APPENDIX III COMPETENT PERSON’S REPORT — AAI REPORT SITE 12 INDEPENDENT TECHNICAL REPORT SITE 12 XIHE ZHONGBAO (FAR WEST) GANSU PROVINCE, CHINA Timothy A. Ross, P.E., RM-SME Agapito Associates, Inc. Grand Junction and Lakewood, Colorado, USA William R. Stanley, L.G., RM-SME Scottsdale, Arizona, 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: — III12-1 — APPENDIX III COMPETENT PERSON’S REPORT — AAI REPORT SITE 12 INDEPENDENT TECHNICAL REPORT SITE 12 XIHE ZHONGBAO (FAR WEST) GANSU PROVINCE, CHINA TABLE OF CONTENTS Page 1 Summary .........................................................III12-15 1.1 Introduction ...................................................III12-15 1.2 Property Description and Ownership .................................III12-16 1.3 Geology and Mineralization .......................................III12-17 1.4 Status of Exploration ............................................III12-17 1.5 Development and Operations .......................................III12-17 1.6 Mineral Resource Estimate ........................................III12-18 1.7 Mineral Reserve Estimate .........................................III12-19 1.8 Economics ....................................................III12-23 1.9 Environmental and Permitting ......................................III12-23 1.10 Risk Assessment ................................................III12-23 1.11 Conclusions and Recommendations ..................................III12-23 2 Introduction .......................................................III12-25 2.1 Information Sources .............................................III12-25 2.2 Qualified Persons ...............................................III12-25 3 Reliance on Other Experts ...........................................III12-27 4 Property Description and Location .....................................III12-27 4.1 Location ......................................................III12-27 4.2 Mineral Rights .................................................III12-27 4.3 Environmental Liabilities, Permits, and Risks for the Property .............III12-28 5 Accessibility, Climate, Local Resources, Infrastructure and Physiography ......III12-31 5.1 Topography, Elevation, and Vegetation ...............................III12-31 5.2 Accessibility ...................................................III12-31 5.3 Local Resources and Infrastructure ..................................III12-32 5.4 Climate .......................................................III12-32 6 History ...........................................................III12-32 6.1 Ownership .....................................................III12-32 6.2 Exploration and Development Work .................................III12-33 6.3 Historical Mineral Resource and Mineral Reserve Estimates ...............III12-33 6.4 Production ....................................................III12-33 7 Geological Setting and Mineralization ..................................III12-34 — III12-2 — APPENDIX III COMPETENT PERSON’S REPORT — AAI REPORT SITE 12 7.1 Regional Geologic Setting .........................................III12-34 7.2 Gold Mineralization in the Xinyang Group, Qinling Gold Belt .............III12-34 7.3 Xihe Zhongbao Area Geology ......................................III12-35 7.3.1 Siergoumen Mine Geology and Mineralization ...................III12-36 7.3.2 Xiaodonggou General Exploration Area Geology and Mineralization . III12-39 8 Deposit Types .....................................................III12-42 8.1 Gold Deposits of the Qinling Gold Belt ..............................III12-42 8.2 Siergoumen and Xiaodonggou Gold Systems ...........................III12-43 8.3 Siergoumen Mine and Xiaodonggou General Exploration Area Deposit Types . III12-44 9 Exploration .......................................................III12-44 9.1 Siergoumen Mine Site Exploration ..................................III12-44 9.2 Xiaodonggou General Exploration Area ...............................III12-45 10 Drilling ..........................................................III12-47 10.1 Trenching, Drilling, Exploration Tunnelling, and Channel Sampling .........III12-47 10.2 Core Drilling—General Procedures, Recovery, and Sampling ..............III12-48 11 Sample Preparation, Analyses, and Security .............................III12-50 11.1 Sample Preparation ..............................................III12-50 11.2 Assay Laboratories and Assay Procedures .............................III12-50 11.3 Assay Laboratory Analytical Verification .............................III12-51 11.4 Sample Security ................................................III12-53 11.5 Density and Moisture Samples .....................................III12-53 12 Data Verification ...................................................III12-54 12.1 Summary ......................................................III12-54 12.2 Witness Sampling ...............................................III12-54 12.3 Mine and Surface Infrastructure ....................................III12-58 13 Mineral Processing and Metallurgical Testing ............................III12-59 13.1 Sample Selection ................................................III12-59 13.2 Mineralogical Analysis ...........................................III12-60 13.3 Physical Testwork ...............................................III12-61 13.4 Grinding Fineness Test ...........................................III12-61 13.5 Cyanidation Leach Testwork .......................................III12-61 13.6 Ancillary Testwork ..............................................III12-62 14 Mineral Resource Estimates ..........................................III12-62 14.1 Mineral Resource Classification System ..............................III12-62 14.2 Conceptual Mining Scenario .......................................III12-63 — III12-3 — APPENDIX III COMPETENT PERSON’S REPORT — AAI REPORT SITE 12 14.3 Mineral Resource Estimation Methodology under PRC MRL ...............III12-64 14.3.1 Economic Parameters ......................................III12-64 14.3.2 Grade Capping ...........................................III12-65 14.3.3 Polygonal Method .........................................III12-66 14.3.4 Tonnage Factor ...........................................III12-67 14.3.5 Estimation Verification .....................................III12-67 14.4 Reconciliation to 2014 CIM Definition Standards by AAI .................III12-68 14.4.1 Mining Reconciliation Considerations ..........................III12-68 14.4.2 Resource Classification .....................................III12-69 14.4.3 Geostatistical Mineral Zone Analysis and Variography ..............III12-75 14.4.4 Consideration of Reasonable Prospects for Eventual Economic Extraction .............................................III12-82 14.5 Mineral Resource Statement .......................................III12-82 15 Mineral Reserve Estimates ...........................................III12-84 15.1 Estimation Parameters ............................................III12-85 15.1.1 Dilution and Mining Recovery Factors .........................III12-86 15.1.2 Reconciliation of Mineral Reserves to Production .................III12-86 15.1.3 Breakeven Cut-off Grade ....................................III12-87 15.2 Reserve Classification ............................................III12-88 15.3 Mineral Reserves ...............................................III12-89 15.4 Factors that May Affect the Mineral Reserve Estimate ...................III12-90 16 Mining Methods ....................................................III12-90 16.1 Mining Method .................................................III12-90 16.2 Production Rates, Dilution and Extraction Ratio ........................III12-92 16.3 Mine Facilities and Equipment .....................................III12-92 16.3.1 Hoisting ................................................III12-92 16.3.2 Ventilation ..............................................III12-92 16.3.3 Compressed Air ...........................................III12-92 16.3.4 Mine Water ..............................................III12-92 16.3.5 Mine Backfill ............................................III12-94 16.4 Mining Schedule ................................................III12-94 17 Recovery Methods ..................................................III12-108 17.1 Crushing Circuit ................................................III12-108 17.2 Grinding Circuit ................................................III12-108 17.3 Leaching and Carbon-in-Pulp (CIP) Circuit ............................III12-110 17.4 Tailings System .................................................III12-110 17.5 Refinery Circuit ................................................III12-110 — III12-4 — APPENDIX III COMPETENT PERSON’S REPORT — AAI REPORT SITE 12 18 Project Infrastructure ...............................................III12-111 18.1 Roads ........................................................III12-111 18.2 Dumps .......................................................III12-111 18.3 Ore Stockpiles .................................................III12-111 18.4 Electric Power .................................................III12-111 18.5 Tailings .......................................................III12-111 19 Market Studies