APPENDIX III COMPETENT PERSON’S REPORT — AAI REPORT SITE 11 INDEPENDENT TECHNICAL REPORT SITE 11 FUJIAN YUANXIN (FAR SOUTH) FUJIAN PROVINCE, CHINA Timothy A. Ross, P.E., RM-SME Dr. Douglas F. Hambley Ph.D, P.E., P.Eng, PG, RM-SME and Vanessa A. Santos, P.G., RM-SME Agapito Associates, Inc. Grand Junction and Lakewood, Colorado, USA Thomas R. Kelly, RM-SME Lima, Peru Qinghua “Jason” Jin, P.E., RM-SME SGS North America, Inc. Tucson, Arizona, USA Carl E. Brechtel, P.E., RM-SME Carl Brechtel Consulting LLC Arvada, Colorado, USA Report Date: 14 September 2018 Effective Date: 31 March 2018 Prepared for: — III11-1 — APPENDIX III COMPETENT PERSON’S REPORT — AAI REPORT SITE 11 INDEPENDENT TECHNICAL REPORT SITE 11 FUJIAN YUANXIN (FAR SOUTH) FUJIAN PROVINCE, CHINA TABLE OF CONTENTS Page 1 Summary..........................................................III11-13 1.1 Property Description and Ownership..................................III11-14 1.2 Geology and Mineralization ........................................III11-14 1.3 Development and Operations .......................................III11-15 1.4 Mineral Resource Estimate .........................................III11-15 1.5 Mineral Reserve Estimate..........................................III11-16 1.6 Economics .....................................................III11-19 1.7 Environmental and Permitting ......................................III11-19 1.8 Processing Plant.................................................III11-19 1.9 Risk Assessment.................................................III11-20 1.10 Conclusions and Recommendations...................................III11-20 2 Introduction .......................................................III11-21 2.1 Information Sources ..............................................III11-21 2.2 Qualified Persons ................................................III11-22 3 Reliance on Other Experts ............................................III11-23 4 Property Description and Location .....................................III11-24 4.1 Location.......................................................III11-24 4.2 Mineral Rights ..................................................III11-24 4.3 Environmental Liabilities, Permits, and Risks for the Property ..............III11-24 5 Accessibility, Climate, Local Resources, Infrastructure and Physiography ......III11-27 5.1 Topography, Elevation, and Vegetation ................................III11-27 5.2 Accessibility ...................................................III11-27 5.3 Local Resources and Infrastructure...................................III11-27 5.4 Climate .......................................................III11-28 6 History ...........................................................III11-28 6.1 Ownership ........................................................III11-28 6.2 Exploration and Development Work .....................................III11-28 6.3 Historical Mineral Resource and Mineral Reserve Estimates ..................III11-28 6.4 Production ........................................................III11-28 — III11-2 — APPENDIX III COMPETENT PERSON’S REPORT — AAI REPORT SITE 11 7 Geological Setting and Mineralization ...................................III11-29 7.1 Regional Stratigraphy.............................................III11-29 7.2 Regional Structure ...............................................III11-29 7.3 Property Geology ................................................III11-30 7.3.1 Stratigraphy ..............................................III11-30 7.3.2 Structure ................................................III11-31 8 Deposit Types ......................................................III11-31 9 Exploration ........................................................III11-34 9.1 Dongji Mining Area ..............................................III11-34 9.2 Dongji Deep General Exploration Area................................III11-34 10 Drilling ...........................................................III11-35 10.1 Dongji Mining Area ..............................................III11-35 10.2 Dongji Deep General Exploration Area................................III11-35 10.3 Core Drilling—General Procedures, Recovery, and Sampling ...............III11-36 10.4 Core Recovery ..................................................III11-38 10.5 Drill-Hole Deviation..............................................III11-38 10.6 Comments on Section 10 ..........................................III11-38 11 Sample Preparation, Analyses, and Security ..............................III11-38 11.1 Sample Preparation...............................................III11-38 11.2 Internal Quality Control ...........................................III11-41 11.3 Sample Security .................................................III11-41 11.4 Density and Moisture Samples ......................................III11-41 11.5 Comments on Section 11 ..........................................III11-41 12 Data Verification....................................................III11-42 12.1 Site Visits .....................................................III11-42 12.2 Witness Samples ................................................III11-44 12.3 Data Review....................................................III11-44 13 Mineral Processing and Metallurgical Testing.............................III11-45 13.1 Sample Selection ................................................III11-46 13.2 Mineralogical Analysis ............................................III11-46 13.3 Physical Testwork ...............................................III11-46 13.4 Gravity-Flotation Testwork.........................................III11-46 13.5 Ancillary Testwork ...............................................III11-47 — III11-3 — APPENDIX III COMPETENT PERSON’S REPORT — AAI REPORT SITE 11 14 Mineral Resource Estimates ...........................................III11-47 14.1 Mineral Resource Classification System ...............................III11-47 14.2 Mineral Resource Estimation Methodology under PRC MRL ...............III11-49 14.2.1 Economic Parameters .......................................III11-49 14.2.2 Grade Capping ............................................III11-50 14.2.3 Polygonal Method .........................................III11-50 14.2.4 Tonnage Factor............................................III11-52 14.2.5 Estimate Verification .......................................III11-52 14.3 Reconciliation to 2014 CIM Definition Standards........................III11-52 14.3.1 Resource Classification .....................................III11-53 14.3.2 Geostatistical Mineral Zone Analysis and Variography .............III11-57 14.3.3 Considerations of Reasonable Prospects for Eventual Economic Extraction ..............................................III11-60 14.3.4 Mining Reconciliation Considerations ..........................III11-60 14.4 Mineral Resource Statement ........................................III11-60 15 Mineral Reserve Estimates ............................................III11-64 15.1 Estimation Parameters ............................................III11-65 15.1.1 Dongji Mining Area Reserve Estimation Parameters ................III11-65 15.1.2 Breakeven Gold Equivalent Cut-Off Grade .......................III11-67 15.1.3 Reconciliation of Mineral Reserves to Production .................III11-67 15.2 Reserve Classification ............................................III11-68 15.2.1 Potential for Additional Reserves ..............................III11-70 16 Mining Methods ....................................................III11-70 16.1 Mining Method..................................................III11-70 16.1.1 Mining at Dongji Mining Area ................................III11-70 16.2 Backfill .......................................................III11-75 16.3 Mining Fleet ...................................................III11-76 16.4 Mine Infrastructure...............................................III11-76 16.4.1 Mine Ventilation...........................................III11-76 16.4.2 Compressed Air ...........................................III11-76 16.4.3 Underground Haulage.......................................III11-76 16.4.4 Shafts...................................................III11-76 16.4.5 Winders .................................................III11-77 16.4.6 Mine Water Discharge ......................................III11-79 16.5 Labor .........................................................III11-79 16.6 Mining Schedule ................................................III11-79 — III11-4 — APPENDIX III COMPETENT PERSON’S REPORT — AAI REPORT SITE 11 17 Recovery Methods ..................................................III11-82 17.1 Crushing Circuit.................................................III11-82 17.2 Grinding Circuit.................................................III11-87 17.3 Flotation Circuit.................................................III11-87 17.4 Concentrate Dewatering ...........................................III11-87 18 Project Infrastructures ...............................................III11-89 18.1 Roads.........................................................III11-89 18.2 Mine Waste Dumps ..............................................III11-89 18.3 Mine Ore Stockpiles..............................................III11-89 18.4 Electrical Energy ................................................III11-89 18.5 Tailings Impoundments............................................III11-89