APPENDIX III COMPETENT PERSON’S REPORT — AAI REPORT SITE 10 INDEPENDENT TECHNICAL REPORT SITE 10 CHIFENG CHAIHULANZI MINE INNER MONGOLIA, CHINA Timothy A. Ross, P.E., RM-SME and Dr. Douglas F. Hambley, P.E., P.Eng., P.G., RM-SME Agapito Associates, Inc. Grand Junction and Lakewood, Colorado, USA Leonard J. Karr, CPG, AIPG Golden, Colorado, USA 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: — III10-1 — APPENDIX III COMPETENT PERSON’S REPORT — AAI REPORT SITE 10 INDEPENDENT TECHNICAL REPORT SITE 10 CHIFENG CHAIHULANZI MINE INNER MONGOLIA, CHINA TABLE OF CONTENTS Page 1 Summary .........................................................III10-14 1.1 Introduction ...................................................III10-14 1.2 Property Description and Ownership .................................III10-15 1.3 Geology and Mineralization .......................................III10-15 1.4 Development and Operations .......................................III10-16 1.5 Metallurgical Testwork ...........................................III10-16 1.6 Processing Plant ................................................III10-16 1.7 Mineral Resource Estimate ........................................III10-16 1.8 Mineral Reserve Estimate .........................................III10-19 1.9 Economics ....................................................III10-20 1.10 Environmental and Permitting ......................................III10-22 1.11 Risk Assessment ................................................III10-22 1.12 Conclusions and Recommendations ..................................III10-22 2 Introduction .......................................................III10-23 2.1 Information Sources .............................................III10-23 2.2 Qualified Persons ...............................................III10-24 3 Reliance on Other Experts ...........................................III10-25 4 Property Description and Location .....................................III10-26 4.1 Location ......................................................III10-26 4.2 Mineral Rights .................................................III10-26 4.3 Environmental Liabilities, Permits, and Risks for the Property .............III10-29 5 Accessibility, Climate, Local Resources, Infrastructure and Physiography ......III10-29 5.1 Topography, Elevation, and Vegetation ...............................III10-29 5.2 Accessibility ...................................................III10-29 5.3 Local Resources and Infrastructure ..................................III10-30 5.4 Climate .......................................................III10-30 6 History ...........................................................III10-30 6.1 Ownership .....................................................III10-30 6.2 Exploration and Development Work .................................III10-30 6.2.1 Chaihulanzi Mine Development ...............................III10-30 6.2.2 Wenjiadixi Exploration Area Exploration ........................III10-31 — III10-2 — APPENDIX III COMPETENT PERSON’S REPORT — AAI REPORT SITE 10 6.2.3 Chaihulanzi Mine Deep Prospecting Area Exploration ..............III10-31 6.2.4 Hadagou Mine Exploration ..................................III10-31 6.3 Historical Mineral Resource and Mineral Reserve Estimates ...............III10-31 6.4 Production ....................................................III10-31 7 Geological Setting and Mineralization ..................................III10-32 7.1 Regional Geologic Setting .........................................III10-32 7.1.1 Chifeng Chaihulanzi Mine Geology ............................III10-33 8 Deposit Types .....................................................III10-35 8.1 Chaihulanzi Mine Geology ........................................III10-35 8.2 Wenjiadixi Exploration Area Geology ................................III10-39 8.3 Chaihulanzi Mine Deep Prospecting Area Geology ......................III10-41 8.4 Hadagou Mine Exploration Geology .................................III10-41 9 Exploration .......................................................III10-42 9.1 Chaihulanzi Mine License and Deep Exploration License .................III10-42 9.2 Wenjiadixi Exploration Area License .................................III10-43 10 Drilling ..........................................................III10-43 10.1 Chaihulanzi Mine License and Deep Exploration License .................III10-43 10.2 Wenjiadixi Exploration Area License .................................III10-43 10.3 Core Drilling Procedures ..........................................III10-43 10.4 Comments on Section 10 ..........................................III10-44 11 Sample Preparation, Analyses, and Security .............................III10-44 11.1 Exploration Samples .............................................III10-44 11.2 Mine Samples ..................................................III10-44 11.3 Sample Preparation ..............................................III10-44 11.4 Assay Procedures ...............................................III10-45 11.5 Sample Security ................................................III10-46 11.6 Comments on Section 11 ..........................................III10-46 12 Data Verification ...................................................III10-46 12.1 Database ......................................................III10-46 12.2 General Procedure ...............................................III10-47 12.2.1 Mine Samples ............................................III10-48 12.2.2 Mill Samples .............................................III10-52 12.3 Results of Witness Samples ........................................III10-52 12.3.1 Interpretation of Witness Sample Results .......................III10-53 12.4 Comments on Section 12 ..........................................III10-53 13 Mineral Processing and Metallurgical Testing ............................III10-54 13.1 Sample Selection ................................................III10-54 13.2 Mineralogical Analysis ...........................................III10-55 — III10-3 — APPENDIX III COMPETENT PERSON’S REPORT — AAI REPORT SITE 10 13.3 Physical Testwork ...............................................III10-55 13.4 Grinding Fineness Test ...........................................III10-55 13.5 Flotation Testwork ..............................................III10-55 13.6 Whole Ore Cyanidation Leach/RIP Testwork ...........................III10-56 13.6.1 Whole Ore Cyanidation Leach Test ............................III10-56 13.6.2 Adsorption Test ...........................................III10-56 13.7 Ancillary Testwork ..............................................III10-58 14 Mineral Resource Estimates ..........................................III10-58 14.1 Mineral Resource Classification System ..............................III10-58 14.2 Conceptual Mining Scenario .......................................III10-59 14.3 Mineral Resource Estimation Methodology under PRC MLR ...............III10-59 14.3.1 Economic Parameters ......................................III10-60 14.3.2 Grade Capping ...........................................III10-61 14.3.3 Polygonal Method .........................................III10-61 14.3.4 Tonnage Factor ...........................................III10-63 14.4 Reconciliation to 2014 CIM Definition Standards by AAI .................III10-63 14.4.1 Resource Classification .....................................III10-64 14.4.2 Geostatistical Mineral Zone Analysis and Variography .............III10-66 14.4.3 Discussion ..............................................III10-74 14.5 Mineral Resource Statement .......................................III10-74 15 Mineral Reserve Estimates ...........................................III10-78 15.1 Estimation Parameters and Modifying Factors ..........................III10-78 15.1.1 Dilution, Extraction Ratio, and Mill Recovery ...................III10-79 15.1.2 Reconciliation of Mineral Reserves to Production .................III10-79 15.1.3 Breakeven Cut-off Grade ....................................III10-80 15.2 Reserve Classification ............................................III10-81 15.3 Mineral Reserves ...............................................III10-82 15.4 Factors That May Affect the Mineral Reserve Estimate ...................III10-82 16 Mining Methods ....................................................III10-84 16.1 Geotechnical and Hydrogeological Considerations .......................III10-84 16.2 Description of Stoping Methods ....................................III10-86 16.2.1 Shrinkage with Delayed Filling ...............................III10-86 16.2.2 Sublevel Longhole Stoping with Delayed Filling ..................III10-86 16.2.3 Room-and-Pillar Mining ....................................III10-86 16.3 Production Rates and Number of Mining Faces, and Dilution and Extraction Ratio .......................................................III10-87 16.4 Mine Facilities and Equipment .....................................III10-89 16.4.1 Hoisting ................................................III10-89 — III10-4 — APPENDIX III COMPETENT PERSON’S REPORT — AAI REPORT SITE 10 16.4.2 Ventilation ..............................................III10-90 16.4.3 Compressed-Air Supply .....................................III10-90