MALBEX RESOURCES INC. AN UPDATED MINERAL RESOURCE ESTIMATE AND PRELIMINARY ECONOMIC ASSESSMENT FOR THE ROJO GRANDE DEPOSIT AT THE DEL CARMEN PROPERTY, EL INDIO GOLD BELT SAN JUAN PROVINCE, ARGENTINA B. TERRENCE HENNESSEY, P.GEO. RICHARD M. GOWANS, P.ENG. DAYAN J. ANDERSON, MMSA CHRISTOPHER JACOBS, CEng MIMMM October 09, 2013 SUITE 900 - 390 BAY STREET, TORONTO ONTARIO, CANADA M5H 2Y2 Telephone (1) (416) 362-5135 Fax (1) (416) 362 5763 Table of Contents Page 1.0 SUMMARY .................................................................................................................... 1 1.1 Introduction .................................................................................................................. 1 1.2 Geology and Mineralization......................................................................................... 2 1.3 Exploration And Drilling ............................................................................................. 3 1.4 Mineral Resources........................................................................................................ 4 1.5 Mining .......................................................................................................................... 6 1.6 Processing .................................................................................................................... 7 1.7 Infrastructure ................................................................................................................ 7 1.8 Social and Environmental Issues ................................................................................. 8 1.9 Capital Costs ................................................................................................................ 8 1.10 Operating Costs ............................................................................................................ 9 1.11 Economic Analysis ...................................................................................................... 9 1.12 Conclusions ................................................................................................................ 11 2.0 INTRODUCTION ........................................................................................................ 13 3.0 RELIANCE ON OTHER EXPERTS ......................................................................... 16 4.0 PROPERTY DESCRIPTION AND LOCATION .................................................... 18 4.1 Location ..................................................................................................................... 18 4.2 Mineral Tenure ........................................................................................................... 18 4.3 Mining Law in Argentina ........................................................................................... 21 4.4 Agreements ................................................................................................................ 22 4.5 Environmental Liabilities and Legislation ................................................................. 23 5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ....................................................... 25 6.0 HISTORY ..................................................................................................................... 27 7.0 GEOLOGICAL SETTING AND MINERALIZATION .......................................... 32 7.1 Geological Setting ...................................................................................................... 32 7.1.1 Regional Geology............................................................................................... 32 7.1.2 Geology of the Del Carmen Property................................................................. 36 7.2 Mineralization ............................................................................................................ 37 8.0 DEPOSIT TYPES ........................................................................................................ 39 9.0 EXPLORATION .......................................................................................................... 41 9.1 2008-2009 Season ...................................................................................................... 41 9.2 2009-2010 Season ...................................................................................................... 44 9.3 2010-2011 Season ...................................................................................................... 49 9.4 2011-2012 Season ...................................................................................................... 52 9.5 2012-2013 Season ...................................................................................................... 53 i 10.0 DRILLING ................................................................................................................... 56 10.1 2009-2010 Season Results ......................................................................................... 58 10.2 2010-2011 Season Results ......................................................................................... 59 10.3 2011-2012 Season Results ......................................................................................... 62 10.4 Drilling Procedures .................................................................................................... 69 11.0 SAMPLE PREPARATION, ANALYSES AND SECURITY .................................. 70 11.1 Sample Collection and Shipment ............................................................................... 70 11.1.1 Surface Samples ................................................................................................. 70 11.1.2 Drill Core Samples ............................................................................................. 70 11.1.3 Security and Chain-Of-Custody ......................................................................... 71 11.1.4 Conclusions ........................................................................................................ 72 11.2 Sample Preparation and Analyses .............................................................................. 72 11.2.1 Sample Preparation ............................................................................................ 72 11.2.2 Analytical Methods ............................................................................................ 74 11.2.3 Summary ............................................................................................................ 74 12.0 DATA VERIFICATION ............................................................................................. 76 12.1 ALS Global Laboratory QA/QC ................................................................................ 76 12.2 Malbex QA/QC .......................................................................................................... 76 12.3 Micon Data Verification ............................................................................................ 80 12.4 Conclusions ................................................................................................................ 81 13.0 MINERAL PROCESSING AND METALLURGICAL TESTING ........................ 82 13.1 McClelland Bottle Roll Leach Tests - 2011............................................................... 82 13.2 McClelland Column Leach Tests - 2011 ................................................................... 83 13.2.1 Metallurgical Samples ........................................................................................ 83 13.2.2 Metallurgical Tests ............................................................................................. 86 13.3 Conclusions and Recommended Future Metallurgical Testwork .............................. 89 14.0 MINERAL RESOURCE ESTIMATES ..................................................................... 91 14.1 General ....................................................................................................................... 91 14.2 Mineral Resource Estimation Procedures .................................................................. 91 14.2.1 Geological Model and 3D Solid Modelling ....................................................... 91 14.2.2 Population Statistics and Grade Capping ........................................................... 93 14.2.3 Compositing ....................................................................................................... 96 14.2.4 Variography........................................................................................................ 97 14.2.5 Density ............................................................................................................. 101 14.2.6 Block Model ..................................................................................................... 101 14.2.7 Grade Interpolation .......................................................................................... 102 14.2.8 Open Pit Evaluation ......................................................................................... 102 14.3 Mineral Resources.................................................................................................... 103 14.3.1 Responsibility for Estimation ........................................................................... 104 14.4 Mineral Resource Validation ..................................................................................