 6.80% 10.00% 70.00% 75.00% 7.20% 10.75% 75.00% 80.00% 7.60% 11.50% 80.00% 85.00% 8.00% 12.00% 85.00% 90.00% 8.40%

The total royalty is the summation of the special mining tax and the mining royalty.

4.5 Environment Liabilities and Permitting All permits are current and there are no currently known significant factors or risks that could affect access, title, or right or ability to perform work. A Capital Provision for reclamation is planned for the end of the 5 year reserves and it was estimated to be $3.9 million.

4.5.1 Principal Permits Table 4-3 lists the principal permits held by S.M. Corona at Yauricocha. Should these permits be maintained, they should be adequate for mining operations.

October 19, 2012 26 Dia Bras Exploration, Inc. Property Description and Location Yauricocha Mine NI 43-101 Technical Report

Table 4-3 List of Principal Permits

Agency Permit No. Expiration Date Rights Granted

License for operation of one General Direction of (01) Type A (Subterranean) Directorial Security Control Services, powder keg for the storage of Resolution N° Arms, Ammunitions and September 11, 2014 explosives, located in the 3134/2009-IN- Explosives Control for Civil District of Alis, in the Yauyos 1703-2 Use – DICSCAMEC Province, in the Department of Lima License for operation of one (01) Type A (subterranean) General Direction of Directorial Powder magazine for the Security Control Services, Resolution N° storage of Blasting Arms, Ammunitions and December 14, 2014 4673/2009-IN- Accessories, located in the Explosives Control for Civil 1703-2 District of Alis, in the Yauyos Use – DICSCAMEC Province, in the Department of Lima Global Authorization for the General Direction of acquisition and use of the Directorial Security Control Services, following items: Resolution N° Arms, Ammunitions and Current (i) Fleet of safety fuse, (ii) 755-2011-IN- Explosives Control for Civil Detonating Cord, (iii) Non 1703-2 Use – DICSCAMEC electric Cord, (iv) Dynamite, (v) Quickmatch

Technical Office of the License for the use of fixed National Authority of the License N° Current nuclear gauges with Cesium Peruvian Nuclear Energy 4319.C2 137 in the Yauricocha unit Institute - IPEN

October 19, 2012 27 Dia Bras Exploration, Inc. Accessibility Climate Local Resources Infrastructure & Physiography Yauricocha Property NI 43-101 Technical Report

5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

5.1 Accessibility The principal access to the Yauricocha Mine is the main Lima – Huancayo – Yauricocha highway. The highway is paved (asphalt) for the first 420 km, along the Lima – Huancayo – Chupaca interval. From Chupaca to the Yauricocha mine the road is unpaved.

Another important access route is along the southern Pan-American Highway from Lima through Cañete to Yauricocha, through the valley of the Rio Cañete, for a distance of 370 km. The road is paved (asphalt) from Lima to Pacarán, and from Pacarán to the mine it is unpaved.

5.2 Climate The climate in the region is cool, with two well-demarcated seasons with daytime temperatures above 20 ºC, the nights are cool with temperatures below 10 ºC. Operations are carried out year round. The wet season extends from November to April, and during April and May there is broad vegetative cover. The dry season covers the remainder of the year.

During the wet season, snow and hail feed the glaciers, which subsequently feed streams that descend the mountainsides and feed the lakes below.

5.3 Local Resources Though there are closer pueblos the closest population center is Huancayo, approximately 60 km east or 90 km by paved 2 lane road. It is served by paved roads but has limited supply capability. Supplies and material for the mine are sourced out of Lima, Peru. All personnel and materials are supplied to the mine via normal highway transport. On site personnel live in camps at the mine.

5.4 Infrastructure Grid power is available at the site, and water wells are on the property. Paved roads extend to the property boundary, and internal travel is on improved gravel roads. Worker camp facilities are provided on site, with internal worker transport and transport to and from the camp provided by contractors.

5.5 Physiography The topography of the Yauricocha mining district is abrupt, typical alpine terrain. Pliocene erosion is clearly recognizable in the undulating, open fields to the northeast of the Continental Divide while to the southeast the terrain is cut by deep valleys and canyons. The extent of this erosion is evidenced by mountain peaks with an average elevation of 5,000 m amsl.

October 19, 2012 28 Dia Bras Exploration, Inc. Accessibility Climate Local Resources Infrastructure & Physiography Yauricocha Property NI 43-101 Technical Report

To the southeast of the Continental Divide the high valleys are related to the Chacra Uplift. Below 3,400 m elevation, this grand period of uplift is clearly illustrated by deep canyons that in some cases are thousands of meters deep.

Valleys above 4,000 m clearly demonstrate the effects of Pliocene glaciations, with well- developed lateral and terminal moraines, U-shaped valleys, hanging valleys and glacial lakes.

5.6 Vegetation Vegetation in the Yauricocha area is principally tropical alpine – rain tundra. The flora is varied with species of grasses, bushes, and some trees. The biological diversity is typical of Andean alpine communities.

5.7 Property Position The property contains nearly 20,000 ha completely surrounding the current operation. This appears to be adequate for all necessary access, tailings, and other infrastructure for the foreseeable future. Of the 20 km length of the property along strike approximately 4 km have been developed near the center of the property.

October 19, 2012 29 Dia Bras Exploration, Inc. History Yauricocha Property NI 43-101 Technical Report

6. HISTORY

The silver of Yauricocha was initially documented by Alexander von Humboldt in the early 1800s. In 1905, the Valladares family filed the claims of what is today the Yauricocha Mine. The Valladares family mined high grade silver ore for 22 years and in 1927, Cerro de Pasco Corporation acquired the Yauricocha claims. In 1948, Cerro de Pasco commenced mining operations at Yauricocha until the Peruvian Military Government nationalized Cerro de Pasco Corporation and Yauricocha became a production unit of State-owned Centromin Peru S.A. for 30 years. In 2002, the Yauricocha unit was privatized and purchased by Sociedad Minera Corona S.A. Dia Bras acquired 82% of the total equity of Corona in May, 2011.

Prior to the 1970’s detailed production records are unavailable. Since 1973, Yauricocha has produced 13.6 million tonnes of ore containing 63 million ounces of silver as well as 378 thousand tonnes of lead, 117 thousand tonnes of copper and nearly 618 thousand tonnes of zinc. Since 1979 Yauricocha has averaged 413,000 tonnes of production per year. The historical estimates presented below are not CIM compliant and cannot be relied upon. This estimate was not used as a basis for the current resource and/or reserve estimates, as the material has already been mined and processed.

Table 6-1 demonstrates these totals since Corona took over the operation in 2002.

Table 6-1 Exploration Advance, Mineral Inventory and Mine Production

Drilling Exploration Development Drilling (DDH) (DDH) Mine Mineral * Exploration and YEAR and Infill By Company By Production Inventory (Meters) Development (Meters) (Meters) Contractor (Tonnes) (Tonnes) (Meters) (Meters)

2002 2,726 1,160 3,886 1,887 124,377 344,630 2003 3,307 1,648 4,955 3,415 212,677 571,520 2004 1,778 2,245 4,023 2,970 233,486 1,001,350 2005 2,004 2,030 4,034 3,160 8,043 373,546 702,524 2006 788 1,998 2,786 2,999 10,195 487,909 6,371,845 2007 826 1,640 2,466 4,751 6,196 546,652 4,773,198 2008 796 1,584 2,380 5,379 13,445 690,222 4,720,606 2009 872 1,040 1,912 4,955 13,579 802,737 4,974,593 2010 454 632 1,086 4,615 3,527 837,389 5,379,526 2011 684 927 1,611 5,195 9,071 819,993 5,330,440 * Beginning of Year Balances. Mineral Inventory includes Proven and probable Reserves and Indicated Resources.

October 19, 2012 30 Dia Bras Exploration, Inc. Geological Setting and Mineralization Yauricocha Property NI 43-101 Technical Report

7. GEOLOGICAL SETTING AND MINERALIZATION

Table 7-1 shows a simplified stratigraphic column of the Yauricocha mine area with detail of the geologic period, and Figure 7-1 a general stratigraphic column:

Table 7-1 Stratigraphic Column

Quaternary Glacial Deposits Intrusives (monzonitic-granodioritic complexes) Tertiary Casapalca red beds Upper Cretaceous Celendín Formation (France Chert) Middle Cretaceous Jumasha limestone Lower Cretaceous Goyllarisquizga Formation

Figure 7-1 Yauricocha Stratigraphic Column

October 19, 2012 31 Dia Bras Exploration, Inc. Geological Setting and Mineralization Yauricocha Property NI 43-101 Technical Report

7.1 Regional Setting Most of the stratigraphy, structure, magmatism, volcanism and mineralization in Peru are spatially- and genetically-related to the tectonic evolution of the Andean Cordillera that is situated along a major convergent subduction zone where a segment of the oceanic crust, the Nazca Plate, slips beneath the overriding South American continental plate. The Andean Cordillera has a metamorphic rock basement of Proterozoic age on which Hercynian Paleozoic sedimentary rocks accumulated and were in turn deformed by plutonism and volcanism to Upper Paleozoic time. Beginning in the Late Triassic time, following Atlantic Ocean rifting, two periods of subduction along the western margins of South America resulted in the formation of the present Andes; the Mariana-type subduction from the Late Triassic to Late Cretaceous and Andean-style subduction from the Late Cretaceous to the present.

Late Triassic to late Cretaceous Mariana-type subduction resulted in an environment of extension and crustal attenuation producing an oceanic trench, island arcs, and back arc basin from west to east. The back arc basin reportedly has two basinal components, the Western Basin and Eastern Basin, which are separated by the Cusco – Puno high, probably part of the Maranon Arch. The basins are largely comprised of marine clastic and minor carbonate lithologies of the Yura and Mara Groups overlain by carbonates of the Ferrobamba Formation. The western back-arc basin, called the ‘Arequipa Basin’, is the present Western Andean Cordillera of Peru; the site of a Holocene magmatic belt that spans the Andes and was emplaced from Late Oligocene to 25 Ma.

The Western Andean Cordillera is recognized for its world-class base- and precious-metal deposits, many of which have been intermittently mined since Incan time. Most of the metal deposits in Peru are spatially and genetically associated with metal-rich hydrothermal fluids generated along magmatic belts that were emplaced along convergent plate tectonic lineaments. Furthermore, many of these primary base-metal deposits have undergone significant secondary enrichment over the last 30 Ma as a result of periodic continental uplift and leaching followed by volcanic cover preservation.

Radiometric studies have correlated the igneous host rocks and attendant hydrothermal alteration for some of the largest and richest porphyry copper deposits in the world along the Western Andean Cordillera from 6 degrees to 32 degrees south, including the Chalcobamba – Tintaya iron-gold-copper skarn and porphyry belt (30-35 Ma) in the main magmatic arc, southward through the Santa Lucia district (25-30 Ma) and into Chile. The Andahuaylas-Yauri Porphyry Copper Belt, a well-known 300 km long porphyry copper belt related to middle Eocene to early Oligocene calc-alkaline plutonism, is situated along the northeastern edge of the Western Andean Cordillera.

October 19, 2012 32 Dia Bras Exploration, Inc. Geological Setting and Mineralization Yauricocha Property NI 43-101 Technical Report

7.2 Local Geology 7.2.1 Goyllarisquizga Formation The oldest rocks exposed in the area are the lower Cretaceous Goyllarisquizga arenites. This formation is approximately 300 m thick and comprises thick gray and white arenites, locally banded with carbonaceous lutites as well as small mantos of low-quality coal beds and clay. In the vicinity of Chaucha, these arenites have near their base interbedded, red lutite. The arenites crop out in the cores of the anticlines southwest of Yauricocha, as beds dispersed along the Chacras uplift, and isolated outcrops in the Éxito zone.

7.2.2 Jumasha Formation The mid-Cretaceous Jumasha Formation consists of massive gray limestone, averages 700 m thick, and concordantly overlies the Goyllarisquizga Formation. Intercalations of carbonaceous lutites occur at its base near the contact with the arenites. These layers are succeeded by discontinuous lenses of maroon and grey limestone, occasionally with horizons of lutite and chert about 6 m thick. Also present are pseudo-breccias of probable sedimentary origin and a basaltic sill.

7.2.3 Celendín Formation The Celendín Formation concordantly overlies the Jumasha Formation and contains finely stratified silicic lutites with intercalations of recrystallized limestone of Santoniana age. The average thickness of the Yauricocha area is 400 m.

7.2.4 Casapalca Red Beds The Casapalca red beds lay concordantly on the Celendín Formation with a gradational contact. It has been assigned an age between upper Cretaceous and lower Tertiary, but because of the absence of fossils its age cannot be precisely determined. It is composed primarily of calcareous red lutites, pure limestones, and reddish arenaceous limestone. Lava flows and tuffaceous beds have been occasionally reported.

7.2.5 Intrusions Major intrusive activity occurred during the Miocene period. Radiometric K-Ar ages derived from biotite samples taken in the Yauricocha and Éxito areas yield an average age of 6.9 Ma.

The intrusives cut the sediments at a steep angle and exhibit sharp contacts, as well as a tendency to follow the regional strike and dip of the structure. The intrusions vary in size from bodies of several hundred square meters to large masses that cover several square kilometers. Small apophyses commonly occur on the margins of larger intrusions.

October 19, 2012 33 Dia Bras Exploration, Inc. Geological Setting and Mineralization Yauricocha Property NI 43-101 Technical Report

Intrusive compositions vary from granodiorite to quartz monzonite at margins with macroscopic plagioclase, orthoclase, biotite, hornblende and quartz. The plagioclases vary from orthoclase to andesine and are typically porphyritic.

7.2.6 Metamorphism All of the intrusions have produced metamorphic aureoles in the surrounding rocks. The extent, type, and grade of metamorphism vary greatly with the type of rock intruded. The rocks have been altered to quartzites, hornfelsed lutites, and recrystallized limestones.

Locally, the intrusions have produced narrow zones of skarn from of variable width. These skarn zones contain epidote, zoisite, tremolite, wollastonite, phlogopite, garnet, chlorite and diopside.

7.2.7 Structure The Andean Cordillera uplift has dominated the structural evolution of the Yauricocha area through episodes of folding, fracturing, and brecciation associated with the local structure having a general NW-SE strike principally expressed as follows:

7.2.7.1 Folds Various folds make up the principal structures of the Yauricocha area. The Purísma Concepcíon anticline and the France Chert syncline occur in the Mina Central area, while the Cachi Cachi anticline and Huamanrripa al Norte syncline and the Quimpara syncline occur immediately to the south of Lake Pumacocha, north of Mina San Valentíne.

The Purísma Concepcíon anticline, located southwest of the Yauricocha Mine in the Mina Central area, exhibits local tight folding and is well defined by a basaltic sill 17 m thick. The axial trace trends approximately N50W with a gentle SE plunge of 20°. In the axis of this anticline and towards Flanco East the basaltic sill contains occurrences of disseminated gold in horizontal, silicic breccias.

The France Chert syncline is a tight fold, also in the Mina Central area but located northeast of the mine. Its axial trace changes trend from N35W in the south to N65W in the north and has a SE40 plunge. The Yauricocha mineral deposit is found in the west flank of this fold and in banded limestones without subsidiary folding.

In the Mina Central area, the NW strike of the folded sediments was rotated about 30° clockwise horizontally. This distortion can be attributed to a basement shear fault that strikes NE-SW.

The axial trace of the Cachi-Cachi-Prometida anticline strikes approximately N80W to N70W and its flanks dip to the north (Prometida) and south (Cachi-Cachi) with a plunge to the east,

October 19, 2012 34 Dia Bras Exploration, Inc. Geological Setting and Mineralization Yauricocha Property NI 43-101 Technical Report

which control the ore deposition in the vicinity of the major North Intrusive located 2 km north of Mina Central.

The Quimpara syncline, located 1 km south of the discharge stream of Pumacocha Lake, has an axial trace that strikes N45W. Its east flank contacts the intrusive at an angle dipping 70° to 75°W. Its west flank dips about 80°E conformably with beds of dark gray limestone that are recrystallized in the vicinity of the contact. Garnets, magnetite and copper oxides occur in the same contact.

7.2.7.2 Fractures Diverse systems of fractures were developed during episodes of strong deformation.

Folding occurred before and/or contemporaneous with intrusive emplacement. Primary fractures developed during folding along with longitudinal faults parallel to the regional strike of the stratigraphy. These faults combined to form the Yauricocha Fault along the Jumasha limestone- Celendín lutite contact. The Yauricocha Fault extends a great distance from the SE of the Ipillo mine continuing to the north behind Huamanrripa hill, parallel to and along Silacocha Lake.

After the intrusions were emplaced, the strike of the folds NW of the mine was rotated by strong horizontal forces some 30°. As a result of this rotation, three sets of shears and joints were developed: NW-SE, NE-SW and E-W with dips of 50-80° NE or SW first, then 60-85° SE or NW, and finally N or S with nearly vertical dips. This set of fractures forms fault blocks that cut the dominant lithologies of the area and join with the Yauricocha Fault. The Yauricocha Fault is the most significant fault in the mining district and is a strong control on mineralization.

7.2.7.3 Contacts The contacts of the Jumasha limestone-Celendín lutite, the Jumasha limestone-intrusions, and Celendín lutite-intrusions had major influence on the development of folds, fractures and ascension of mineralizing fluids.

7.2.7.4 Breccias The breccias that occur in the Yauricocha area typically follow structural lineations and occur predominantly in the limestones associated with contacts and intersections of fractures. They form tabular and chimney-like bodies.

Tectonic breccias, forming near intrusions or contacts, constitute some of the principal receptive structures for mineralization.

Figure 7-2 shows the surface geology of the Yauricocha area.

October 19, 2012 35 Dia Bras Exploration, Inc. Geological Setting and Mineralization Yauricocha Property NI 43-101 Technical Report

Figure 7-2 Plan of Yauricocha Area Surface Geology

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7.3 Mineralization Mineralization at the Yauricocha Mine is represented by variably oxidized portions of a multiple-phase polymetallic system with at least two stages of mineralization, demonstrated by sulfide veins cutting brecciated bodies. Mineralized bodies and quartz-sulfide veins appear to be intimately related and form a very important structural-mineralogical assemblage in the Yauricocha mineral deposit. The descriptions of the veins and mineralized bodies (breccia chimneys or pipes) that occur in the vicinity of the Yauricocha Mine include the descriptions in Section 8 as well as new data from recent exploration and interpretations.

Comments herein made regarding the characteristics of the Yauricocha district apply directly to the Sociedad Minera Corona Yauricocha Mine.

The mineralized zones defined at Yauricocha are shown within the property boundary in Figure 7-3. The northern and southern developed portions of the properties are shown in Figures 7-4 and 7-5 respectively. All parts of the property with historic exploration or production activity are in the current area of operations. This area is nearly centered within the concession boundary and there is both space and potential to expand the resources and the operation both directions along the strike of the Yauricocha Fault.

October 19, 2012 37 Dia Bras Exploration, Inc. Geological Setting and Mineralization Yauricocha Property NI 43-101 Technical Report

Figure 7-3 Mineralized Zones on the Yauricocha Mine

October 19, 2012 38 Dia Bras Exploration, Inc. Geological Setting and Mineralization Yauricocha Property NI 43-101 Technical Report

7.4 Mineralized Bodies (Breccia Chimneys and Pipes) In plan view, these deposits are lenses with major axes parallel to the general strike of the strata (NW-SE) that either dip steeply to the NE or are approximately vertical. Their vertical dimensions are almost always much greater than their horizontal. There are instances where these deposits extend more than 650 m down from the surface and whose widths are 10 to 40 m, tending to be spindle-shaped at depth.

The bodies are emplaced in the Jumasha limestone and form groupings within the limestone as well as along the contact with the Celendín lutites and in contact with intrusive masses.

Some bodies are irregularly distributed, though interconnected, forming larger mineralized zones such as in the case of the Catas – Contacto and Oriental – Antacaca bodies. Other bodies occur as solitary units, forming relatively small, discrete mineralized areas, such as with the veins in the area and Cuye, Mascota, Sasacaca, Sur Medio, Contacto Occidental, Amoeba, Maritza, Carmencita, and Cuye Norte breccias.

The mineralization of these deposits is typically represented by a zoned sequence of pyrite, quartz, enargite, chalcopyrite, bornite and/or covellite in the core or central parts, with an outer portion or halo of soft masses of friable pyrite, galena, sphalerite, tetrahedrite and/or geocronite, plus or minus chalcopyrite in gangue of limestone, clay and quartz.

7.5 Veins The mineralized veins are well developed in both the intrusive and limestone units with mineralization being more abundant in the intrusive host.

Surface and underground vein exposures at the Cachi Cachi, Victoria, Central, Éxito and Ipillo mines show that veining can be grouped into three principal systems. The first system strikes N70-80W and dips 60-80° SW or NE. The second system strikes N70-80E and dips 65-80° NW, while the third system strikes generally E-W and dips north and south.

Their horizontal and vertical dimensions are relatively short, while their widths vary between 0.5 and 2.5 m.

Limestone-hosted vein mineralization consists primarily of pyrite, sphalerite and galena with some quartz and chalcopyrite. Intrusion-hosted vein mineralization consists of pyrite, quartz, enargite, galena, sphalerite, covellite, fluorite, hematite, pale zinc blende and electrum.

The deposits and veins are described below by sectors (Mina Central, Mina Cachi Cachi, Mina Éxito, Mina Ipillo and Mina Victoria).

October 19, 2012 39 Dia Bras Exploration, Inc. Geological Setting and Mineralization Yauricocha Property NI 43-101 Technical Report

7.6 Mina Central

Name Type Mineralogy (Gangue) Classification Comment A Deposit Deposit - Tabular Cp-(py) Not in table Amoeba Deposit Spl-Gal-Cp-En-Cv-(Py) Not in table Antacaca Deposit Spl-Gal-Cp-En-(Py) Polymetallic, Copper Part of the Antacaca Antacaca West Deposit Cp-En-(Py) Polymetallic Deposit Butz Deposit - Breccia Spl-Gal-Cp-En-(Py-Qtz-Fl) Polymetallic Spl-Gal-Cp-En-Bn-(Mag- Catas Deposit - Breccia Polymetallic Anomalous Au Hem-Py) Contacto Occidental Deposit Spl-Gal-(Py-Qtz-Fl) Oxide Argentiferous galena Contacto Oriental Deposit - Breccia Spl-Gal-Cp-En-(Py) Polymetallic Spl-Gal-Tet-Geo-(Py-Cal- Contacto Sur Medio Deposit - Breccia Polymetallic Argentiferous galena Rhodc-Real-Orp-Gar-Ser) Spl-Cp-Er-Tet-(Py-Mag- Vertically zoned, Cuye Deposit Copper, Polymetallic Hem) possible Au Spl-Gal-(Py-Qtz-Fl-Pyro- Cuye Norte Deposit Not in table Gyp-Jaro-Cer) Cp-En-Cv-Bn-Chalcoc-(Py- El Norte Deposit Zonation Hem) Erika Deposit - Breccia Spl-Gal-(Py-Fl) Not in table Argentiferous galena Felicidad Deposit En-(Py-Qtz) Not in table Spl-Gal-En-Bn-Tet-(Py- Gallito Deposit - Breccia Polymetallic Calc) Huamanrripa Deposit - Breccia Spl-Gal-(Py) Not in table Juliana I Deposit - Breccia Spl-Gal-(Py) Polymetallic Juliana II Deposit - Breccia Spl-Gal-Cp-En- Polymetallic Argentiferous galena Jacqueline Deposit - Not in table Katty Deposit Spl-Gal-(Py-Qtz-Fl) High grade oxide Mascota Deposit (Hem) Oxide Principal oxide body Milagrosa Deposit Spl-Gal-Cp-En-(Py) Polymetallic Argentiferous galena, extension of Catas but Olguita Deposit Spl-Gal-Cp-(Py) Not in table with different mineralogy Anomalous Au, Polymetallic, High Pozo Rico Deposit Cp-En oxidized portion of the Grade Oxide Catas sulfide deposit Sasacaca Deposit Spl-Gal-Cp-En-(Py) Not in table Violeta Deposit - Breccia Spl-Gal-Cp-(Py-Cerr-Jaro) Violeta 329 Deposit - Breccia Spl-Gal-(Py-Rhodoc) High Grade Oxide Argentiferous galena Viviana Deposit - Breccia Spl-Gal-Tet-(Py-CO3) Polymetallic Argentiferous galena, Cuye Vein Vein - Breccia Spl-Gal-(Py) Not in table partially brecciated Name Type Mineralogy (Gangue) Classification Comment Vein-like interior, Spl-Gal-(Py-Mar-Qtz-Fl- massive Juliana Vein Vein Not in table CaMnCO3) mineralization at contact Marita Vein Spl-Gal-(Py) Not in table Argentiferous galena Vein A Vein Spl-Gal-(Py) Not in table Vein C Vein “sulfides and oxides” Not in table Vein Cuye Sur Vein - Breccia Spl-Gal-En-(py) Not in table Vein D Vein Spl-Gal-Cp-(py) Not in table Vein F Vein Spl-Gal-Cp-(py) Not in table Vein G Vein - Breccia Spl-Gal-(py) Not in table Vein Mascota Vein - Breccia Spl-Gal-(py-rhodoc) Not in table

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Figure 7-4 Northern Sector of Mina Central

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Figure 7-5 Southern Sector of Mina Central

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These concessions are held 100% by Sociedad Minera Corona S.A.

7.7 Cachi-Cachi Mine Mineral deposits in the Cachi-Cachi area are located 1.5 km north of the Yauricocha Mine at an elevation of 4,600 m amsl. They are hosted by Jumasha limestone as individual bodies within the limestone along its contact with the Yauricocha intrusive (northwest border). It was discovered by a diamond drilling program done during the years 1978, 1980 and 1993. This deposit was mined by open pit method until 1986. The Manuelita and Privatizadora deposits were discovered on Level 720 and are currently being mined on Levels 465, 520, 575 and 620, which are connected by a bored raise.

In the Cachi-Cachi area, a Tertiary-Cretaceous stratigraphic sequence is exposed that comprises Jumasha limestone and France Chert lutites. These were intruded by Pliocene granodiorite and quartz monzonite porphyry intrusions. These intrusions produced defined alteration areoles (argillic, potassic and sericitic types) as well as wide skarn zones (andradite-grossularite) in contact with the limestones. The deposits are massive irregular bodies and breccias that occupy an area of 100 by 150 m; they have been identified down to Level 720 and are continuing to be defined in intermediate levels.

On Levels 410, 465, 520, 575 and 620 the deposits are found as lenticular forms within limestone preferentially recrystallized along the limestone-intrusive contact.

Mineralization consists of galena, sphalerite, massive or friable pyrite, chalcopyrite, quartz and tennantite; galena, sphalerite and enargite are the economic minerals. At the extreme southern part of the area, local zones of residual limonite and sulfides enriched in copper (covellite, bornite, native copper) occur.

Narrow veins, striking E-W and dipping S, occur in the intrusion but to unknown depths or extent. The mineralization is different than in the deposits and contains massive or friable pyrite, enargite and quartz.

Several systems of faulting and fracturing have affected the area of Cachi-Cachi, and the following are the most important:

a) Faulting and fracturing striking N-S and dipping E, and a strike of E-W with dips to the south, possibly pre-mineralization, that have controlled the shape and disposition of the deposits. b) Two systems of post-mineralization faulting, both with horizontal displacement; the first strikes N80E and dips 75S, and the second strikes N75E and dips 80S.

These concessions are held 100% by Sociedad Minera Corona S.A.

October 19, 2012 43 Dia Bras Exploration, Inc. Geological Setting and Mineralization Yauricocha Property NI 43-101 Technical Report

Table 7-2 Cachi-Cachi Mine Concessions

Name Type Mineralogy (Gangue) Classification Comment

Angelita Deposit Spl-Gal-(Py) Polymetallic Caprichosa Deposit - Breccia Spl-Gal-(Py) Not in table Fanny Deposit - Replacement Gal-(Jaro-Lim-Cerr) Polymetallic Remnant galena Privatizadora Deposit - Breccia Spl-Gal-(Py) Polymetallic Raquellita Deposit - Breccia Spl-Gal-(Py) Polymetallic Raquellita II Deposit - Breccia Spl-Gal-(Py-Bar-Chalcedony) Polymetallic

Rossy Deposit - Breccia Spl-Gal-(Py-Qtz) Not in table Carmencita Vein Vein - Breccia Spl-Gal-Cp-(Py) Conflicting; see text Dianita Vein Vein Spl-Gal-Cp-(Py) Not in table Esperanza Vein Vein Spl-Gal-(Py-Chalcedony) Not in table Tatiana Vein Spl-Gal-(Py) Not in table Elissa Deposit - Replacement Spl-Gal-(Py-Calcite-Rhodoc) Polymetallic Virginia Vein Vein Not in table

7.8 Éxito Mine This bonanza deposit is a mineralized structure (breccia) located within the granodiorite at its east side, within intrusive breccia on its west side, and within Jumasha limestone to the southwest. The bonanza body was initially discovered at 100 m depth during a diamond drilling program and later by underground workings, such as a ramp and crosscut with diamond drilling to a depth of 200 m. This deposit was exploited during 2008 to Level 670; it does not continue to depth.

Mineralization is in the form of a breccia that contains clasts of sulfides, fragments of intrusive rock and sub-rounded skarn in a sandy matrix. They exhibit post-mineralization transport. The “in-situ” mineralization had been formed in a skarn zone (endoskarn). Mineralization comprises massive ruby sphalerite and a poor dissemination of galena-chalcopyrite. The predominant gangue minerals are quartz and garnet.

Three principal directions of fracturing are present: N75E 70-75SE (Vizcachita); N20-30W 70- 80SW; and, E-W 70-75S.

The principal deposits of the Éxito mine were mined out in 2008, and the mine was closed in 2009.

These concessions are held 100% by Sociedad Minera Corona S.A.

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Table 7-3 Exito Mine Concessions

Name Type Mineralogy (Gangue) Classification Evita Deposit Deposit - Breccia Spl-Gal-(Py-Qtz-Garnet-Epi-Hem-Chl) Not in table Isabel Deposit - Breccia Spl-Gal – (Py-Qtz-Garnet) Not in table Evita Vein Vein Spl-Gal-(Py-Qtz-Garnet-Epi) Not in table Santa Isabel Vein Vein Spl-Gal-Cp-(Py-Qtz) Not in table

7.9 Ipillo Mine The Ipillo mine is located 23 km SE of the Yauricocha production facilities. The structures are mineralized with gold and grade to Pb-Zn towards the contact with the Jumasha limestone. The deposit is located in the central part of the altered and fractured Éxito granodioritic stock. It is identified as a lenticular system of veins that strike NW70-80.

Mineralization is typically of filled fractures and replacements in the form of patches and disseminations. The width of the mineralization varies between 0.5 and 2.5 m and occurs in shoots 70 to 90 m long. The mineralogy consists of sphalerite, galena and chalcopyrite with values of gold. The gangue is constituted by pyrite, quartz, hematite and carbonates.

Table 7-4 Ipillo Mine Concessions

Name Type Mineralogy (Gangue) Classification Comments Poggi Vein Spl-Gal-Cp-(Py-Qtz-hem) Not in table Hematite as specularite, anomalous Au Poggi I Vein Spl-Gal-Cp-(Py-Qtz-hem) Polymetallic Anomalous Au Ponderosa Vein Vein Spl-Gal-Cp-(Qtz, Hem) Not in table Anomalous Au Ramal Coquelet Vein Spl-Gal-Cp-(Py-Hem)

7.10 Victoria Mine The Victoria area is located in the southeast portion of the district, 450 m from the Yauricocha Mine and at an average elevation of 4,600 m amsl. All of the area is within the Yauricocha granodioritic intrusive that is elongated parallel to the regional trend. Its contacts with the surrounding rocks are concordant and at a steep angle.

One of the important structural settings that occur in the area is complex faulting. Surface mapping has identified three systems of mineralized structures, either economic or marginal. The first system is formed by veins striking N70-75E and dipping 65-70NW. The second is formed by veins striking N60-70W and dipping 65-80SW. The third is formed by a series of E- W structures that dip from NW to S.

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In outcrops of these structures, abundant quartz with residual limonite is seen that are products of oxidation and partial leaching of the sulfide minerals pyrite, galena, sphalerite, tennantite and chalcopyrite, which are also seen frequently.

Table 7-5 Victoria Mine Concessions

Name Type Mineralogy (Gangue) Classification La Grande Vein Vein Spl-Gal-En-(Py-Qtz-Rhodochrosite) Not in table Victoria 0505 Vein Vein Spl-Gal-Cp-En-Cv-Ten-(Py-Qtz-Real-Orp) In table as Veta 0505, Copper Victoria 8651-E Vein Vein Spl-Gal-Cp-En-Tet-(Py-Qtz-Hem-Rd) Not in table

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8. DEPOSIT TYPES

The ore deposits of the Yauricocha district are spatially and genetically related to the Yauricocha stock, a composite intrusive body of granodioritic to quartz monzonitic composition that has been radiometrically dated at about 7.5 million years old (see Alvarez and Noble, 1988, for primary references). The stock intrudes tightly folded beds of the Late Cretaceous Jumasha and Celendín Formations and the overlying Casapalca Formation (latest Cretaceous and Paleocene?).

The principal deposits of the Yauricocha district, located near the western margin of the Yauricocha stock, are related spatially and genetically to the main body of the stock and to narrow fingers of granodiorite that presumably connect at depth to a western extension of the stock. The deposits consist of vertically elongate pipes composed largely of pyrite and other sulfide minerals that replace limestone of the Jumasha Formation. Skarn is developed adjacent to the stock but does not host appreciable amounts of ore. The pipes typically exhibit both vertical and radial zoning and there is a pronounced district zoning, with an inner core of enargite (the principal copper mineral) giving way outward to an enargite-chalcopyrite-bornite zone, which in turn is succeeded to the west by zones characterized by sphalerite, galena, lead and silver.

Mineralization of the Yauricocha deposit is formed principally by pyrite, quartz, enargite, chalcopyrite, bornite and covellite in the core and central parts of the bodies. Loose masses of friable pyrite, galena, sphalerite and minor amounts of chalcopyrite in a gangue of limestone, clay and quartz occur in the periphery of the bodies. Also, native gold is associated with these sulfide minerals.

8.1 Principal Sulfide Minerals 8.1.1 Pyrite Generally of friable texture to porous and massive bodies; five types have been distinguished that represent five different stages of formation.

8.1.2 Marcasite Three types of marcasite have been identified, which are associated with chalcopyrite, galena and sphalerite.

8.1.3 Enargite This is the principal copper mineral in the deposit, which occurs in irregular fragments and large masses together with quartz and pyrite.

8.1.4 Chalcopyrite After enargite, chalcopyrite is the most abundant copper mineral. It occurs as replacement fragments of limestone breccia together with friable quartz and pyrite, or filling small cavities. It

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is associated with native gold and electrum. The amount of this mineral increases in the lower levels of the mine.

8.1.5 Bornite Bornite is invariably associated with chalcopyrite and to a lesser degree with enargite.

8.1.6 Covellite and Idaite These two minerals have been observed within bornite, forming as small laminar intergrowths.

8.1.7 Tetrahedrite and Tennantite Small crystals of these minerals are abundant in the periphery of the enargite bodies, as in the mineralized bodies on the outer margins of the Central and Sur Medio intrusions.

8.1.8 Galena This mineral is found disseminated and in skarnified limestone; it is always associated with chalcopyrite and sphalerite.

8.1.9 Sphalerite Sphalerite is the most abundant mineral in the Yauricocha deposit and is associated with clay, pyrite and galena, mainly in the peripheries of the mineralized bodies.

8.1.10 Geocronite (Pb 14(Sb, As)6 S 23) This mineral is found in the upper levels of the mine associated with galena, sphalerite, tetrahedrite and quartz filling fractures and cleavages in sphalerite.

8.2 Gangue Minerals 8.2.1 Quartz Quartz is the most abundant gangue mineral in the mineralized bodies.

8.2.2 Specularite and Siderite These minerals are associated with limestone and intrusive veins in the Éxito and Ipillo mines.

8.2.3 Calcite Calcite is found in veinlets associated with quartz and sphalerite.

8.2.4 Fluorite Fluorite was deposited contemporaneously with galena and sphalerite within the lead-zinc deposits.

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8.2.5 Barite Barite occurs in the periphery of the lead-zinc deposits in zones of lower temperature.

8.2.6 Magnetite This mineral is found primarily in the Cuye and Catas deposits, and rarely in Antacaca, and in deep levels (Levels 770 to 1020).

8.3 Supergene Enrichment and Oxidation Oxidation of the deposits in Yauricocha is partial to complete and extends from the surface to below Level 1020. Supergene enrichment is closely related to the distribution of oxidation. Covellite, chalcocite and digenite, of supergene origin, are found where the sulfide minerals are in contact with oxidized areas.

Residual Oxides: “In-situ” oxides include limonite, goethite, jarosite, hematite, quartz, gypsum, anglesite, kaolin, gold and silver. Residual oxides of the Mascota and Pozo Rico deposits extend from the surface to below Level 1120. In general, oxides only extend to depths of 10 to 15 m.

Transported Oxides: These oxides are completely free of quartz and contain cuprite, native copper, malachite, azurite, brocanthite, jarosite, cerussite, crisocola, and manganese oxides. These transported oxides occur along the lower portions of the chimney deposits and are found from the surface down to Level 920 where they fill karst cavities.

8.4 Controls on Mineralization Structural Control: The axial traces of the folds that cross the Yauricocha area have been rotated in a horizontal plane about 30°, and as a result of this rotation three principal systems of shearing and jointing have developed with strikes of E-W, NW-SE and NE-SW. The first system is almost vertical, while the second dips 70NE due to the influence of the strata in the direction of the shearing, while the third dips 75SE. The great majority of the mineralized bodies (chimneys, or pipes) occur in the NW-SE set. It is inferred that the bodies indicate the strike direction of the most profound and defined shear set, given that they are the deepest found in the mine. It is very possible that the positions of the bodies at depth may be controlled by the intersection of the persistent NE-SW and E-W shear sets. In plan view, the position of the bodies is parallel to those two directions of shearing and jointing. Furthermore, the two sets interact, as mentioned above, as illustrated by the pyrite banding in the mineralized bodies and the presence of some veins with their respective directions seen within the intrusive as well as the Jumasha limestone and the France Chert.

The contact of the Jumasha limestone and the France Chert is strongly influenced by the orientation and position of the Cuya and Catas bodies. This contact strikes NW to SE and dips between 85 and 70° to the NE.

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Physical-Chemical Controls: The preference for mineralization of the limestone by the intrusives is well defined, although some discontinuous deposits of the vein type also occur in the limestone and the granodiorite. All the known bodies that contain copper occur within the aureole of recrystallization of the limestone bordering the granodioritic intrusions, and bodies of Pb-Zn are only found in recrystallized limestone. The limestone is more receptive to alteration where there is increased fracturing and calcite crystals are larger. Therefore, it is not surprising that the large mineralized bodies occur within the areole of recrystallized limestone and where the rocks differ in competency, as exemplified by contacts of the limestone-chert-intrusive.

8.5 Conclusions In the Yauricocha mining district, at the end of the Miocene, near-vertical intrusions of granodiorite were emplaced in the Middle Cretaceous Jumasha limestone, and in marl and lutite of the Celendín Formation, forming a metamorphic aureole around the intrusions. The red bed lutites were bleached and calc-silicate minerals were formed. The limestones were recrystallized and developed a coarse granular texture.

Figure 8-1 NS Cross Section

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• Due to a tear fault in the basement, the NW strike of the folded sediments was rotated by strong horizontal forces 20-30° clockwise. As a result of this rotation, three principal systems of shearing and jointing were developed, with strikes of NW-SE, NE-SW, and E- W. • The systems of shearing and jointing, the areas of tectonic disturbance and recrystallization of limestone to coarse granular texture were the dominant controls on emplacement of mineralized bodies. Therefore, the principal bodies are grouped along the contacts and demonstrate a net tendency to grow in NW-SE, NE-SW and E-W directions. • Soft and friable aggregations of quartz and pyrite formed the mineralized bodies due to rapid dissolution of the limestone along fractures and joints. The limestone breccias and intrusions that were produced by the solutions that dissolved the rock show an orientation parallel with the contacts of the mineralized bodies. • The presence of abundant argillized rock is due to the action of acidic solutions on the limestone and the residual insoluble productions of the calc-silicate minerals (phlogopite and sanidine) were altered to clay. These were transported to the outer limits of the zones by the ascending mineralizing solutions and were concentrated in the upper limits of the mineralized bodies. This alteration displayed by the granodiorite and the calc-silicates serves as a guide in exploration for mineralized bodies. The economic minerals were deposited by a rapid process of “dissolution and collapse”. These minerals are: enargite, chalcopyrite, bornite, galena and sphalerite with pyrite and quartz. • Mineralogical zoning of the district is readily marked, with the core of the central part consisting of enargite located within the Jumasha limestone near the contact with the France Chert. Next to the west are rich bodies of bornite and chalcopyrite with predominance also of enargite. Further to the west occur rich bodies of lead, zinc, silver and gold. The same zoning is observed at a smaller scale inside the ore body. • The mineralization was associated with a porphyritic hydrothermal system and the temperatures of the mineralizing solutions were about 500° C which is classified as a xenothermal deposit, that is, high temperature and low pressure. • The uplift and erosion of the Andes at the end of the Pliocene exposed some of the deposits and some of them were oxidized. In many cases, oxidation is complete. Oxidation of sulfide minerals by meteoric waters produced the residual and transported oxides. The clays that surround the bodies, especially in their upper parts, have protected many oxidized bodies.

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9. EXPLORATION

Yauricocha has historically performed exploration drilling, although the work done to date has focused on expansion of the known mineralized bodies and within the immediate vicinity. Greenfield exploration has been restricted to surface mapping. Although there is potential for expansion, there is insufficient data at this time to quantify these as resources except in the Victoria and Ipillo Mines listed below. Exploration activities in 2011 focused mostly in the Victoria and Ipillo areas of the project.

9.1 Victoria Area Starting in December 2010, surface exploration work was started in the Victoria area, as well as underground sampling and drilling from the existing workings. The principle objective was to determine if the copper resources in the Cuye body extend into the Victoria area, which is located about 800 m to the SE of the Mina Central at an elevation of 4522 m amsl.

The Victoria area was explored between 1960 and 1966. The existing mine was exploited between 1969 and 1975, when it reportedly produced about 17 thousand short tons of ore containing 2.8% Cu and 3.10 oz/t-Ag. Centromin explored the vein and in 1996 abandoned the work due to low copper prices.

The veins contain enargite, tetrahedrite, chalcopyrite, pyrite, quartz, realgar, rodocrosite, and orpament in the east grading toward sphalerite, galena quartz and pyrite near the contact with the Jumash limestone along the Yauricocha fault. Five veins are recognized in the area the principal structures being the 0505 and 8651 veins.

9.2 Ipillo Area The Ipillo Mine is located at the extreme south east of Yauricocha. The access is via an unimproved 25 km road from the Mina Central. Centromin Peru developed a 750 m crosscut at 4424 m amsl elevation to discover and analyze the principal outcropping structures (Poggi, Alis, Coquelet, and Laraos veins). The most important of these is the Poggi vein.

Prior production from the Poggi vein is reported at 70,700 tonnes containing grades of 86.7 g/t Ag, 2.32% Pb, 0.52% Cu, 5.97% Zn and 1.02 g/t Au. Work at the mine was stopped in 1997. Current investigations are under way to determine if the current metal prices make the mine economically feasible.

Ipillo is covered by the granodioritic Exito stock. This igneous body underlies the Jumasha limestone to the west, and the Casapalca red beds to the east and south. The east-west compressional forces in the Andean region which produced the north-south synforms and antiformshave generated zones of sub-parallel faults. In the Ipillo area mineral is deposited as fracture filling along these multiple fault structures. In some areas these are breciated with veins, micro-veins and stockworks, sometimes surrounded by disseminated mineralization. The

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mineralization contains sphalerite, chalcopyrite, galena, hematite, siderite, quartz, pyrite and calcite.

9.3 Adrico Gold Prospect The Adrico gold prospect is an intrusion-hosted, disseminated gold prospect located 400 m to the southwest of the Yauricocha mine. A total of 17 drillholes has been completed totaling 2,327 m.

9.4 Ongoing Exploration Collar coordinates are not currently kept in a database; only the assay intercepts are stored electronically. Conversion of the entire database for the use of computerized analysis techniques is in progress.

Sampling methods and sample quality are discussed in Sections 11 and 12.

October 19, 2012 53 Dia Bras Exploration, Inc. Drilling Yauricocha Property NI 43-101 Technical Report

10. DRILLING

10.1 Drilling Equipment Sociedad Minera Corona’s Geology Department owns and operates two small hydraulic drills. The reach is 150 m and the core diameter is 3.5 cm. A third air drill has a reach of 60 m and the core diameter is 2.25 cm.

Additionally, the department owns two jackleg drills fitted with an extension bar reaching up to 25 m. These machines are utilized to establish the boundary of the deposits at intervals of 10 m between holes.

The company utilizes the services of a contractor for deeper drillholes reaching up to 200 m in length. Core diameters are HQ and NQ. Exploration (deep continuity sampling) and development (reserve and production definition) drilling conducted by Corona since 2002 is detailed in Table 10-1. Exploration drilling is confined to expansion of known mineralized bodies and has not been performed to date for discovery of new bodies.

Table 10-1 Yauricocha Exploration and Development Drilling

Development Exploration and Drilling (DDH) Drilling (DDH) Exploration YEAR and Infill Development By Company By Contractor (Meters) (Meters) (Meters) (Meters) (Meters) 2002 2,726 1,160 3,886 1,887 2003 3,307 1,648 4,955 3,415 2004 1,778 2,245 4,023 2,970 2005 2,004 2,030 4,034 3,160 8,043 2006 788 1,998 2,786 2,999 10,195 2007 826 1,640 2,466 4,751 6,196 2008 796 1,584 2,380 5,379 13,445 2009 872 1,040 1,912 4,955 13,579 2010 454 632 1,086 4,615 3,527 2011 684 927 1,611 5,195 9,071

October 19, 2012 54 Dia Bras Exploration, Inc. Sample Preparation Analyses and Security Yauricocha Property NI 43-101 Technical Report

11. SAMPLE PREPARATION, ANALYSES, AND SECURITY

The samples are placed in a plastic bag labeled with a permanent marker on the outside. A sample ticket displaying the number and bar code is inserted in the bag. The bags are tied to prevent outside contamination during their handling and transportation to the assay lab.

The samples are processed at the Sociedad Minera Corona’s lab located in the Concentrator Plant under the supervision of company personnel. A summary of the sample preparation procedure follows. The on-site laboratory is not currently independently certified.

11.1 Sample Preparation Procedures The fundamental objective of the preparation of geologic and exploration samples is to obtain a clean and representative sample with adequate size distribution for quantitative analysis. These sampling procedures are applied to samples from the underground mine, from stockpiles of ore and from ore cars all which are under the responsibility of the Geology department, along with samples from exploration.

11.1.1 Equipment and Materials Equipment used in sample preparation includes:

• 1 – Primary Jaw Crusher, Make – Denver, Jaw capacity – 5” x 6”, Output – 70%, minus ¼” • 1 – Secondary Jaw Crusher, Make – FIMA, Jaw capacity – 5” x 6”, Output –80%, minus 10 mesh • 1 – Pneumatic Pulverizer, Make – Tmandina • 2 – Sample Dryers, with termocupla and temperature regulator • 1 – ½” Stainless steel splitter, Make – Jones • Five point air nozzles • Stainless steel trays, 225x135x65 mm • Stainless steel trays, 300x240x60 mm • Plastic or impermeable cloth • 2” brushes

11.1.2 Sample Reception Samples are collected in the field by the geology staff and transported by the internal transport service from the Yauricocha Mine or Klepetko Adit and are received at the reception counter at the laboratory entrance. A log entry is made to record the number of samples being received. These samples are between 1.5 kg and 3.0 kg, are damp and received in plastic bags.

October 19, 2012 55 Dia Bras Exploration, Inc. Sample Preparation Analyses and Security Yauricocha Property NI 43-101 Technical Report

11.1.3 Procedure Prior to beginning sample prep, verify that

• The equipment is clean and free from contamination. • The crushers and pulverizers are functioning correctly. • Review the numbering of the sample bags that all bags are unique and identifiable. The procedure to reduce the sample to a pulp of 150 gm, and 85% passing 200 mesh is:

• Transfer the sample to the appropriate tray, depending on the volume of the sample, noting the tray number on the sample ticket. • Insert a blank sample (silica or quartz) in each batch. • Place in the Sample Dryer at a temperature of 115º C. • Code the sample envelopes with the information from the sampling ticket noting the sample code, the tray number, date and the quantity of samples requested on the sample ticket. • Once dry, remove and place the tray on the work table to cool. • Pass 100% of the sample through the Primary Jaw Crusher when particle sizes exceed 1”, the resulting product 70% passing ¼”. • Pass the sample through the secondary crusher, the resulting product 80% passing 10 mesh. • Clean all equipment after crushing of each sample. • Select a random sample to carry out the control of the crushing to 10 mesh, noting the weights in the log along with the sample code for the sample in question. • Empty the sample into the Jones Splitter and split to obtain an approximate 150 g sample. Clean the splitter after each sample with the air nozzle. • Put the numbered envelopes in the tray for the corresponding sample. • Then pass the sample in the ring cavity of the pneumatic pulverizer until achieving a size fraction of 85% minus 200 mesh. This is accomplished by setting the time on the pulverizer’s timer. Clean the cavities after each pulverization with the compressed air nozzle. • Transfer the pulverized sample to the impermeable sample mat, homogenize and pour into the respective coded envelope. • As a part of this process, pass a random sample through a 200 mesh screen, noting the weights in the control log. • Clean all materials and the work area thoroughly.

October 19, 2012 56 Dia Bras Exploration, Inc. Sample Preparation Analyses and Security Yauricocha Property NI 43-101 Technical Report

11.2 Control of the Samples Staff from the Yauricocha geology department collect and transport the samples to the laboratory. Control is personally maintained and both field and laboratory procedures are sound.

11.3 Analytical Procedures Core and channel samples from the mine are assayed utilizing one of two procedures. Silver, lead, zinc, and copper are assayed by atomic absorption. Gold is assayed by fire with an atomic absorption finish.

The laboratory is clean and well organized. Equipment is well maintained and supplies and reagents are store in well labeled containers. During the site visit, no samples were being processed in the lab and Gustavson did not have an opportunity to independently confirm the use of the procedures. Gustavson believes that the procedures are adequate for the mineralized bodies currently being analyzed. As exploration on nearby deposits progresses, the analytical procedures merit a detailed review.

11.4 Assay Database Two assay databases were provided to Gustavson. One contains data from each of the identified mineralized bodies. These are listed in Table 11-1. The second database contains data from the development cross cuts that penetrate the bodies.

Table 11-1 Mineralized Bodies with Drill Data

Large Deposits Small Deposits Antacaca Raquelita II Antacaca Sur Raquelita I Butz Privatizadora Catas Manuelita Mascota Elissa Rosaura Elissa Carmencita Norte Manuelita Privatizadora Manuelita Elissa Elissa Raquelita Ii Tatiana Angelita Tatiana Veta Esperanza

October 19, 2012 57 Dia Bras Exploration, Inc. Data Verification Yauricocha Mine NI 43-101 Technical Report

12. DATA VERIFICATION

12.1 Verification of the Quality Control Program Sociedad Minera Corona does not utilize the services of an independent lab for reconciliation. The company used an internal QA/QC procedure at its assay lab located in the Concentration Plant. Historically, the results have compared well with the metal contained in concentrates and further work on a formal QA/QC procedure has not been pursued. This procedure is currently under review and the updated procedure will be in place during the course of the year 2012.

The current procedure includes certified standards, blanks, and pulp duplicates. These are processed at approximately 1 per 20 samples. External labs receive approximately 1 sample for each 15 processed internally. Gustavson did not have the opportunity to fully observe the laboratory operation; however Gustavson has examined QA/QC records of certified standards for 2011 year to date. Daily average response to the copper, silver, lead and zinc standard samples are shown in Figures 12-1 through 12-4. Gustavson is of the opinion that the data are adequate for the purposes of the report and show consistently good performance.

Figure 12-1 Yauricocha Mine Daily Quality Control Results Copper

October 19, 2012 58 Dia Bras Exploration, Inc. Data Verification Yauricocha Mine NI 43-101 Technical Report

Figure 12-2 Yauricocha Mine Daily Quality Control Results Silver

Figure 12-3 Yauricocha Mine Daily Quality Control Results Lead

October 19, 2012 59 Dia Bras Exploration, Inc. Data Verification Yauricocha Mine NI 43-101 Technical Report

Figure 12-4 Yauricocha Mine Daily Quality Control Results Zinc

October 19, 2012 60 Dia Bras Exploration, Inc. Mineral Processing and Metallurgical Testing Yauricocha Property NI 43-101 Technical Report

13. MINERAL PROCESSING AND METALLURGICAL TESTING

13.1 Process Description The Chumpe Mill treats ores produced by the Yauricocha Mine using crushing, grinding and flotation. The ores are complex, carrying zinc, lead, copper, silver, and gold values. Three types of ore are treated: polymetallic (PM), containing payable silver, lead, copper and zinc; copper ore, containing payable copper and silver; and lead oxide (PbOx), containing payable silver and lead. Gold occurs in the ores and is partially recovered. Until recently, it has not been tracked in the mill. Impurity elements such as arsenic and antimony are not routinely monitored.

The three ore types are treated in two separate milling circuits which share a common crushing section. PM and copper ore ores are treated in campaigns through the polymetallic circuit, with PbOx ore treated in the lead oxide circuit. Further description of the process plant and circuit is presented in Section 17.

13.2 Metallurgical Performance Concentrate production statistics are presented in Section 17. The silver and gold data supplied for 2011 and 2012 contained inconsistencies, and turnover of plant personnel made it impossible to resolve these, thus they are not presented.

Figures 13-1, 13-2 and 13-3 show the head grades and recovery histories for silver and base metals.

14.00

12.00

10.00

8.00 Ag (PM feed) Ag (Cobre feed) 6.00 Ag (PbOx feed) Head Ag Head Ag (oz/st) 4.00

2.00

0.00 2003 2004 2005 2006 2007 2008 2009 2010 2011

Figure 13-1 Silver Head Grades by Ore Type

October 19, 2012 61 Dia Bras Exploration, Inc. Mineral Processing and Metallurgical Testing Yauricocha Property NI 43-101 Technical Report

10.00

9.00 Pb (PM feed) 8.00

7.00 (PbOx feed) 6.00 Cu (PM 5.00 feed)

4.00 Cu

Head Assay Assay Head (%) (Cobre 3.00 feed)

2.00 Zn (PM feed) 1.00

0.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Figure 13-2 Base Metal Head Grades by Ore Type

100.00

90.00 Ag (PM feed)

80.00 Ag (Cobre feed) 70.00

Ag (PbOx feed) 60.00 Pb (PM feed) 50.00 Pb (PbOx 40.00 feed) Recovery (%) Recovery Cu (PM feed) 30.00 Cu (Cobre 20.00 feed)

Zn (PM feed) 10.00

0.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Figure 13-3 Recoveries by Metal and Feed Type

October 19, 2012 62 Dia Bras Exploration, Inc. Mineral Processing and Metallurgical Testing Yauricocha Property NI 43-101 Technical Report

13.3 Forecast Metallurgical Recoveries 13.3.1 Polymetallic and Copper Ore Feed Plots relating head grades and recoveries were generated for Polymetallic (PM) and copper ore feeds. Linear regression trend lines were then calculated for each plot. The trend line equations are of the form:

Recovery (%) = (Head Grade [oz./st or %] * Slope) + Intercept

These equations can be used to estimate metallurgical recovery for ores with mineralogy similar to current and past plant feeds. While they should not be extrapolated beyond head grades used to generate the coefficients, such extrapolation turned out to be necessary for copper recovery from copper ore feed, as use of the linear equation resulted in predicted recoveries higher than any recorded for this feed. Copper estimated recoveries for this case were capped at the highest observed value. The estimated intercepts, slopes, R2 values and usable range limits for concentrates produced from PM and copper ores are listed in Table 13-1. The plots are shown in Figures 13-4 through 13-7.

Table 13-1 Metal Recovery Estimation Coefficients

Feed Lower Upper 2 Concentrate Slope Intercept R Type Limit Limit Polymetallic Silver 2.7oz./st 4.0 oz./st 6.31 35.29 0.632 Polymetallic Lead 1.8% 3.1% 4.38 68.01 0.584 Polymetallic Copper 0.5% 0.7% 84.7 -1.9 0.442 Polymetallic Zinc 4.3% 7.8% 0.98 82.34 0.195 Copper Silver 2.3oz./st 3.1oz./st 1.45 63.69 0.190 Copper Copper 1.97% 3.1% -3.45 97.94 0.693

October 19, 2012 63 Dia Bras Exploration, Inc. Mineral Processing and Metallurgical Testing Yauricocha Property NI 43-101 Technical Report

70.00

65.00 y = 6.3096x + 35.287 R² = 0.6316

60.00

55.00 Ag (PM feed)

Recovery (%) Recovery 50.00

45.00

40.00 0.00 1.00 2.00 3.00 4.00 5.00 Head Ag (oz/st)

80.00

70.00

y = 84.74x - 1.9069 R² = 0.4423 60.00

50.00 Cu (PM feed) Recovery (%) Recovery

40.00

30.00 0.00 0.20 0.40 0.60 0.80 1.00 Head Cu (%)

Figure 13-4 Ag and Cu Recoveries from Polymetallic (PM) feed

October 19, 2012 64 Dia Bras Exploration, Inc. Mineral Processing and Metallurgical Testing Yauricocha Property NI 43-101 Technical Report

86.00 y = 4.3756x + 68.006 R² = 0.5848 84.00

82.00

80.00

78.00 Pb (PM feed) 76.00 Recovery (%) Recovery

74.00

72.00

70.00 0.00 1.00 2.00 3.00 4.00 Head Pb (%)

92.00

91.00 y = 0.9796x + 82.341 R² = 0.1948 90.00

89.00

88.00

87.00 Zn (PM feed)

Recovery (%) Recovery 86.00

85.00

84.00

83.00 0.00 2.00 4.00 6.00 8.00 10.00 Head Zn (%)

Figure 13-5 Pb and Zn Recoveries from Polymetallic (PM) feed

October 19, 2012 65 Dia Bras Exploration, Inc. Mineral Processing and Metallurgical Testing Yauricocha Property NI 43-101 Technical Report

70.00

y = 1.4544x + 63.693 R² = 0.1897 68.00

66.00

Ag (Cobre feed) 64.00 Recovery (%) Recovery

62.00

60.00 0.00 1.00 2.00 3.00 4.00 Head Ag (oz/st)

100.00

y = -3.4456x + 97.943 R² = 0.6933

95.00

90.00 Cu (Cobre feed) Recovery (%) Recovery

85.00

80.00 0.00 1.00 2.00 3.00 4.00 Head Cu (%)

Figure 13-6 Ag and Cu Recoveries from Copper Ore Feed

October 19, 2012 66 Dia Bras Exploration, Inc. Mineral Processing and Metallurgical Testing Yauricocha Property NI 43-101 Technical Report

y = 0.1824x + 11.339 R² = 0.0061

Ag (PM feed;Zn Conc.) Recovery (%) 5

0 0.00 2.00 4.00 6.00 Head Ag (oz/st) Figure 13-7 Silver Recovery from PM Feed into Zinc Concentrate

13.3.1 Lead Oxide Feed The lead oxide circuit has been in operation for a comparatively short time compared to the polymetallic circuit and so has a limited performance history. During its history, lead and silver head grades have been fairly consistent, while recoveries have varied significantly, indicating that head grades are not the most important factors influencing recovery. Future results, as well as potential mineralogical, geological and operational studies, may isolate factors influencing recoveries by this circuit and make recovery predictions feasible. The average historic recoveries are 46.7% for silver and 61.2% for lead. Table 13-2 lists available grade and recovery data for the lead oxide circuit. Table 13-2 Lead Oxide Circuit Historic Performance

Recoveries Head Grades Sulphide Conc. Oxide Conc. Total Year Ag (oz/st) Pb (%) Ag (%) Pb (%) Ag (%) Pb (%) Ag (%) Pb (%)

2008 12.37 8.02 6.64 2.53 na2 na2 nc3 nc3 2009 10.46 8.13 12.46 6.92 29.5 61.0 42.0 67.9 2010 9.91 8.71 19.4 7.29 29.7 62.9 49.1 70.2 2011 NR 6.75 NR 6.37 NR 50.73 NR 57.1 20121 NR 6.58 NR 5.98 NR 43.08 NR 49.1 1 Information for 2012 includes partial data for January, February and March only. 2 Data not available. 3 Not calculated due to insufficient data. NR – Provided information not reported

October 19, 2012 67 Dia Bras Exploration, Inc. Mineral Resource Estimate Yauricocha Property NI 43-101 Technical Report

14. MINERAL RESOURCE ESTIMATE

Gustavson audited the mineral resource estimation and methodologies, and considers the work to meet industry standard practices, and are CIM and NI 43-101 compliant.

14.1 Data Used for Grade Estimation A complete set of the detailed longitudinal sections were made available from Dia Bras. These sections show the location and grade of the samples used and the size and shape of the blocks estimated. Data used for the estimate include:

• Diamond drillholes; • Underground samples in development drifts, within the stopes and cross cuts;

The bodies that have calculated resources and the plans that Gustavson has examined during their audit are listed in Table 14-1.

Table 14-1 Mineral Resource Data List

Calculations Plans Katty Ox Carmencita Mascota P. Alta Ox Mascota inferior Mascota P. Baja Ox Mascota Superior Pozo Rico Ox Katty Pozo Rico C. Occidental Rosaura Cu Violeta Rosaura Cuye Violeta 329 Ox Catas Antacaca A-10 Antacaca Sur Antacaca Sur Cu Antacaca Antacaca Sur C. Sur Medio II Antacaca W C. Oriental Butz Pozo Rico C. Occidental Ox Butz C. Oriental Ox Juliana II C. Oriental Antacaca W C.S.M. II Catas 3 Sur C.S.M. Sur Medio Carmencita Ox Sur Medio Sur Medio II Catas 3 Sur Juliana II Catas Cu Juliana I Catas Viviana Cuye Cu Gallito Gallito Privatizadora Juliana I - II Manuelita N 820 - 770 Viviana Manuelita

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Calculations Plans Angelita Raquelita I Carmencita Norte Raquelita II N 670-620-575 Elisa Elissa N 670 - 720 Manuelita Elissa - N 620 - 575 Privatizadora Elissa Raquelita I Tatiana Raquelita II Carmencita Norte Tatiana Contacto Veta Esperanza Tatiana Angelita Veta Esperanza Tatiana Contacto Viviana Antacaca A-10

14.2 Density The specific gravity is obtained by collecting representative samples weighing 10 kg. each pertaining to the various ore types. The calculations are made at the onsite laboratory.

The following lists the average S.G. by ore type:

• Polymetalic ores: 3.56 tonne/m3 • Copper ores: 3.84 tonne/m3 • Oxide ores: 3.20 tonne/m3 • Oxide ores with high Pb content: 3.35 tonne/m3

14.3 Method Used in Mineral Resource Estimation 14.3.1 Volume Estimation To estimate the volume of the level, the Yauricocha geologist determines the boundaries of the orebodies in plan view and section utilizing exploration and development drilling; as well as geologic mapping data. These boundaries are projected onto two known mining levels and contoured. Orebody boundaries are projected to the closest recognized contacts, generally mine levels.

For the calculation of the resource volume, the projection height is defined in terms of floors (pisos). A piso at Yauricocha is a vertical distance equal to 2.13m. This was based on the length of the mining timbers available when the mine was initially developed.

For orebodies extending beyond two recognized contacts, two different rules apply:

For orebodies whose projected boundaries tend to decrease in size upward or downwards relative to the known contact, the rule is to extend the projected boundaries in the same proportion to the boundaries between the two recognized contacts.

October 19, 2012 69 Dia Bras Exploration, Inc. Mineral Resource Estimate Yauricocha Property NI 43-101 Technical Report

Body on Level A

Developed Proven or Mined Mining Zone Ore Body on Level B

5 Pisos

Limits of Proven and Probable Resource 5 Pisos

Figure 14-1 Projection of Mineralized Body Limits Below Decreasing Level Limits

For orebodies whose projected boundaries tend to increase upward or downwards relative to the two known contacts, the rule is to clip the projected boundaries utilizing the projection on the known contacts as clipping surface. This leads to a conservative estimate of the resource volume.

Body on Level A

Developed ProvenMineral or Mined Mining Zone OreProbado ó Body on Level B

5 Pisos Limits of Proven and Probable Resource 5 Pisos

Figure 14-2 Projection of Mineralized Body Limits Below Increasing Level Limits

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14.3.2 Grade Estimation In each particular mineralized zone, all assay data, consisting of drift, sublevel, stope, raises, and exploration drilling samples, are utilized in the calculation of grade. The statistical software MINITAB is utilized in the analysis of the grades. The erratic grades are defined as those that fall outside the 2 standard deviation range of the median of the samples. The erratic grades are corrected by averaging the erratic value with the value of the four adjacent samples located at both ends of the erratic value.

The grades thus calculated have not been further adjusted by the Geology Department. This task is the responsibility of the Mine and Engineering Departments at Yauricocha.

The grades are assigned within the volume defined by the Yauricocha geologists, to provide the average grade of the block whose size is determined by the measured and indicated parameters. The resulting average grade is adjusted for dilution and further adjusted by reconciliation with Plant data from the previous two years.

14.3.3 Dilution From historical information, the dilution correction depends on the mining method, presence of water and geomechanical factors which are summarized in Table 14-2.

Table 14-2 Dilution Correction

Method Description % Dil. Observations SLCC Conventional Sub Level Caving 15 SLCM1 Mechanized Sub Level Caving – No Water Present 20 Cuye, Mascota Deposits SLCM2 Mechanized Sub Level Caving – Some Water Present 20 Catas Deposit SLCM3 Mechanized Sub Level Caving –Water present 25 Antacaca, Rosaura, Antac. Sur Deposits CRAC Conventional Ascending Cut and Fill 10 CRAM1 Mechanized Ascending Cut and Fill – No Pillars 10 CRAM2 Mechanized Ascending Cut and Fill –Pillars 10 SQ Square Set 10

14.3.4 Grade Correction Factors Mine to Mill In addition to the penalty for dilution, there is a second reduction factor for each metal based on a statistical evaluation of mine production grades versus grades at the concentrator for the past two years. These factors are presented in Table 14-3.

Table 14-3 Grade Adjustment for Mine-Mill Reconciliation

Polymetallic Bodies Copper Bodies Oxide Bodies Ag - 8 % Ag - 6 % Ag - 10 % Pb - 6 % Pb - 0 % Pb - 10 % Cu - 10 % Cu - 6 % Cu - 5 % Zn - 8 % Zn - 0 % Zn - 5 %

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14.4 Mineral Resource Estimation The effective date of this resource estimate is January 1, 2012. This average cut-off grade of 83 gpt expressed in terms of silver equivalent grade (AgEq) at an average silver price of 26.28 $/oz and average metallurgical recovery for silver of 70%. Mineral Resources are not Mineral Reserves and do not demonstrate economic viability. There is no certainty that all or any part of the Mineral Resource will be converted to Mineral Reserves. The quantity and grade or quality is an estimate and is rounded to reflect the fact that it is an approximation.

Mineral resources from the Ipillo and Victoria Mines are conditional to negotiations with the local community and permit from the authority. Other than that, Gustavson knows of no other existing environmental, permitting, legal, socio-economic, marketing, political, or other factors that might materially affect the mineral resource estimate.

AgEq= (Ag *Pag* Rag/31.1035)+(Pb*Ppb*Rpb*22.05)+(Cu*Pcu*Rcu*22.05)+(Zn*Pzn*Rzn*22.05) (Pag* Rag) Where the symbols represent

Table 14-4 Silver Equivalent Calculation Values

Grade Price Recovery Metal Symbol Price Units Symbol Symbol

Silver Ag g/t 26.28 $/tOz Pag Rag

Copper Cu % 3.491 $/lb Ppb Rpb

Lead Pb % 0.9988 $/lb Pcu Rcu

Zinc Zn % 0.9531 $/lb Pzn Rzn

Copper Lead Lead Recovery Polymetallics Bodies Oxides Sulfides

Rag 65.50% 29.50% 12.50% 66.10%

Rpb 61.72% 58.09% 6.85% 32.80%

Rcu 90.09% 11.44% 20.50% 55.92%

Rzn 85.95% 6.71% 11.34% 87.92%

Quality and grade are estimates and are rounded to reflect the fact that the resource estimate is an approximation.

Mineral resources are not mineral reserves and do not demonstrate economic viability. There is no certainty that all or any part of the mineral resource will be converted to mineral reserves.

October 19, 2012 72 Dia Bras Exploration Mineral Resource Estimate Yauricocha Property NI 43-101 Technical Report

Table 14-5 Measured Resources

MEASURED RESOURCES METAL CONTENT ORE TYPES Tonnes (t) AgEq (gpt) Ag(gpt) Pb(%) Cu(%) Zn(%) Au(gpt) Ag(kg) Ag(oz*106) Pb(t) Cu(t) Zn(t) Au(g) Polymetallic Ores 1,026,840 374.66 85.02 1.86 0.70 4.33 0.47 87,302 2.807 19,099 7,188 44,462 478,487 Copper Ores 117,130 376.97 86.29 0.38 2.08 1.21 0.40 10,107 0.325 445 2,436 1,417 46,852 Oxide Ores 475,560 776.66 323.11 8.23 0.23 0.98 2.36 153,658 4.940 39,139 1,094 4,660 1,122,322 TOTALS 1,619,530 492.87 155.02 3.62 0.66 3.12 1.02 251,067 8.072 58,683 10,718 50,540 1,647,661

Table 14-6 Indicated Resources

INDICATED RESOURCES METAL CONTENT ORE TYPES Tonnes (t) AgEq (gpt) Ag(gpt) Pb(%) Cu(%) Zn(%) Au(gpt) Ag(kg) Ag(oz*106) Pb(t) Cu(t) Zn(t) Au(g) Polymetallic Ores 1,717,320 261.37 46.16 0.97 0.61 2.87 0.55 79,278 2.549 16,605 10,442 49,334 950,994 Copper Ores 296,180 382.44 66.15 0.34 2.08 0.83 0.99 19,592 0.630 1,007 6,154 2,463 292,083 Oxide Ores 489,860 758.79 318.53 9.23 0.23 0.46 1.95 156,035 5.017 45,214 1,105 2,253 955,227 Copper Oxide Ores 58,500 468.57 19.25 0.54 3.19 2.49 0.40 1,126 0.036 314 1,866 1,454 23,384 TOTALS 2,561,860 375.21 99.94 2.46 0.76 2.17 0.87 256,031 8.231 63,139 19,566 55,504 2,221,688

Table 14-7 Measured and Indicated Resources

MEASURED + INDICATED RESOURCES METAL CONTENT ORE TYPES Tonnes (t) AgEq (gpt) Ag(gpt) Pb(%) Cu(%) Zn(%) Au(gpt) Ag(kg) Ag(oz*106) Pb(t) Cu(t) Zn(t) Au(g) Polymetallic Ores 2,744,160 303.76 60.70 1.30 0.64 3.42 0.52 166,580 5.356 35,704 17,629 93,796 1,429,482 Copper Ores 413,310 380.89 71.86 0.35 2.08 0.94 0.82 29,699 0.955 1,452 8,591 3,880 338,935 Oxide Ores 965,420 767.59 320.79 8.74 0.23 0.72 2.15 309,693 9.957 84,353 2,198 6,914 2,077,549 Copper Oxide Ores 58,500 468.57 19.25 0.54 3.19 2.49 0.40 1,126 0.036 314 1,866 1,454 23,384 TOTALS 4,181,390 420.78 121.28 2.91 0.72 2.54 0.93 507,098 16.303 121,822 30,284 106,044 3,869,349

Table 14-8 Inferred Resources

INFERRED RESOURCES METAL CONTENT ORE TYPES Tonnes (t) AgEq (gpt) Ag(gpt) Pb(%) Cu(%) Zn(%) Au(gpt) Ag(kg) Ag(oz*106) Pb(t) Cu(t) Zn(t) Au(g) Polymetallic Ores 444,740 302.92 64.91 1.96 0.44 3.83 0.28 28,868 0.928 8,702 1,937 17,047 126,152 Copper Ores 624,880 231.02 27.40 0.10 1.46 0.32 0.59 17,122 0.550 640 9,126 2,013 369,336 Oxide Ores 204,710 698.43 288.33 9.17 0.17 0.11 1.77 59,024 1.898 18,778 342 233 361,927 High Grade Gold Ores 520,000 142.05 0.34 0.00 0.00 0.00 2.16 177 0.006 0 0 0 1,123,200 (Adrico) TOTALS 1,794,330 276.38 58.62 1.57 0.64 1.08 1.10 105,191 3.382 28,119 11,405 19,294 1,980,615

October 19, 2012 73 Dia Bras Exploration Mineral Reserve Estimate Yauricocha Property NI 43-101 Technical Report

15. MINERAL RESERVE ESTIMATE

15.1 Reserve Classification The mineral reserve is the economically demonstrated minable portion of the mineral resource and follows the same polygonal estimations as the resource. Yauricocha has defined the proven reserve as the measured and indicated resources limited by mine recovery as determined by mining method and a fixed cut-off determined by the sum total of the value of the contained metals.

The Proven Reserve volume is defined by the horizontal projection at the known contact and a vertical extension of 5 floors (10.665 m) up and down in the case of irregular geometry and 8 floors (16.00 m) up and down applicable to the larger orebodies with more regular geometry.

The Probable Reserve volume is defined by the horizontal projection at the boundaries of the Measured block. The vertical extension is defined in a similar manner as in the Measured Resources.

15.2 Tonnage Factor - Mine Recovery Mine recovery factor is a function of the mining method as per the following table

Table 15-1 Mine Recovery Factory

Method Description % Rec. Observations SLCC Conventional Sub Level Caving 90 SLCM1 Mechanized Sub Level Caving – No Water Present 90 Cuye, Mascota Deposits SLCM2 Mechanized Sub Level Caving – Some Water Present 80 Catas Deposit SLCM3 Mechanized Sub Level Caving –Water present 70 Antacaca, Rosaura, Antac. Sur Deposits CRAC Conventional Ascending Cut and Fill * CRAM1 Mechanized Ascending Cut and Fill – No Pillars * CRAM2 Mechanized Ascending Cut and Fill –Pillars * SQ Square Set * * These depend on the pillars left

15.3 Cut-off Evaluation Cut-Off is the limit where it is possible to mine a mineral deposit economically. The cut-off considers the mining cost, processing costs, administration costs, and price of metals. The cut- off is calculated for each ore type and used individually for production. For purposes of corporate reporting, cut-offs are weight averaged to achieve a global number for all resources and reserves. The following table summarized the weighted average of the cut-offs given the percentage production of each mining method.

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Table 15-2 Cut off Weight Average

Cut-off Mining Mining ADM. Total % Prod. Abbrev. Plant AgEq Direct Indirect Lima US$/TM Total g/t SLCC 19.2 13.0 9.2 8.1 49.50 8 83.69 SLCM1 13.4 13.0 9.2 8.1 43.68 45 73.85 SLCM2 15.1 13.0 9.2 8.1 45.36 20 76.69 SLCM3 16.8 13.0 9.2 8.1 47.04 15 79.53 CRAC 48.9 13.0 9.2 8.1 79.19 6 133.89 CRAM1 26.4 13.0 9.2 8.1 56.69 2 95.85 CRAM2 27.8 13.0 9.2 8.1 58.01 2 98.08 SQ 59.3 13.0 9.2 8.1 89.55 2 151.41 49 100 82.85

Costs do not consider depreciation.

Where:

Table 15-3 Mining Method Abbreviations

Abbreviation Description

SLCC Conventional Sub Level Caving SLCM1 Mechanized Sub Level Caving w/o water SLCM2 Mechanized Sub Level Caving w. some water SLCM3 Mechanized Sub Level Caving w. water CRAC Conventional Overhand Cut & Fill CRAM1 Mechanized Overhand Cut & Fill w/o Pillars CRAM2 Mechanized Overhand Cut & Fill w. Pillars SQ Cut & Fill with Square Set

This average cut-off grade of 83 gpt expressed in terms of silver equivalent grade(AgEq) at an average silver price of 26.28 $/oz and average metallurgical recovery for silver of 70%. tonne

15.4 Mineral Reserves Estimation The mineral reserve estimates for the January 1 2012 are presented in Tables 15-4, 15-5 and 15- 6.

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Table 15-4 Yauricocha Proven Mineral Reserves

PROVEN RESERVES ZONE Tonnes (t) AgEq (gpt) Ag(gpt) Pb(%) Cu(%) Zn(%) Au(gpt) CACHI CACHI & MINA 1,013,350 534.04 189.40 4.46 0.52 2.40 1.29 CENTRAL Polymetallic Ores 517,350 353.69 87.40 1.83 0.64 3.98 0.38 Copper Ores 48,610 328.86 73.80 0.18 1.96 0.62 0.41 Oxide - Mascota Lower Levels 428,730 755.77 317.00 7.75 0.23 0.66 2.50 High Grade Oxides 18,660 974.27 385.40 13.04 0.23 3.41 1.12 MINA IPILLO (Polymetallic) 0

MINA VICTORIA (Copper Ore) 0

TOTALS 1,013,350 534.04 189.40 4.46 0.52 2.40 1.29

Table 15-5 Yauricocha Probable Mineral Reserves

PROBABLE RESERVES ZONE Tonnes (t) AgEq (gpt) Ag(gpt) Pb(%) Cu(%) Zn(%) Au(gpt) CACHI CACHI & MINA CENTRAL 3,024,310 373.24 97.10 2.33 0.73 2.60 0.80 Polymetallic Ores 2,295,920 287.29 52.00 1.10 0.68 3.21 0.53 Copper Ores 254,970 379.80 63.90 0.22 2.06 0.86 1.05 Oxide - Mascota Lower Levels 437,440 774.22 332.20 9.29 0.24 0.17 2.06 High Grade Oxides 35,980 935.67 348.00 10.62 0.24 6.07 0.96 MINA IPILLO (Polymetallic) 65,830 503.88 119.50 1.14 1.06 5.45 1.15 MINA VICTORIA (Copper Ore) 59,450 367.79 80.60 0.83 1.98 0.80 0.49

TOTALS 3,149,590 375.86 97.20 2.27 0.76 2.63 0.80

Table 15-6 Yauricocha Proven + Probable Mineral Reserves

TOTAL PROVEN + PROBABLE RESERVES ZONE Tonnes (t) AgEq (gpt) Ag(gpt) Pb(%) Cu(%) Zn(%) Au(gpt) CACHI CACHI & MINA CENTRAL 4,037,660 413.79 120.20 2.86 0.67 2.55 0.93 Polymetallic Ores 2,813,270 299.84 58.50 1.24 0.67 3.35 0.51 Copper Ores 303,580 371.25 65.50 0.21 2.04 0.82 0.95 Oxide - Mascota Lower Levels 866,170 765.02 324.70 8.53 0.23 0.42 2.28 High Grade Oxides 54,640 949.65 360.80 11.45 0.24 5.16 1.02 MINA IPILLO (Polymetallic) 65,830 503.88 119.50 1.14 1.06 5.45 1.15 MINA VICTORIA (Copper Ore) 59,450 367.79 80.60 0.83 1.98 0.80 0.49

TOTALS 4,162,940 414.56 119.70 2.81 0.70 2.57 0.92

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AgEq= (Ag *Pag* Rag/31.1035)+(Pb*Ppb*Rpb*22.05)+(Cu*Pcu*Rcu*22.05)+(Zn*Pzn*Rzn*22.05) (Pag* Rag) Where the symbols represent

Table 15-7 Silver Equivalent Calculation Values

Grade Price Recovery Metal Symbol Price Units Symbol Symbol

Silver Ag g/t 26.28 $/tOz Pag Rag

Copper Cu % 3.491 $/lb Ppb Rpb

Lead Pb % 0.9988 $/lb Pcu Rcu

Zinc Zn % 0.9531 $/lb Pzn Rzn

Copper Lead Lead Recovery Polymetallics Bodies Oxides Sulfides

Rag 65.50% 29.50% 12.50% 66.10%

Rpb 61.72% 58.09% 6.85% 32.80%

Rcu 90.09% 11.44% 20.50% 55.92%

Rzn 85.95% 6.71% 11.34% 87.92%

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16. MINING METHODS

16.1 Mining Operations at Yauricocha Mining at Yauricocha is accomplished by various extraction methods, principally sublevel caving and overhand cut and fill stoping. The larger mineralized bodies are both thicker (10-20 m) and longer along strike and down dip and the ore minerals are held in semi consolidated rocks which ravel easily with minor provocation by blasting. The smaller bodies are also in poor rock, however can be of quite high metal grades, averaging over 10 oz/tonne silver and 10% lead. During cut and fill stoping the mine uses timber in square sets to maintain the level open for safe access (mostly through breasting) and then fills the lower level after mining the upper level.

Major items of mining equipment are shown in Table 16-1.

Table 16-1 Major Mine Equipment

Mining Equipment Units Jumbos 4 Scoop Trams 15 Mine Trucks 2 Locomotives 9 Mine Cars 11 Skips 5 Compressors 5 Front End Loaders 2 Backhoe 1 Total Mining Equipment 53

Approximately 93% of the ore and waste material is extracted through the Klepetko Tunnel located at Level 720. The tunnel has a section of 3 m x 3 m, is 4 km long and is equipped with 20 tonne trolley locomotive hauling ore cars of 110 to 160 ft3 capacity.

Mine ventilation flows through Level 300, the Klepetko Tunnel and the Central and Mascota shafts. Ground support is accomplished by rock bolts, mesh, square sets and steel arch support. Two shafts are in service at the Yauricocha Mine, namely Pique Central and Pique Mascota. The Pique Central services Levels 850 to 690, has a depth of 690 m and a hoisting capacity of 74 tonnes/hr for ore and 67 tonnes/hr for waste. The Mascota shaft services Levels 900 to 680, its depth is 720 m and has a hoisting capacity of 135 tonnes/hr for ore and 110 tonnes/hr for waste. The average hoisting cost is $0.77/tonne.

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New access is being built for the deeper lead oxide, copper and polymetallic orebodies. The new access will serve the Mascota, Cuye, Catas, Antacaca, Rosaura and Antacaca Sur orebodies in the Mina Central.

Given the depth of current production below the surface, development drilling to convert the mineral resource to a minable reserve is performed on an ongoing basis from underground workings.

Because the potential of the orebodies is at depth, the company is planning the sinking of a hoist raise to hoist ore from deeper levels to the 720 haulage level.

The Mining Unit at Yauricocha is organized in the following departments: Operations, General Mine Services, Maintenance and Safety. The Engineering Department provides technical support to the operation.

Figure 16-1 shows the general mining process.

Figure 16-1 Yauricocha General Mining Flowsheet

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16.2 Geotechnical Characteristics The Catas, Antacaca, and Cuye mineralized structures are controlled by a shear zone running NW-SE, parallel to the alignment of the Yauricocha Regional Fault, which is the predominant structure running along the contact between the limestone pertaining to the Jumasha formation and the shale pertaining to the Celendil (France Chert) Formation.

There are a number of folds in the vicinity of the Mina Central, among them the Purisima Concepcion Anticline and the France Chert Syncline, both trending N-W and with a plunge varying from 20° to 40° SE.

These folds produced longitudinal faults parallel to the predominant trend of the regional structure. Horizontal stresses following the placement of the intrusive body resulted in a shift of approximately 30° in the orientation of the sediments. As a result shear zones and fractures developed along the NW-SE trend but with a steeper plunge of 80°. This set of fractures forms a stockwork across the different lithologic domains and controls the position of the mineralized structures.

The lithologic contacts between the limestones of the Jumasha Formation, the shale of the Celendin Formation and intrusive bodies are the most important and consistent feature in the ensuing folding, fracturing and placement of the mineralized solutions.

The breccias also follow the predominant orientation, are tabular in geometry and are present mostly in the limestones. These breccias constitute the main repository of the mineralized solutions at the Yauricocha Mine.

The Yauricocha Mine consists of four mineralized structures hosting massive sulphides and oxidized minerals.

The Cuye deposit is a lenticular body of limestone placed between the intrusive stock and the interbedded shale of the Celendin Formation. It has been identified from surface down to Level 920.

The Catas deposit is also a lenticular body deposited between the shale of the Celendin Formation (hanging wall) and limestone of the Jumasha Formation (footwall). Its largest dimensions occur when its elongated axis is vertical. It has been identified from surface down to the exploration Levels 920-970.

The Antacaca deposit is bound by the intrusive (hanging wall) and the limestone of the Jumasha (footwall). This structure presents the largest concentration of groundwater seepage. It has been identified from surface down to the exploration Levels 920-970

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The Mascota orebody occurs mostly in the Jumasha limestones; in some exploration levels the contact with intrusive represents the hanging wall. The Mascota deposit has a E-W orientation; its length is approximately 90 m and its average thickness is 20 m. It has been identified from surface down to Level 920.

16.3 Geomechanical Characteristics A geomechanical characterization of the country and mineralized rocks following the Rock Mass Rating (RMR) resulted in 5 classes. The evaluation of different rock types and deposits was based on observations made at the surface and at the excavations located in the mine Levels 670, 720 and 770. The observations on the country rock were limited to the areas not affected by the sublevel caving method in order to rank its condition relative to its proximity to the mineralized structures. The results are summarized below:

Table 16-2 Geomechanical Units

RMR Stratigraphic Unit Lithologic Unit Rock Type Values Intrusive Stock Monzonite 65 Rock Type II - GOOD

Jumasha Formation Limestone 55 Rock Type III - AVERAGE

Celendín Formation Silicified Shale 28 Rock Type IV - POOR

Orebody Sulphides- Oxides 8 - 12 Rock Type V – VERY POOR

16.4 Excavation Design Parameters The results of the geomechanical characterization process were utilized to derive the following parameters to be utilized in the design of underground excavations:

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Table 16-3 Excavation Design Parameters by Geomechanic Units

Time Maximum Geotechnical RMR Self Permissable Comments Unit Avg Support Excavation Excavation dimensions not to be UNIT I 4m x 4m x 4m exceeded due to brittleness in the 65 1 Month INTRUSIVE (H) intrusive, shear zones and rockbursts in the vicinity of the Yauricocha fault Considered the best unit for permanent UNIT II 10m x 10m x workings, major excavations, tunnel and 55 5 Days LIMESTONE 6m (H) civil structures, at least 100 meters away from orebodies. Recommended only for temporary UNIT III workings as part of Sublevel Caving BRECCIA - 28 1 Hour 3m (a) x 3m (h) Method; Mechanical support is required SHALE for permanent structures Recommended only for temporary UNIT IV workings as part of Sublevel Caving Immediate SULPHIDES AND 8 3m (a) x 3m (h) Method; not recommended for Collapse OXIDES permanent or civil structures due to high stress concentrations

In an effort to put the results of the geomechanical characterization into practice at the Yauricocha Mine, a modified version of the RMR analysis was conducted in 2007 this time utilizing the Geological Strength Index (GSI), which is defined in the following equation:

GSI = RMR’89 -5

The geomechanical units listed in Table 16-3 were related to ground conditions to facilitate the identification of potential hazards as well as to provide design and ground support guidelines for the production crews.

Two field conditions were defined to correlate the geomechanical units to actual field observations:

• Structure condition determined by the number of fractures per linear meter • Strength of the rock as measured by a scaling bar or rock pick • The modified geotechnical units are as follows: • Geomechanical Unit I; Lightly Fractured Rock; 2-6 fractures per meter • Geomechanical Unit II: Moderately Fractured Rock; 6 to 12 fractures per meter • Geomechanical Unit III: Very Fractured Rock; 12 to 20 fractures per meter • Geomechanical Unit IV: Highly Fractured or Crushed Rock; more than 20 fractures per meter

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16.5 Production Plan The mine production plan was developed by Yauricocha engineers and checked by Gustavson. As stated in the previous section, the production plan for minable material includes 100% of Proven and Probable Reserves, and Gustavson is of the opinion that this is appropriate for an underground mine with significant operating history.

As an ongoing producer, Yauricocha has maintained good records especially during the tenure of Sociedad Minera Corona.

In 2011, the total ore production at the Yauricocha Mining Unit was 819,993 tonnes, averaging 68,333 tonnes per month and 2,278 tonnes per day.

Of the total ore production, 81% was mined utilizing the mechanized sub-level caving method, 6% utilizing the conventional sub-level caving, 10% by means of ascending cut and fill with waste rock backfill and 3% with conventional square sets. This is summarized in Table 16-4.

Table 16-4 Monthly Production by Mining Method

Production Subtotal Total Mining Method Mechanization Tonnes/day % % Conventional 5,406 7.9 Overhand Cut and Fill 10 Mechanized 1,423 2.1 Conventional 4,317 6.3 Sub Level Caving 86.8 Mechanized 55,062 80.5 Square Set Conventional 2,125 3.2 3.2 Total 68,333 100 100

The mine plan includes 804,000 tonnes/yr of total ore divided between polymetallic, copper and oxide ores in the first year with annual tonnages increasing and moving more towards the polymetallic ores.

Table 16-5 details the production plan by mining zone, ore type and deposit type.

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Table 16-5 Mine Production Plan by Ore Type

2012 2013 2014 2015 2016 Total

Polymetallic Ores (tonnes) 550,390 615,000 541,170 674,880 497,660 2,879,100 Ag(oz/t) 2.67 2.14 1.62 1.15 1.19 1.75 Ag(g/t) 91.51 73.28 55.61 39.55 40.75 59.91 Pb(%) 1.95 1.39 1.30 0.79 0.78 1.23 Cu(%) 0.59 0.81 0.68 0.58 0.74 0.68 Zn(%) 4.27 3.78 3.66 2.50 2.89 3.40 Au(g/t) 0.37 0.57 0.54 0.61 0.46 0.52 Copper Ores (tonnes) 48,610 7,500 208,830 82,140 15,950 363,030 Ag(oz/t) 2.15 2.35 1.97 1.82 2.35 1.98 Ag(g/t) 73.79 80.64 67.44 62.35 80.64 67.99 Pb(%) 0.18 0.83 0.27 0.42 0.83 0.33 Cu(%) 1.96 1.98 2.16 1.76 1.98 2.03 Zn(%) 0.62 0.80 0.83 0.82 0.80 0.80 Au(g/t) 0.41 0.49 1.00 1.05 0.49 0.90 Oxide Ores (tonnes) 181,000 181,170 168,000 168,000 168,000 866,170 Ag(oz/t) 8.23 9.21 11.29 8.81 9.94 9.47 Ag(g/t) 282.14 315.63 386.92 301.88 340.84 324.68 Pb(%) 5.90 8.84 8.83 8.40 10.86 8.53 Cu(%) 0.20 0.23 0.30 0.23 0.20 0.23 Zn(%) 0.38 1.01 0.34 0.17 0.14 0.42 Au(g/t) 2.94 2.20 2.05 1.99 2.16 2.28 High Grade Oxide (tonnes) 24,000 22,830 0 7,810 0 54,640 Ag(oz/t) 10.83 11.29 7.36 10.52 Ag(g/t) 371.17 386.95 252.16 360.76 Pb(%) 12.59 12.61 4.56 11.45 Cu(%) 0.23 0.24 0.26 0.24 Zn(%) 3.25 4.59 12.71 5.16 Au(g/t) 1.14 1.06 0.54 1.02 Grand Total (tonnes): 804,000 826,500 918,000 932,830 681,610 4,162,940 Ag(oz/t) 4.13 3.94 3.47 2.64 3.37 3.49 Ag(g/t) 141.70 135.13 118.93 90.58 115.65 119.66 Pb(%) 3.05 3.33 2.44 2.16 3.27 2.81 Cu(%) 0.58 0.68 0.95 0.62 0.63 0.70 Zn(%) 3.14 3.17 2.41 2.02 2.16 2.57 Au(g/t) 0.97 0.94 0.92 0.90 0.88 0.92 Metal Content Ag (kg) 113,928 111,686 109,180 84,496 78,828 498,118 Ag(oz) 3,662,782 3,590,700 3,510,139 2,716,534 2,534,334 16,014,488 Pb(lbs) 54,117,505 60,599,506 49,475,475 44,406,734 49,093,074 257,692,294 Cu(lbs) 10,204,625 12,344,414 19,238,337 12,765,922 9,527,182 64,080,479 Zn(lbs) 55,706,285 57,776,060 48,781,284 41,463,864 32,455,951 236,183,444 Au(g) 783,548 776,829 844,533 835,882 600,123 3,840,914 Au(oz) 25,191 24,975 27,152 26,874 19,294 123,485

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16.6 Development Schedule Table 16-6 shows the schedule for mine development work during 2012 through 2016. This will allow preparation for mining as well as underground access for development and infill drilling. All costs are grouped into mine operating cost.

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Table 16-6 Mine Development Schedule for Production Preparation and Exploration

PROGRAMMED PROJECTED PROJECTED PROJECTED PROJECTED Advance 2012 2013* 2014* 2015* 2016* Workings SECTION EXPLORATION PREPARATION TOTAL EXPLORATION PREPARATION TOTAL EXPLORATION PREPARATION TOTAL EXPLORATION PREPARATION TOTAL EXPLORATION PREPARATION TOTAL Raise 1.20 X 2.40 0 2,119 2,119 0 2,160 2,160 0 2,356 2,356 0 2,372 2,372 0 2,372 2,372 Raise 1.50 X 1.50 0 36 36 0 37 37 0 40 40 0 40 40 0 40 40 Raise 1.50 X 1.80 0 799 799 0 815 815 0 888 888 0 894 894 0 894 894 Crosscut 1.50 X 1.80 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Raise 2.10 X 2.10 0 660 660 0 673 673 0 734 734 0 739 739 0 739 739 Pocket 2.20 X 2.40 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Ramp 2.40 X 2.40 1,160 1,046 2,206 1,555 1,066 2,621 1,665 1,163 2,828 1,299 1,171 2,470 1,299 1,171 2,470 Ramp 2.50 X 2.50 260 390 650 348 398 746 373 434 807 291 437 728 291 437 728 Ramp 3.00 X 3.00 250 9,914 10,164 335 10,108 10,443 359 11,023 11,382 280 11,098 11,378 280 11,098 11,378 Crosscut 3.50 X 3.50 0 240 240 0 245 245 0 267 267 0 269 269 0 269 269 Chamber 5.00 X 5.00 20 20 40 27 20 47 29 22 51 22 22 45 22 22 45 Shaft 5.40 x 2.40 0 100 100 0 102 102 0 111 111 0 112 112 0 112 112 TOTAL 1,690 15,324 17,014 2,265 15,624 17,889 2,426 17,038 19,464 1,892 17,154 19,046 1,892 17,154 19,046

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17. RECOVERY METHODS

17.1 Process Description The Chumpe Mill treats ore produced by the Yauricocha Mine using crushing, grinding and flotation. The ores are complex, carrying zinc, lead, copper, silver and gold values. Three types of ore are treated: polymetallic (PM), containing payable silver, lead, copper and zinc; copper ore, containing payable copper and silver; and lead oxide (PbOx), containing payable silver and lead. Gold occurs in the ores and is partially recovered, until recently it has not been tracked in the mill. Impurity elements such as arsenic and antimony are not routinely monitored.

17.1.1 Crushing, Screening and Fine Ore Storage All ore received from the mine is treated in a common crushing-screening circuit. PM and copper ores are received in a 450 tonne bin, with PbOx ore received in a 150 tonne bin. The two ore types are crushed separately in campaigns. The crushing circuit incorporates a 24” by 36” jaw crusher and a 48” standard cone crusher, along with three screens. Fine PM and copper ores are stored in three fine ore bins, while fine PbOx ore is stored in a single dedicated bin.

17.1.2 Polymetallic Circuit When treating PM ore, the polymetallic circuit produces three final concentrates: copper, lead and zinc. A bulk copper-lead concentrate is produced initially and then separated into lead and copper fractions. When treating copper ore, the polymetallic circuit produces only a copper concentrate. The following describes PM ore treatment. Copper ore treatment is a simplified version of the same process, with no lead or zinc concentrates produced.

17.1.2.1 Polymetallic Circuit Grinding Ore from the fine ore bins is sent to a 7 ft by 12 ft rod mill in open circuit. Rod mill discharge passes to a cyclone sump, with cyclone underflow ground in an 8 ft by 10 ft ball mill. Ball mill discharge is treated in three unit flotation cells producing copper-lead bulk concentrate before the tails are returned to the cyclone sump. Cyclone overflow is treated in three circular flotation cells producing copper-lead bulk concentrate. Tailings from these cells are sent to the cyclone sump of a fine grinding circuit consisting of two 8 ft by 6 ft ball mills in closed circuit. This cyclone sump also receives scavenger concentrates and cleaner tails from subsequent operations in the copper-lead circuit.

17.1.2.2 Copper-Lead Flotation and Separation The cyclone overflow from the fine grinding circuit is treated in a bulk copper-lead rougher- scavenger circuit followed by four stages of cleaning. The final cleaner concentrate is sent to a

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copper-lead separation circuit, along with copper-lead bulk concentrates from the earlier flotation cells. Scavenger tails are sent to the zinc circuit.

In the copper-lead separation circuit, lead minerals are depressed and copper minerals floated in a rougher-scavenger circuit, so that the scavenger tails (lead concentrate) are sent to the lead concentrate thickener. The copper rougher concentrate is processed through three stages of cleaning, with the cleaner concentrate being sent to a recleaner stage in which copper is depressed and remnant lead floated using four recleaner stages. The recleaner tails form the final copper concentrate and are sent to the copper concentrate thickener. The recleaner lead concentrate is sent to the lead thickener.

17.1.2.3 Zinc Flotation Scavenger tails from the copper-lead bulk concentrate circuit form the feed to the zinc circuit. The feed is conditioned and floated in an intricate circuit utilizing pre-roughers, roughers, cleaners, rougher-scavengers and cleaner-scavengers. A final zinc concentrate is produced and sent to the zinc thickener.

Tailings from the final zinc scavenger are sent to the PM tailings thickener.

17.1.3 Lead Oxide Circuit The lead oxide circuit produces two concentrates: a sulphide concentrate which is sent to the lead thickener and combined with concentrates from the polymetallic circuit, as well as a separate lead oxide concentrate. Crushed PbOx ore is fed directly to a 7 ft by 12 ft rod mill. Discharge from this mill is sent to a cyclone, with cyclone underflow sent to a 5 ft by 6 ft ball mill in closed circuit. Cyclone overflow goes to the lead oxide sulphide circuit.

17.1.3.1 Sulphide Flotation The sulphide circuit consists of six rougher cells, with the first two serving as conditioners. The available flowsheet indicates that a sulphide cleaner circuit is contemplated but not yet installed. The concentrate from the final four cells is sent to the lead concentrate thickener, where it is mixed with lead concentrate from the polymetallic circuit. Sulphide circuit tails become the feed for the lead oxide circuit.

17.1.3.2 Oxide Flotation The lead oxide circuit utilizes two rougher stages, three rougher-scavenger stages, two cleaner stages and one cleaner-scavenger stage. Conditioners are employed prior to the first rougher, first rougher-scavenger and first cleaner. Third rougher-scavenger tails are sent to the tailings thickener, where they are mixed with tailings from the polymetallic circuit prior to being pumped to tailings disposal. Second cleaner concentrate is pumped to the lead oxide concentrate thickener.

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17.1.4 Thickening and Filtration The four concentrates (lead sulphide, copper, zinc and lead oxide) as well as the final tailings are sent to separate thickeners. Underflows from the concentrate thickeners are filtered using drum filters and filter presses. Underflow from the tailings thickener is sent through two tailings lines, each with a dedicated pump, to the tails dam. A third standby pump can serve either line.

17.1.5 Reagents, Grinding Media and Power

17.1.5.1 Reagent Data While the two milling circuits share some reagents and grinding media, most reagents are used in only one of them. The polymetallic circuit treats both PM and copper ores, which require somewhat different schemes, but their separate consumptions are not available. Reagent consumptions for 2011 are listed in Table 17-17.

Table 17-1 Reagent Usage 2011

Annual Usage (kg) Usage (kg/t) Reagent Circuit Circuit Total Poly-metallic Lead Oxide Poly-metallic Lead Oxide Z-6 12,990 12,990 0.034 Z-11 9,160 9,160 0.024

ZnSO4 366,800 366,800 0.954 CAL 599,200 599,200 1.559

Na2SO3 61,500 61,500 0.160

NaH2PO4 2,090 2,090 0.005 Tylose 2,100 2,100 0.005

Na2Cr2O7 7,750 7,750 0.020 Carbon (activ.) 1,120 1120 0.003 Frother 70 14,800 14300 29,100 0.039 0.067 NaCN 83,600 12100 95,700 0.218 0.057

CuSO4 110,300 3200 113,500 0.287 0.015 ZnO 5,100 5,100 0.013 Z-14 263,000 263,000 1.241 Aero 404 7,350 7,350 0.035 Aero 407 2,950 2,950 0.014

Na2S 850,000 850,000 4.011

Na2SiO3 420,300 420,300 1.983 Petroleo 36,900 36,900 0.174 Media (Mill #) 1 ½” balls (2) 26,100 0.068 117,900 1 ½” balls (3) 91,800 0.239 2” balls (4) 106,700 106,700 0.278 1 ½” balls (6) 3,990 3,990 0.019 3” rods (1) 29,700 0.140 136,200 3” rods (5) 106,500 0.277

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17.1.5.2 Power Power consumption by plant section is available for April, May and June 2012. Table 17-2 lists these consumptions.

Table 17-2 Power Consumption

April 2012 May 2012 June 2012 Avg. Section Usage % of Usage % of Usage % of % of (kWh) Total (kWh) Total (kWh) Total Total Polymetallic Crushing 92,144.47 4.6% 98,870.21 4.7% 96,469.90 4.7% 4.7% Grinding 370,362.39 18.5% 397,280.22 18.8% 388,085.72 18.9% 18.8% Pb Flotation 198,484.36 9.9% 212,906.74 10.1% 207,992.58 10.1% 10.1% Zn Flotation 237,070.29 11.9% 254,284.61 12.1% 248,461.53 12.1% 12.0% Cu Flotation 114,139.06 5.7% 122,436.93 5.8% 119,594.40 5.8% 5.8% Pumping 89,253.23 4.5% 95,732.70 4.5% 93,546.06 4.6% 4.5% Laboratory 16,284.45 0.8% 17,467.42 0.8% 17,065.44 0.8% 0.8% Auxiliary 165,675.60 8.3% 177,711.22 8.4% 173,620.35 8.5% 8.4% Tailings 178,210.50 8.9% 191,128.64 9.1% 186,838.54 9.1% 9.0% Subtotal 1,461,624.35 73.1% 1,567,818.69 74.3% 1,531,674.55 74.6% 74.0% Lead Oxide Crushing 13,230.48 0.7% 13,316.96 0.6% 12,828.99 0.6% 0.6% Grinding 133,840.69 6.7% 134,716.57 6.4% 129,771.95 6.3% 6.5% Flotation 156,852.06 7.8% 157,868.05 7.5% 152,158.42 7.4% 7.6% Pumping 108,772.07 5.4% 109,478.01 5.2% 105,507.34 5.1% 5.3% Laboratory 10,314.37 0.5% 10,381.68 0.5% 10,002.11 0.5% 0.5% Tailings 114,877.34 5.7% 115,632.35 5.5% 111,362.09 5.4% 5.5% Subtotal 537,887.01 26.9% 541,393.63 25.7% 521,630.89 25.4% 26.0%

Total power consumption for 2008 through 2011 is listed in Table 17-3.

Table 17-3 Power Usage 2008 - 2011

2011 2010 2009 2008

Total Power Usage (kWh) 22,817,152.36 22,624,882 22,053,186 19,954,201

17.2 Metallurgical Performance Concentrate production statistics are presented below. Statistics for silver and gold production for 2011 and 2012 are not presented because the data supplied to MQes were inconclusive with unit conversion errors and mathematical inconsistencies. To resolve these issues requires reviewing assay procedures along with original assay documentation.

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17.2.1 Concentrates Production Product grades and recoveries for the polymetallic circuit treating PM ore, polymetallic circuit treating copper ore and lead oxide circuit treating PbOx ore are listed in Tables 17-4, 17 -5 and 17-6, respectively. Feed and concentrate tonnages, are shown in Figures 17-1 to 17-2. Information for 2012 includes partial data for January, February and March only. Figures in boldface refer to payable metals.

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Table 17-4 Polymetallic Circuit Products, PM Ore

2012 Assays Recoveries Mass Product (m-tons) Ag Pb Cu Zn Ag Pb Cu Zn (oz/st) (%) (%) (%) (%) (%) (%) (%) Head 123,193 NR 1.94 0.74 4.32 100 100 100 100 Cu Conc. 2,326 NR 5.24 23.39 7.00 NR 5.11 60.05 3.06 Pb Conc. 3,266 NR 57.56 2.27 3.46 NR 78.73 8.19 2.12 Zn Conc. 9,356 NR 0.84 1.08 50.83 NR 3.29 11.14 89.30 Tails 108,242 NR 0.28 0.17 0.27 NR 12.87 20.39 5.51 2011 Assays Recoveries Mass Product (m-tons) Ag Pb Cu Zn Ag Pb Cu Zn (oz/st) (%) (%) (%) (%) (%) (%) (%) Head 382,421 NR 2.19 0.65 4.6 100 100 100 100 Cu Conc. 6,046 NR 5.95 23.7 6.7 NR 4.3 58.1 2.3 Pb Conc. 11,607 NR 56.9 2.36 4.8 NR 78.8 11.1 3.2 Zn Conc. 30,436 NR 1.04 1.08 51.1 NR 3.8 13.3 88.6 Tails 334,331 NR 0.33 0.13 0.31 NR 13.1 17.6 5.89 Year 2010 Assays Recoveries Mass Product (m-tons) Ag Pb Cu Zn Ag Pb Cu Zn (oz/st) (%) (%) (%) (%) (%) (%) (%) Head 432,819 3.24 2.14 0.68 4.75 100 100 100 100 Cu Conc. 6,833 54.62 5.44 24.50 7.42 26.7 4.0 57.0 2.5 Pb Conc. 12,849 35.77 55.82 2.46 4.68 32.8 77.3 10.7 2.9 Zn Conc. 35,959 4.48 1.20 0.89 50.38 11.5 4.7 11.0 88.2 Tails 377,178 1.08 0.35 0.17 0.35 29.0 14.1 21.4 6.4 Year 2009 Assays Recoveries Mass Product (m-tons) Ag Pb Cu Zn Ag Pb Cu Zn (oz/st) (%) (%) (%) (%) (%) (%) (%) Head 403,054 3.66 2.59 0.62 5.04 100 100 100 100 Cu Conc. 5,598 57.40 5.90 23.77 10.29 21.8 3.2 53.1 2.8 Pb Conc. 14,511 38.78 57.12 2.38 4.95 38.1 79.5 13.8 3.5 Zn Conc. 35,144 5.37 1.43 0.92 50.35 12.8 4.8 12.9 87.1 Tails 347,801 1.16 0.37 0.15 0.38 27.3 12.5 20.3 6.6 Year 2008 Assays Recoveries Mass Product (m-tons) Ag Pb Cu Zn Ag Pb Cu Zn (oz/st) (%) (%) (%) (%) (%) (%) (%) Head 414,333 3.99 2.35 0.66 4.97 100 100 100 100 Cu Conc. 6,230 61.82 4.67 24.17 8.3 23.32 2.99 55.39 2.51 Pb Conc. 13,023 46.66 57.52 2.88 5.15 36.78 76.96 13.79 3.26 Zn Conc. 34,144 5.57 1.24 0.91 52.22 11.5 4.34 11.38 86.63 Tails 360,936 1.3 0.42 0.148 0.43 28.4 15.7 19.5 7.59 NR – provided data not reported

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Table 17-5 Polymetallic Circuit Products, Copper Ore

Year 2012 Assays Recoveries Mass Product Ag Pb Cu Zn Ag Pb Cu Zn (m-tons) (oz/st) (%) (%) (%) (%) (%) (%) (%) Head 36,736 NR 0.68 1.97 0.95 100 100 100 100 3,046 NR 4.70 21.35 8.52 NR 57.29 89.71 74.77 Cu Conc. Tails 33,690 NR 0.31 0.22 0.26 NR 41.88 10.29 25.04 Year 2011 Assays Recoveries Mass Product (m-tons) Ag Pb Cu Zn Ag Pb Cu Zn (oz/st) (%) (%) (%) (%) (%) (%) (%) Head 221,930 NR 0.61 2.35 1.02 100 100 100 100 Cu Conc. 22,328 NR 3.54 21.00 8.63 NR 58.32 90.06 84.71 Tails 199,601 NR 0.28 0.26 0.17 NR 41.68 9.94 15.31 Year 2010 Assays Recoveries Mass Product (m-tons) Ag Pb Cu Zn Ag Pb Cu Zn (oz/st) (%) (%) (%) (%) (%) (%) (%) Head 192,501 2.44 0.55 2.24 1.02 100 100 100 100 Cu Conc. 18,425 16.74 3.40 20.90 9.05 65.5 59.1 89.4 84.5 Tails 174,076 0.93 0.25 0.26 0.18 34.5 40.9 10.6 15.5 Year 2009 Assays Recoveries Mass Product (m-tons) Ag Pb Cu Zn Ag Pb Cu Zn (oz/st) (%) (%) (%) (%) (%) (%) (%) Head 200,751 2.34 0.58 2.37 1.08 100 100 100 100 Cu Conc. 20,825 15.05 3.79 20.70 9.26 66.8 68.0 90.8 88.7 Tails 179,927 0.87 0.21 0.24 0.14 33.3 32.0 9.2 11.3 NR – provided data not reported

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Table 17-6 Lead Oxide Circuit Products, PbOx Ore

Year 2012 Assays Recoveries Mass Product (m-tons) Ag Pb Cu Zn Ag Pb Cu Zn (oz/st) (%) (%) (%) (%) (%) (%) (%) Head 52,007 NR 6.58 0.39 1.26 100 100 100 100 Sul. Conc 1,854 NR 11.02 1.11 3.61 NR 5.98 10.23 10.22 Ox. Conc. 3,125 NR 47.17 0.49 1.01 NR 43.08 7.68 4.81 Tails 47,027 NR 3.71 0.35 1.18 NR 50.94 81.93 84.56 Year 2011 Assays Recoveries Mass Product (m-tons) Ag Pb Cu Zn Ag Pb Cu Zn (oz/st) (%) (%) (%) (%) (%) (%) (%) Head 211,937 NR 6.75 0.40 1.64 100 100 100 100 Sul. Conc 5,973 NR 15.25 2.47 6.47 NR 6.37 17.26 11.15 Ox. Conc. 15,486 NR 46.86 0.42 0.81 NR 50.73 7.64 3.63 Tails 190,477 NR 3.22 0.34 1.55 NR 42.90 75.24 84.93 Year 2010 Assays Recoveries Mass Product (m-tons) Ag Pb Cu Zn Ag Pb Cu Zn (oz/st) (%) (%) (%) (%) (%) (%) (%) Head 211,729 9.91 8.71 0.31 1.86 100 100 100 100 Sul. Conc 6,312 64.36 21.29 1.74 5.64 19.4 7.3 16.5 9.0 Ox. Conc. 25,214 24.74 46.03 0.30 1.16 29.7 62.9 13.6 8.2 Tails 180,202 5.92 3.05 0.27 1.81 50.8 29.8 71.9 82.8 Year 2009 Assays Recoveries Mass Product (m-tons) Ag Pb Cu Zn Ag Pb Cu Zn (oz/st) (%) (%) (%) (%) (%) (%) (%) Head 186,938 10.45 8.13 0.22 1.38 100 100 100 100 Sul. Conc 5,624 43.34 18.69 2.14 6.54 12.5 6.9 28.7 14.2 Ox. Conc. 21,651 26.66 42.80 0.26 1.01 29.5 61.0 13.3 8.5 Tails 159,650 7.01 3.05 0.15 1.23 57.2 32.1 57.0 75.7 Year 2008 Assays Recoveries Mass Product (m-tons) Ag Pb Cu Zn Ag Pb Cu Zn (oz/st) (%) (%) (%) (%) (%) (%) (%) Head 137,685 12.37 8.02 0.16 1.30 100 100 100 100 Sul. Conc 1,193 94.76 23.46 2.87 6.19 6.6 2.5 15.5 4.1 Ox. Conc. nd nd nd nd nd nd nd nd nd Tails nd nd nd nd nd nd nd nd nd nd – no data provided. NR – provided data not reported

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900,000

800,000

700,000

600,000

500,000 Lead Oxide Cobre 400,000 Polymetallic Mill Feed (tonnes)

300,000

200,000

100,000

0 2003 2004 2005 2006 2007 2008 2009 2010 2011

Figure 17-1 Polymetallic Circuit Products, PM Ore

120,000

100,000

80,000 Lead Oxide (PbOX feed) Zinc (PM feed) 60,000 Copper (Cobre feed) Copper (PM feed) 40,000 Lead (PbOx feed)

Concentrate (tonnes) Lead (PM feed)

20,000

0 2003 2004 2005 2006 2007 2008 2009 2010 2011

Figure 17-2 Concentrates Produced by Ore Type

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17.2.2 Combined Concentrates Grades Concentrates produced by the two circuits from the three ore types are shipped as five separate products. These concentrates and their sources are:

• Lead sulphide concentrate: o Lead concentrate from polymetallic circuit treating PM ore. o Sulphide concentrate from lead oxide circuit treating PbOx ore. • Copper concentrate (polymetallic):

o Copper concentrate from polymetallic circuit treating PM ore. • Copper concentrate (Campana): o Copper concentrate from polymetallic circuit treating copper ore. • Zinc concentrate: o Zinc concentrate from polymetallic circuit treating PM ore. • Lead Oxide concentrate: o Oxide concentrate from lead oxide circuit treating PbOx ore.

17.2.3 Gold Gold is present in Yauricocha ores but until recently it has not been routinely analyzed and tracked through the mill circuits. Gold payments are made for the lead sulphide, copper and lead oxide concentrates but not the zinc concentrate. Gold assays supplied for 2011 and 2012 contain unit conversion errors and mathematical inconsistencies.. As such, no gold assays for 2011 and 2012 are presented in this report.

17.2.4 Impurity Elements Impurity elements are not routinely analyzed and tracked through the mill circuits but are assayed for in final concentrates. Average values for June 2012 materials are listed in Table 17- 7.

Table 17-7 Impurity Elements in Concentrates

Concentrate As(%) Sb(%) Bi(%) Pb+Zn(%) As+Sb(%) Fe (%) Mn (%) Lead Sulphide 0.70 0.13 0.18 ------Copper (polimetalico) 1.85 0.39 0.14 13.33 ------Zinc ------0.27 8.30 0.28 Lead Oxide 0.60 0.10 0.10 ------

Figures in Bold exceed penalty minimums.

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17.3 Operating Costs Chumpe Mill operating costs summaries were provided for 2010 and 2011. Costs were stated in Peruvian soles, which have been converted to US dollars. Table 17-8 lists operating costs for the Chumpe mill for 2010 and 2011.

Table 17-8 Mill Operating Costs

Item 2010 2011 Tonnes treated 837,048 816,289 Soles/$ 2.827 2.799 2010 2011 Item Cost ($) Unit Cost ($/t) Cost ($) Unit Cost ($/t) Wages & Burden 1,333,810 1.593 $1,471,341 $1.80 Grinding Media 616,235 0.736 $643,573 $0.79 Reagents & 2,244,369 2.681 $2,556,395 $3.13 Consumables Power 1,237,380 1.478 $1,330,839 $1.63 Maintenance Supplies 965,714 1.154 $975,345 $1.26 Laboratory Charges 65,821 0.079 $93,564 $0.11 General Costs 533,858 0.638 $619,036 $0.76 Total 6,997,186 8.359 $7,690,095 $9.48 17.4 Conclusions The Chumpe Mill is a stable plant that uses conventional methods to produce as many as five separate concentrates for sale. Available data indicate that, with expansions and process modifications taken into account, the mill performance has been stable for several years, with recoveries affected more by relatively minor changes in ore grade than by other factors. As long as process inputs such as mill tonnages, tenors and mineralogical characteristics remain constant, metallurgical recoveries and performance are not expected to change significantly.

Silver and gold assays being reported contain calculation and unit conversion errors. It is recommended this be addressed immediately.

17.5 Risks and Opportunities The feed-recovery estimation equation for copper from copper ore has a slope of -3.41, as shown in Figure 13-6. This nonstandard behavior indicates that, as feed grade increases, recovery actually goes down. Such behavior suggests that some process in the circuit may become overloaded at higher feed grades. A potential example of this would be overloading of certain flotation cells, which are unable to produce concentrate at the feed rate being used. The

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polymetallic circuit should be investigated during copper ore campaigns to determine cause(s) of the decreasing recovery at high feed grades and suggest method(s) of improving performance.

Metallurgical testing has indicated that buildup of dissolved metals in recycled process water may cause problems in the flotation circuits. Sodium hydrosulphide and activated carbon have been tested for use in controlling these buildups. Other control methods, such as addition of ferric or aluminum salts to form floccules which adsorb dissolved metals, should also be investigated.

Automatic samplers are in use at the Chumpe Mill but no on-stream analyzers, grinding circuit particle size monitors or other real-time instrumentation is in use. The applicability of such instrumentation, coupled with computerized controls of the various mill circuits, such as grinding mill feed speeds and feed rates, pump sump levels and reagent feed rates should be investigated. Possible benefits would include cost savings and process improvements.

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18. PROJECT INFRASTRUCTURE

Two shafts are in service at the Yauricocha Mine, namely Pique Central and Pique Mascota. The Pique Central services Levels 850 to 690, has a depth of 690 m and a hoisting capacity of 74 tonnes/hr for ore and 67 tonnes/hr for waste. The Mascota shaft services Levels 900 to 680, its depth is 720 m and has a hoisting capacity of 135 tonnes/hr for ore and 110 tonnes/hr for waste.

The sub-level caving is causing some subsidence that is already lightly affecting the Central and Mascota shafts and this will only get worse in the future. New access to the lower orebodies is being constructed.

Figure 18-1 Location of the Two Shafts

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Figure 18-2 Plan View of Mining Area

The Chumpe Mill treats ores produced by the Yauricocha Mine using crushing, grinding and flotation. The ores are complex, carrying zinc, lead, copper, silver and gold values. Three types of ore are treated: polymetallic (PM), containing payable silver, lead, copper and zinc; copper ore, containing payable copper and silver; and lead oxide (PbOx), containing payable silver and lead. Gold occurs in the ores but, while it is partially recovered, until recently it has Summary Needs not been tracked in the mill. Impurity elements such as arsenic and antimony are not routinely monitored.

The current operating capacity is 2,000 tonne/day for the polymetallic ore and 1,710 tonne/day for the copper ore.

The tailings dam has a capacity of 6.5 million tonnes.

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The electric energy is supplied from the National Interconnected System (SINAC, by its Spanish acronym), in a voltage level of 69 kV. It is received in the substation at Chumpe. The physical electric line 601 comes from the city of La Oroya, from the substation administered by the company SN Power S.A., afore ElectroAndes. The total power installed is 12.75 mVA for mine and plant

There are currently two extraction fans installed on ventilation raises.

There is a man camp with facilities for 2,000 people. Currently there are 1,100 workers resident.

Infrastructure is also discussed in Section 5.

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19. MARKET STUDIES AND CONTRACTS

19.1.1 Markets The commodities produced by Yauricocha, gold, silver, lead, zinc, and copper, are all traded on various metals exchanges around the world. Historic market prices have been used to estimate future pricing. Current contracts include adjustment factors for these prices and no further consideration of market or sales limits has been considered within this report.

Gustavson has reviewed these contracts and is satisfied that the terms and conditions are typical and appropriate for operations similar to Yauricocha.

19.1.2 Metal Sales Based upon the current resources and mine plan, upon recent experience of the mine and upon the commercial contracts under which Sociedad Minera Corona (“SMC”) sells its products, the recoverable quantities of Silver, Lead, Copper, Zinc and Gold were estimated. The revenues were then projected by either applying fixed prices available in 2012 for each metal, or by applying the three-year trailing average price for each metal.

No escalation of metals prices was considered for the economic model.

19.1.3 Contractual Treatment Charges and Refining Charges Yauricocha produces metal concentrates rather than refined metals. Gustavson judges that the contracts for shipping and refining these concentrates are typical of similar operations. Current contracts include adjustment factors for metal prices and concentrate quality on a shipment by shipment basis.

Each concentrate produced by SMC is subject to further processing charges for the treatment of the concentrate and the final refinement of the metals contained therein. These costs were estimated from the current contracts and from the projected qualities of the concentrates estimated to be produced. These contracts run through 2012; their terms are assumed to continue and no escalation of their provisions was included. These contracts have been renewed previously and no material changes are expected with renewal in 2012.

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20. ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT

Dia Bras completed the acquisition of Corona and all environmental obligations and agreements will transfer to Dia Bras. Peruvian regulations require a return of the project to original landscape upon surrender or termination of the mining concessions.

Even though Sociedad Minera La Cima S.A. (today, Gold Fields la Cima S.A.) is the title holder of the Production Unit Carolina -which originally was owned by the Company- the Company is still accountable for the environmental liabilities arising from the activities carried out while the Company was the title holder of said Production Unit.

The Company has complied with presenting the (i) Adequacy and Environmental Management Plan – PAMA (Plan de Adecuación y Manejo Ambiental) which was approved by Directorial Resolution N° 015-97-EM/DGM and was subsequently modified by Directorial Resolutions N° 331-97-EM/DGM, N° 419-2001-EM/DGAA and N° 159-2002-EM-DGAA, and the (ii) Plan for Closure of Mines (Plan de Cierre de Minas) for the Acumulación Yauricocha mining concession. Pursuant to Directorial Resolution N° 031-2007-MEM/DGM of 09 February 2007, the Company would have complied in its totality with the execution of the PAMA, having invested $2,773,355 in its execution.

The Company does not need to have environmental instruments for the remaining mining concessions, due to the fact that pursuant to the information provided by the Company the mining activities in these concessions has not yet begun.

20.1.1 Protected Natural Areas Acumulación Yauricocha is located within the buffer zone of a Protected Natural Area (“PNA”) called “Reserva Paisajística Nor Yauyos Cochas”. The PNA is the mainland and/or marine spaces of the national territory expressly recognized and declared as such, including its categories and zonings, for the conservation of biological diversity and other associated values of cultural, scenic and scientific interest, as well as for their contribution to the sustainable development of the country.

The areas adjacent to the PNA are considered buffer zones which comprise the National System for Protected Natural Areas for the State (“SINANPE”), which due to their nature and location require a special treatment in order to ensure the conservation of the protected area.

The activities conducted in the buffer zones shall not endanger the achievement of the PNA goals. As a general rule, the approval of environmental studies of mining exploration activities that are to be conducted within a PNA or is included within its buffer zone, is subject to the prior favorable opinion of the National Natural Resources Institute (“INRENA”). However, since this PNA “Reserva Paisajística Nor Yauyos Cochas” has been created after the approval of the

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PAMA for the Yauricocha unit, the Company does not have the obligation to require the aforementioned favorable opinion

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21. CAPITAL AND OPERATING COSTS

21.1 CAPEX for Major Infrastructure A 2008 study by Klohn Crippen Berger S.A. estimated a 9-year capacity for the waste dump. This should be adequate for the 5 year mining plan, but should be reevaluated in the near future to provide dump capacity for mining past the plan.

The plant tailings are disposed by means of a two 6” diameter pipe system, extending 3,500 m from the pump house to the tailings dam. The capacity of the tailings dam is estimated at 6,500,000 -tonnes, good for 8 years at the current production rate. This is also adequate for the 5 year mining plan and will need to be evaluated for mining past the period.

A new access will be constructed over 3 years starting in 2012 and will have a cost of approximately $26 million.

21.2 Contingency and Working Capital Working capital at the current operations consist of accounts payable and inventories, net of accounts payable and was provided by SMC. Working Capital is projected to vary within a normal operating range during the years of operation.

Capital contingency in the amount of 15% of the annual capital projections was included in the analysis to provide capital for unforeseen events and additional scope related to equipment and facilities anticipated to be needed, and is considered appropriate for the basis of estimation of the facilities and equipment needed to be acquired to maintain production during the period of the current resources.

21.3 Capital Cost Estimate The capital cost estimate for Yauricocha mining unit were provided by SMC personnel based upon expectations of capital needed to maintain current operating levels and efficiencies.

The following table summarizes these capital items:

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Table 21-1 Annual Capital Costs

Estimated (USD '000) 2012 2013 2014 2015 2016 Total

A. MINE

1 5 ea.1.5 yd3 Electric Scoops (Replacement) - 780.0 - - - 780.0 2 3 ea. 2.5yd3 Electric Scoops - 705.0 - - - 705.0

3 2 ea. 20 Tonne Locomotives (Lv. 920) - 400.0 - - - 400.0

4 12 ea. 160 p3 carts (for 01-20 Tonne Locomotive Lv. 920) 673.3 - - - - 673.3

5 6 Tonne Skip Stand By Mascota Shaft 134.9 - - - - 134.9

6 8 ea. 110 p3 carts (for 01 - 8 Tonne Locomotive Lv. 920) 561.1 - - - - 561.1

7 20 ea. 160 Tonne carts (for Lv. 720) – Replacement 136.4 - - - - 136.4 8 Cement Injection Pump (02 Und) 107.9 - - - - 107.9

9 Loader CAT 966H - 450.0 - - - 450.0

10 Overhaul Scoop Diesel ST-2D No12 - 150.0 - - 150.0 300.0

11 Overhaul Scoop Electric EST-2D No 15 - 150.0 - - 150.0 300.0

12 Overhaul Loader CAT 966H No 263 - 200.0 - - 400.0 600.0

13 Overhaul Scoop Electric EJC-65E No 17 - 120.0 - - 240.0 360.0 14 Overhaul Electric EST-2D No 16 - 150.0 - - 300.0 450.0

15 Overhaul Scoop Electric EJC-61 E No 13 - 120.0 - - 240.0 360.0

16 Overhaul Scoop Electric LHD-202E No 21 - 120.0 - - 240.0 360.0

17 Overhaul Loader CAT 966H No 264 - - 200.0 - - 200.0

18 Minijumbo Colibri - 80.0 - - 80.0 160.0

19 Pump System Lv 850 Cachi Cachi 647.4 - - - - 647.4 20 Cachi Cachi Shaft 50.0 - - - 500.0 550.0

21 Construction of Yauricocha Shaft - Interior Mine: Lv. 720 to Lv. 1250 486.5 7,815.7 4,707.8 4,626.3 - 17,636.3 22 New Principal Extraction Tunnel 900.0 5,400.0 2,700.0 - - 9,000.0

23 Ch. Raise Borer 460m de 2.10m diameter (Lv. 720 a Surface) - Ventilation y Services TOTAL 3,697.5 16,640.7 7,607.8 4,626.3 2,300.0 34,872.4

B. ELECTRIC MECHANICAL MAINTENANCE 1 Parallel 12 KV line Chumpe to Yauricocha (7 Km) 214.8 240.0 - - - 454.8

2 Study, Construction and installation of Pump House at Lv. 920, 200 l/s - 330.0 - - - 330.0 3 400 HP motor for Central Shaft NORDBERG Winch - Stand By. - 300.0 - - - 300.0

4 1 ea. drum winch for Victoria stope (120 HP) - 150.0 - - - 150.0

5 Increase Electrical Contract 6500 kW to 7000KW (2012) & 12000KW (2014) ------6 1 ea Transformer 350 KVA, ( 2.3 - 0.46 KV) - Mine Deepening - 25.0 25.0 - - 50.0

TOTAL 214.8 1,045.0 25.0 - - 1,284.8

C. CONCENTRATION PLANT

1 Dam Expansion - Stage 3 - 1,500.0 - - - 1,500.0 2 Dam Expansion - Stage 4 350.2 - - 1,700.0 - 2,050.2

3 Replace Vertical & Horizontal Pumps in Plant - 150.0 - - - 150.0

4 Dust Extractor - Crusher Section - 90.0 - - - 90.0

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Estimated (USD '000) 2012 2013 2014 2015 2016 Total

5 Automation crane bridges - 60.0 - - - 60.0

6 Install Cell SK-240 - 220.0 - - - 220.0

7 Change cells in Bulk Floatation Circuit - 700.0 - - - 700.0

8 Change Cells Zinc Floatation Circuit - 800.0 - - - 800.0

9 High frequency screens - - 500.0 - - 500.0

10 Installation of Cells Ok. 30Ft3. Zinc Circuit - - 350.0 - - 350.0

11 Filter Press for Zinc Concentrate - - 800.0 - - 800.0 12 Screen modification and Installation before Crushing Circuit. - - 80.0 - - 80.0

13 Copper Thickener - - 300.0 - - 300.0

14 Concentrate Pad Expansion 24.7 - - 120.0 - 144.7

15 Installation of Pneumatic Samplers 24.7 - - 120.0 - 144.7

16 Installation of Mill 8x6 To regrind material in Zinc Circuit 72.1 - - 350.0 - 422.1

17 Install Courier for Polymetallic and Oxide Plant ------18 Tailings Pump ------

19 Engineering Study and Improvement of Concentrating Plant 274.7 1,020.0 2,666.7 1,333.3 - 5,294.7

TOTAL 746.5 4,540.0 4,696.7 3,623.3 - 13,606.5

D. HEALTH & SAFETY

Monitoring Dusts and Vibrations Equipment 30,000 41.0 - - - 41.0 81.9

Emergency Shelter Chambers (Article N°. 138 of S.D. N°. 055-2010-EM) - 30.0 - - 30.0 60.0

TOTAL 41.0 30.0 - - 71.0 141.9

E. ENVIRONMENTAL AND COMMUNITY SUPPORT

1.0 MINE WATER TREATMENT PLANT

1.1 Treatment Plant Expansion (prepare and assess project) - SMALLVILLE 310.0 - - - - 310.0 1.2 Mine Water Treatment Plant Expansion (At 800 l/s) Chumpe Ravine - 400.0 - - - 400.0 2.0 WASTE WATER TREATMENT

2.1 Upgrade Domestic Wastewater Treatment System - Esperanza Sector (OEFA) & comply with LMP 37.0 - - - - 37.0 2.2 Domestic Wastewater Treatment System Upgrading - Chumpe Sector and comply with LMP (Professional Sanitary Support) 45.0 - - - - 45.0 3.0 Environmental Impact Study - 250.0 250.0 - - 500.0

4.0 Improve Treatment Plant according to ECAS. - - 200.0 - - 200.0

5.0 CLOSURE & POST-CLOSURE CAROLINA MINE 984.0 1,050.0 120.0 120.0 120.0 2,394.0

TOTAL 1,376.0 1,700.0 570.0 120.0 120.0 3,886.0

F. GEOLOGY

1 Diamond drilling & field exploration 1,663.7 1,800.0 1,200.0 1,050.0 1,200.0 6,913.7

2 Regional Exploration & New Project Field Exploration 273.5 396.4 216.0 236.0 236.0 1,357.9

TOTAL 1,937.2 2,196.4 1,416.0 1,286.0 1,436.0 8,271.6

TOTAL YEARLY CAPITAL EXPENDITURES 8,013.0 26,152.0 14,315.5 9,655.7 3,927.0 62,063.1

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21.4 Operating Cost Estimates (OPEX) 21.4.1 Mining OPEX Mine operating costs are estimated based on the results of operations from 2011, since the projected operations are similar in size and operating parameters to those of 2011.

Table 21-2 Mining Methods at Yauricocha

Production Mining Method Mechanization Subtotal % Total % Tonnes/day Conventional 5,406 7.9 Overhand Cut and Fill 10 Mechanized 1,423 2.1 Conventional 4,317 6.3 Sub Level Caving 86.8 Mechanized 55,062 80.5 Square Set Conventional 2,125 3.2 3.2 Total 68,333 100 100

The productivity of the mechanized sub-level caving method averages 20 tonne/man-shift and far exceeds the other mining methods as illustrated in Figure 21-1. The mining cost of the mechanized sub-level caving averages $10.68/tonne, significantly below the unit cost for the other mining methods (Table 21-3).

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Figure 21-1 Productivity by Mining Method

Table 21-3 Mining Cost by Mining Method

Description Conventional Mechanized Conventional Sub Mechanized Sub Square Set Cut and Fill Cut and Fill Level Caving Level Caving Productivity 4.80 6.10 7.4 20.1 1.80 Tonne/man-shift Preparation 16.86 5.54 5.01 3.46 5.89 Cost $/Tonne Exploitation 22.41 17.18 12.82 10.68 39.58 Cost $/Tonne Services 9.63 3.67 1.38 0.92 13.78 Cost $/Tonne Total 48.89 26.39 19.20 15.06 59.25 Cost $/Tonne

Mining cost for 2011 was $40.01/tonne. By far, the largest cost (40%) is associated to preparation and exploration.

Sociedad Minera Corona S.A. employs a total of 279 workers at the mine and plant. However, the vast majority of the work force (866 workers) is hired by four contractors. The transportation of concentrate and exploration work is contracted to two firms. Likewise, the security, transportation of personnel, civil and environmental work is carried out by contractors. The total work force at Yauricocha consists of 1,145 workers. The company is union-free.

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The mine operates two shifts of approximately 10 hours per shift 7 days a week with workers working 14 days on and 7 days off, to mine and transport ore material. No significant variation from the operating areas, operating efficiencies and work flow are projected.

No escalation of costs of the Mine Department has been projected. A contingency of 5% of the Mine costs has been included to cover unforeseen costs and work requirements in the future, including the continued operation at deeper levels in the mine.

YAURICOCHA MINE COST ELEMENTS 45

40 0.9 3.7 0.5 35 0.5 Mine Closure 2.1 3.3 1.0 0.5 Royalties 1.1 30 0.4 2.5 3.9 Transportation

2.4 3.6 G&A 3.0 1.9 25 1.4 Depreciation 1.6 1.9 1.5 1.3 Maintenance 1.6 1.2 20 1.3 Mine Services

Mining Cost $/ton Cost Mining Power 15 16.0 Prep&Exploitation 13.8 15.0 Expl&Dev 10 Labor

5 2.4 1.7 2.3

3.9 4.3 4.7 0 2009 2010 2011

Figure 21-2 Mine Cost Elements

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MINE COST COST ELEMENTS as % of TOTAL COST

100% 3.0% 1.6% 2.4% 3.3% 6.1% 9.3% 90% 7.4% 7.4% 8.2% 9.4% 80% 10.3% Mine Closure 4.9% 9.8% Royalties 70% 5.5% 5.0% Transportation 3.6% 4.6% 3.9% 3.6% 3.5% G&A 60% 3.7% Depreciation 50% Maintenance Mine Services 40% 42.6% 43.3% 40.0% Power % of Total Mine Cost Mine Total % of 30% Prep&Exploitation Labor 20% Expl&Dev 12.1% 10% 12.5% 11.7%

7.3% 4.8% 5.7% 0% 2009 2010 2011

Figure 21-3 Cost Elements as a Percentage of Total Cost

21.4.2 Processing Plant and Freight OPEX Plant operating costs are estimated based on the results of operations from 2011, since the projected operations are similar in size, design and operating parameters to those of 2011. The plant operates three 8 hour shifts 7 days a week, with workers normally working 14 days on and 2 days off per rotation, to process ore material and ship the resulting concentrates. No significant variation from the operating areas, operating efficiencies and work flow are projected.

No escalation of costs of the Process Plant Department has been projected. A contingency of 5% of the Plant and Freight costs have been included to cover unforeseen costs and work requirements in the future.

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YAURICOCHA PROCESSING COST ELEMENTS 12.0 11.0 0.8 10.0 0.9 0.6 1.9 9.0 G&A 1.8 8.0 1.8 1.3 Depreciation 0.1 Maintenance 7.0 1.0 1.2 0.1 1.6 Lab 6.0 0.1 1.5 1.5 Power 5.0 Reagents, Thickener, Filtration 4.0 3.1 Milling 2.7 2.8 Labor Processing Cost ($/ton) 3.0 2.0 0.8 0.7 0.7 1.0 1.4 1.6 1.8 0.0 2009 2010 2011

Figure 21-4 Processing Cost Elements

PROCESSING COST COST ELEMENTS as % of TOTAL COST 100% 0.7% 0.8% 1.0% 9.0% 6.3% 6.7% 90%

80% 18.0% 16.6%

17.6% 70% Lab 11.3% 11.1% G&A 60% 9.8% Depreciation 50% Maintenance Reagents, Thickener, Filtration 26.3% 27.5% 40% 27.7% Milling 30% Labor % of Total Processing Cost 7.2% 6.9% 20% 6.9%

10% 13.6% 15.6% 15.8% 0% 2009 2010 2011

Figure 21-5 Processing Cost as a Percentage of Total Cost

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21.4.3 Freight Costs Freight operating costs are estimated based upon the current freight rates for 2011 and upon the projected tonnes of concentrate to be shipped. No escalation of costs of Freight has been projected. A contingency of 5% of the Plant and Freight costs have been included to cover unforeseen costs and work requirements in the future.

21.4.4 General and Administration OPEX Administrative operating costs are estimated based on the results of operations from 2011, since the projected operations are similar in size and operating parameters to those of 2010. Administrative staff work 10 days on and 5 days off, one shift per day of approximately 10 hours. No significant variation from the administrative responsibilities, operating efficiencies and work flow are projected.

No escalation of costs of the Administrative Department has been projected. Administrative scope and cost are considered to be quite stable and no contingency has been included in the current projections.

21.4.5 Worker’s Profit Sharing Peruvian law mandates an 8% share of taxable income be set aside and paid to the operation’s employees, which amount has been projected and included as a part of operating costs.

21.4.6 OPEX Summary The following table shows the estimated typical annual operating costs for the Yauricocha Operations.

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Table 21-4 Annual Operating Costs Operating Cost Summary 2012 2013 2014 2015 2016 Tonnes of Ore 838,301 826,500 918,000 932,830 539,950 Operating Costs/Year (000's) Mining Costs $26,964 $26,919 $29,500 $29,934 $18,422 Processing Costs 7,953 7,841 8,709 8,850 5,123 Freight Costs 3,965 3,853 3,852 3,209 2,165 Operating Cost Contingency 1,944 1,931 2,103 2,100 1,286 Administrative Costs 3,128 3,084 3,425 3,480 2,015 Closure Operating Costs 809 809 809 809 809 Employee Profit Sharing 5,341 4,349 3,953 593 1,378 Total Operating Costs $50,104 $48,784 $52,351 $48,975 $31,196

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22. ECONOMIC ANALYSIS

22.1 Summary The Base Case for the Yauricocha operations anticipates mining the currently defined resources and reserves over 5 years and is forecast based upon the three year trailing average of metals prices and upon the operating costs and capital costs consistent with recent operations. 4.2 million tonnes of material are projected to be mined during this time with a projected Before-Tax Net Present Value at 8% (“NPV-8”) of $193 million and an After-Tax Net Present Value at 8% (“NPV-8”) of $145.8 million. The after-tax results are considered the base case.

There is no IRR or payback period, as the mine is in operation, therefore there is no initial capital required for start-up.

22.1.1 Basis of Evaluation Mineral resources were estimated by the Yauricocha Operations and reviewed by Gustavson. MQes reviewed the metallurgical process, predicted recoveries, concentrate production and concentrate grades, which information was included in the economic analysis. The beginning date for this analysis is October 10, 2012.

The majority of the head grades were outside of the range for the metallurgical recovery formulas, therefore the recoveries to concentrate, including the tonnages of each concentrate, were originally calculated using weighted average of the historical last three years based on ore tonnages of type of material that would be going through each circuit. Dia Bras provided more detailed metallurgical balance projections which were used for metal recoveries in this analysis.

The silver recovery was provided in the detailed metallurgical balances. Gold is present in Yauricocha concentrate, but has not been routinely analyzed and tracked through the mill circuits. There was not sufficient information in the metallurgical balances to determine the gold grades in the Polymetallic Circuit, therefore gold contribution from this circuit was not included in the evaluation

The impurity elements that were reported in June 2012 are assumed to be representative and constant. These impurities are penalties that are deducted from the revenues.

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Table 22-1 Impurity Elements Average Values (June 2012)

Concentrate As (%) Sb (%) Bi (%) Pb+Zn (%) As+Sb Fe (%) Mn (%)

Lead Sulphide 0.7 0.13 0.18 ------Copper (polymetallic) 1.85 0.39 0.14 13.33 ------Zinc ------0.27 8.3 0.28 Lead Oxide 0.6 0.1 0.1 ------

The after tax cash flow was estimated on a yearly basis and include revenues, treatment and refining charges for the final processing of the concentrates, royalties, mining costs, processing plant costs, freight costs, administration costs, operating cost contingency and the cost of employee profit sharing. The operating costs were calculated using historical data and the assumption is that these cost per tonne are constant through subsequent years.

22.1.2 Royalty and Special Tax In 2011, the Peruvian Congress passed a new Mining Law to become effective in 2012. Under this law, a Special Tax and Royalty is introduced which applies to the operating margin of producing mining companies. The margin rates for a given interval of EBIT is as follows:

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Table 22-2 EBIT Margin Rates

Special Mining Tax Mining Royalty EBIT Margin Margin Rate Margin Rate

0.00% 0.00% 0.00% 0.00% 0.00% 10.00% 2.00% 1.00% 10.00% 15.00% 2.40% 1.75% 15.00% 20.00% 2.80% 2.50% 20.00% 25.00% 3.20% 3.25% 25.00% 30.00% 3.60% 4.00% 30.00% 35.00% 4.00% 4.75% 35.00% 40.00% 4.40% 5.50% 40.00% 45.00% 4.80% 6.25% 45.00% 50.00% 5.20% 7.00% 50.00% 55.00% 5.60% 7.75% 55.00% 60.00% 6.00% 8.50% 60.00% 65.00% 6.40% 9.25% 65.00% 70.00% 6.80% 10.00% 70.00% 75.00% 7.20% 10.75% 75.00% 80.00% 7.60% 11.50% 80.00% 85.00% 8.00% 12.00% 85.00% 90.00% 8.40%

The total royalty is the summation of the special mining tax and the mining royalty.

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Table 22-3 Yauricocha Mine Economic Model

Dia Bras Exploration Inc Economic Analysis of Yauricocha Mining Unit 2012 - 2016 2012 2013 2014 2015 2016 Total Production Copper Ores 75,790 7,500 208,830 82,140 15,950 390,210 Zinc Oxide Ores 205,401 204,000 168,000 175,810 168,000 921,211 Polymetallic Ores 557,110 615,000 541,170 674,880 497,660 2,885,820 Total 838,301 826,500 918,000 932,830 681,610 4,197,241

Saleable Metal Silver oz 1,801,540 1,553,398 1,465,944 1,064,325 917,073 6,802,280 Lead Metric Tonnes 15,810 16,257 12,707 11,057 12,697 68,528 Copper Metric Tonnes 3,329 3,250 6,037 3,408 1,563 17,587 Zinc Metric Tonnes 18,231 17,215 14,640 12,177 7,736 69,999 Gold oz 4,340.3 4,924.2 5,936.2 3,688.6 3,531.4 22,420.7

Revenue (US$ 000's) Gross Metal Revenue $150,412 $143,118 $150,467 $108,194 $84,346 $636,537 Treatment Charges/Refining Charges (23,495) (22,921) (23,784) (19,256) (12,875) (102,330) Royalties (6,119) (4,520) (3,792) (575) (1,077) (16,082) Net Revenue $120,798 $115,677 $122,892 $88,363 $70,394 $518,124

Expenses (US$ 000's) Mining Costs ($26,964) ($26,919) ($29,500) ($29,934) ($18,422) ($131,739) Processing Costs (7,953) (7,841) (8,709) (8,850) (5,123) (38,476) Freight Costs (3,965) (3,853) (3,852) (3,209) (2,165) (17,044) Operating Cost Contingency (1,944) (1,931) (2,103) (2,100) (1,286) (9,363) Administrative Costs (3,128) (3,084) (3,425) (3,480) (2,015) (15,131) Closure Operating Costs (809) (809) (809) (809) (809) (4,043) Employee Profit Sharing (5,341) (4,349) (3,953) (593) (1,378) (15,614) Total Expenses ($50,104) ($48,784) ($52,351) ($48,975) ($31,196) ($231,410)

Operating Cash Flow, before Taxes (US$ 000's) $70,694 $66,893 $70,541 $39,388 $39,198 $286,714

Depletion of Asset Base ($7,441) ($7,337) ($8,149) ($8,280) ($4,793) ($36,000) Depreciation/Amortization ($1,905) ($9,604) ($16,989) ($24,296) ($18,579) ($71,372) Income Tax ($18,404) ($14,986) ($13,621) ($2,043) ($4,748) ($53,803) Add in Depreciation/Depletion $9,346 $16,941 $25,137 $32,576 $23,372 $107,372

Operating Cash Flow, after Taxes (US$ 000's) $52,290 $51,907 $56,920 $37,345 $34,450 $232,912

Capital (US$ 000's) Sustaining Capital + Mine & Plant Expansions (6,637) (24,452) (13,745) (9,536) (3,807) (58,177) Environmental, Sustainability, & Closure Capital (1,376) (1,700) (570) (120) (120) (3,886) Capital Contingency (1,202) (3,923) (2,147) (1,448) (589) (9,309) Working Capital 5,165 910 (747) 5,168 1,724 12,219

Cash Flow, Before Tax (US$ 000's) $66,644 $37,727 $53,332 $33,452 $36,406 $227,561 NPV @ 8.0%, Before Tax (US$ 000's) $193,041.7 $64,128 $33,614 $43,997 $25,553 $25,749 $193,042

Cash Flow, After Tax (US$ 000's) $48,240 $22,742 $39,710 $31,408 $31,658 $173,758 NPV @ 8.0%, Before Tax (US$ 000's) $145,824.1 $46,419 $20,262 $32,760 $23,992 $22,391 $145,824

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22.1.3 Sensitivity Analysis Price, Operating Costs and Capital Costs The Yauricocha Operation is most responsive to changes in the price of metals. In the Base Case (After Tax), an increase in the average metals prices of 10% would increase the NPV by about 19% to approximately $173.8 million, shown in in Figure 22-1. An increase of 20% would result in an NPV of $201.4 million, an increase of about 38%.

The operations are also sensitive to variations in Operating Costs. In the Base Case, an increase in the average Operating Costs (mining, process plant, freight, operating cost contingency of 5%, administration, closure operating cost and employee profit sharing) of 10% would decrease the NPV by 11% to approximately $129.9 million, see Figure 22-1. An increase of 20% would result in an NPV of $112.7 million, a decrease of 23%.

Figure 22-1 Yauricocha Operations Sensitivity Graph

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22.1.4 Conclusions This study shows a production of 6.8 million oz of silver, 68.5 thousand tonnes of lead, 70 thousand tonnes of zinc, 17.6 thousand tonnes of copper, and about 22.4 thousand ounces of gold from 4.2 million tonnes of ore during the next five years. This produces before-tax NPV at 8% discount rate of $193 million and an after-tax NPV at 8% discount rate of $145.8 million.

Further exploration is in process. The reported polymetallic reserves are depleted before the end of the 5 year mine plan.

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23. ADJACENT PROPERTIES

There are no adjacent properties to the Yauricocha mine.

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24. OTHER RELEVANT DATA AND INFORMATION

In 2012, Dia Bras performed an internal geological review of their resources and identified a target for further exploration in the Central Mine Area below the mine workings and areas drilled under the workings.

The identification of this exploration target is based solely on the Company’s understanding of the geology of the deposit, the mineral deposit type itself as well as his confidence level that the ore zones are not truncated at depth by faults or other factors. Thomas L. Robyn, Ph.D., CPG, RPG, of Dia Bras, has supported geologic indications to make such assumptions. As the projection of geologic inference goes further from areas of factual data, the confidence level of the projection decreases.

Deposits in the Central Mine Area have been continuously mined since 1961 and have been drilled for vertical distances of up to 800 meters, which potentially signifies a continuous mineralized system occurs in the area. Comparison of Yauricocha with other well-studied and documented deposits of its type (high-temperature carbonate replacement) indicates that that mineralization should continue to depth for a significant distance.

These findings are based on Yauricocha’s similarity to other deposits of its type, the extensive history of the mine, absence of structural complexities, and the high quality of work done by the mine’s staff, all of which allow a certain confidence level regarding continuity of mineralization.

The initial conclusions by the Company’s geologists are conceptual in nature and based on projections of orebodies defined by pre-existing underground sampling and drilling within and 200-300 m below the deepest mine level. As a result, the exploration target is modeled on the widths, strike lengths and grades of the orebodies immediately above the target.

A preliminary internal evaluation supports the further analysis of the Central Mine Area below the mine workings and areas drilled under the workings, and above Level 1420. The potential of the Central Mine Area below the mine workings and areas drilled under the workings is approximately 5-6 million tonnes, roughly averaging 90-110 g/t Ag, 2-3% Pb, 0.5-1.0% Cu, 2- 3% Zn and 0.6-1.0 g/t Au.

The potential quantity and grades of the exploration target are conceptual in nature, there has been insufficient exploration to define a mineral resource below Level 1220, and it is uncertain if further exploration will result in discovery of a mineral resource at greater depth.

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25. INTERPRETATION AND CONCLUSIONS

Yauricocha is a successful, ongoing mining and concentrating operation, and is one of the principal assets of Dia Bras,

In the Yauricocha mining district, at the end of the Miocene, near-vertical intrusions of granodiorite were emplaced in the Middle Cretaceous Jumasha limestone, and in marl and lutite of the Celendín Formation, forming a metamorphic aureole around the intrusions. The red bed lutites were bleached and calc-silicate minerals were formed. The limestones were recrystallized and developed a coarse granular texture.

The Chumpe Mill treats ores produced by the Yauricocha Mine using crushing, grinding and flotation. The ores are complex, carrying zinc, lead, copper, silver and gold values. Three types of ore are treated: polymetallic (PM), containing payable silver, lead, copper and zinc; copper ore, containing payable copper and silver; and lead oxide (PbOx), containing payable silver and lead. Gold occurs in the ores and is partially recovered. Until recently, it has not been tracked in the mill. Impurity elements such as arsenic and antimony are not routinely monitored.

Gustavson audited the mineral resource estimation and methodologies, and considers the work to meet industry standard practices, and are CIM and NI 43-101 compliant.

The mineral reserve is the economically demonstrated minable portion of the mineral resource and follows the same polygonal estimations as the resource. Yauricocha has defined the proven reserve as the measured and indicated resources limited by mine recovery as determined by mining method and a fixed cut-off determined by the sum total of the value of the contained metals.

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The Probable Reserve volume is defined by the horizontal projection at the boundaries of the Measured block. The vertical extension is defined in a similar manner as in the Measured Resources.

Mining at Yauricocha is accomplished by various extraction methods, principally sublevel caving and overhand cut and fill stoping. The larger mineralized bodies are both thicker (10-20 m) and longer along strike and down dip and the ore minerals are held in semi consolidated rocks that ravel easily with minor provocation by blasting. The smaller bodies are also in poor rock, however they can be of quite high metal grades, averaging over 10 oz/tonne silver and 10% lead. During cut and fill stoping the mine uses timber in square sets to maintain the level open for safe access (mostly through breasting) and then fills the lower level after mining the upper level.

The mine production plan was developed by Yauricocha engineers and checked by Gustavson. As stated in the previous section, the production plan for minable material includes 100% of Proven and Probable Reserves, and Gustavson is of the opinion that this is appropriate for an underground mine with significant operating history.

This report shows a production of 6.8 million oz of silver, 68.5 thousand tonnes of lead, 70 thousand tonnes of zinc, 17.6 thousand tonnes of copper, and about 22.4 thousand ounces of gold from 4.2 million tonnes of ore during the next five years. This produces before-tax NPV at 8% discount rate of $193 million and an after-tax NPV at 8% discount rate of $145.8 million.

Reported unit operating costs for the plant and the mine experienced an increase of 12 and 15%, respectively, in 2011 relative to 2010, mostly due to a rise in labor and environmental remediation costs, supplies, fuel, reagent consumption and power. A new special tax and royalty law was passed by the Peruvian Congress in 2011 had a detrimental effect on the economics of the operation. Other factors that contributed to the cost increase are the depreciation of the US dollar relative to the New Sol and a decrease in production.

This study has focused on a five year operation based on the current existence of resources and reserves which allow production for at least that time period. The size and history of production

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at Yauricocha are indicative that there may be mine life beyond the five years analyzed in this study.

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26. RECOMMENDATIONS

Recommendations for 2012 consist of improvements in the following areas: exploration, mine infill drilling, permitting, mine development and metallurgical testing and evaluation.

In the area of exploration, the Company should consider the design and implementation of relational database system to gather and store its exploration data, upgrading its QA/QC practices and utilization of the already purchased mining software for the evaluation of mineral resources.

The execution of the 2012 infill drilling is of importance for the delineation of additional resources at depth and along strike in the Mina Central.

The budget for this work is shown in Table 26-1. This work can be completed in one phase.

Table 26-1 Estimated Recommendations Budget

Task Cost Software Implementation and Training $100,000 Surface Drilling $2,000,000 Underground Drilling $3,000,000 Geophysics $250,000 Metallurgical Testwork $250,000 Total $5,600,000

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27. REFERENCES

The following documents were provided by Dia Bras staff and reviewed by Gustavson:

1. RESUMEN GENERAL YAURICOCHA-2012.xls 2. Planeamiento 2012-2016 rev. por trimestres (t).xls 3. RESUMEN PROGRAMA DE AVANCES 2012 - 2016 (t).xlsx 4. COSTO MINADO POR METODOS (t).xlsx 5. COSTOS DE LABORES POR METRO DE AVANCE.xlsx 6. COSTOS CONTABLES 2011 - ENERO 2012.xls 7. Criterios de Estimación de Reservas y Recursos-2012.doc 8. Geologia Yauricocha-2012.doc 9. Exploratión Advance-Mineral Inventry.xls 10. Planeamiento 2012-2016 rev..xls 11. Cuadro resumen - Recursos-Reservas Yauricocha 2012-2016 planning.xls 12. Informacion Adicional - Tony Hammond.xlsx 13. Reservas Probadas-Probables-Recursos Minerales-Por Cuerpos-Ycha-2012.xls 14. Reservas Probadas-Probables-Recursos Minerales-Por Zonas-Ycha-2012.xls 15. INFORME LABORATORIO 2012.docx 16. GEOYAU-032-12 (Informe Ipillo).doc 17. GEOYAU-178(INFORME DE EXPLORACION EN VICTORIA).doc 18. Recursos Ipillo.xls 19. Recursos Victoria-.xls 20. Royalties Explained.xlsx 21. Daniel Tellechea memo 2012 7 20.docx

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