Santander MineDevelopment and Production

Tender for Bid

October 20, 2014

Santander Mine

TREVALI PERU S.A.C – SANTANDER MINE

UNDERGROUND MINE DEVELOPMENT AND PRODUCTION

TENDER DOCUMENTS

1.0 Document Instructions to Tenderers/Tender Submission by Contractor

2.0 Document Appendix

2

Santander MineTABLE OF CONTENTS

TREVALI PERU S.A.C – SANTANDER MINE............................................UNDERGROUND MINE DEVELOPMENT AND PRODUCTION.....................TENDER DOCUMENTS........................................................................DOCUMENT 1....................................................................................INSTRUCTION TO TENDERERS............................................................1.0 TENDER TITLE...........................................................................2.0 THE PROJECT.............................................................................

2.1 Mine Development....................................................................................................7

2.2 Mine Production........................................................................................................7

3.0 ITEMS OF WORK INCLUDED IN THE CONTRACT............................3.1 General Scope of Work.............................................................................................7

3.2 Detailed Scope of Work.............................................................................................7

3.22 Development....................................................................................................8

3.23 Development Schedule....................................................................................9

3.23 Ore Production.................................................................................................9

3.23.1 Outline......................................................................................................9

3.23.2 Drilling/Blasting.....................................................................................10

3.23.3 Mucking/Hauling....................................................................................12

3.23.4 Backfilling..............................................................................................12

3.24 Ground Support.............................................................................................12

3.25 Ventilation.....................................................................................................13

3.26 Compressed Air.............................................................................................13

3.27 Quality of Work.............................................................................................13

3.28 Reservations...................................................................................................13

4.0 SUPPLIES AND RESPONSIBILITIES............................................5.0 TENDER FORMS SUBMITTED.......................................................

5.1 Tender Submission..................................................................................................18

5.2 Company Rights......................................................................................................18

5.3 Notification of Acceptance......................................................................................18

6.0 EXAMINATION OF TENDER DOCUMENTS......................................7.0 SITE CONDITIONS......................................................................

7.1 Site Visit..................................................................................................................19

3

Santander Mine7.2 Inquiries...................................................................................................................19

8.0 BOND REQUIREMENTS...............................................................9.0 INSURANCE...............................................................................10.0 IGV.........................................................................................11.0 SUBCONTRATORS....................................................................12.0 CONTRACTORS WORKFORCE...................................................13.0 FUNDS USED.........................................................................14.0 TENDER SUBMITTAL................................................................

14.1................................................................................................................................20

15.0 DEADLINES.............................................................................APPENDIX.......................................................................................

1.0 Schedule of Prices....................................................................................................22

LIST OF FIGURES

Figure 1: Drift Cross Section 8Figure 2: High Level Development Schedule 9Figure 3: Stope Drilling/Blasting/Mucking Sequence 11

LIST OF TABLES

Table 1: High level stope drilling, mucking and backfilling schedule for 2014/2015 Santander mine....................................................................................................................9Table 2: Responsibility Matrix (Tables 1-5).....................................................................14

4

Santander MineDOCUMENT 1

INSTRUCTION TO TENDERERS

5

Santander MineINSTRUCTION TO TENDERERS

1.0 TENDER TITLE

Santander MineUnderground Development and Production Contract No. 2015 – SA – 0001

2.0 THE PROJECT

The Santander Property is located in western central Peru, about 215 kilometres east-northeast of the capital city of Lima (Figure 4-1). The location of the property is within the district of Santa Cruz de Andamarca, province of Huaral, Department of Lima. Geographic co-ordinates for the centre of the property are 11º 06’ south latitude and 76º 32’ west longitude. The property covers a total area of 4,454.7 hectares.

The Santander Property consists of an irregular, northwest-trending block of 66 mineral concessions covering 950.7 hectares and six concessions covering 3,504 hectares. One of the older concessions (San Jose No. 1) is located approximately 35 kilometres west of the main property and is reported to cover a coal deposit. This is not of interest to Trevali at this time.

The climate is typical of the Puna or Altiplano with annual precipitation levels varying depending on the altitude. At elevations greater than 4,000 metres, precipitations range from 700 mm to 900 mm per year; at elevations between 3,000 metres to 4,000 metres, precipitations range from 450 mm to 600 mm per year; and at lower elevations of 2,000 metres to 3,000 metres, precipitations range from 250 mm to 400 mm per year. Typically, three-quarters of annual precipitations fall during the December to March “wet-season”, equally divided between rain and light-to-moderate snowfall. Throughout the remainder of the year, precipitations as rainfall are sporadic.

Average daily temperatures vary with season. Between June and August, daily highs range from 10ºC to 16ºC and lows range from 0ºC to 5ºC; from December to March, daily highs range from 5ºC to 8ºC and lows range from -5ºC to -1ºC. Humidity varies from 55.4% in August to 76.8% in March. Finally, evaporation ranges from 49.3 mm in February to 136.7 mm in July. The average hours of sunshine exposure are 184 hours for the months of May to August and 100 hours from December to March.

Exploration and operations are possible on a year-round basis.

6

Santander Mine2.1 Mine Development

Two ramp declines provide the access to the three main orebodies at the Santander Mine, Magistral Norte, Magistral Centro and Magistral Sur. The three main orebodies are split up into 70m levels, with 17.5m sublevels, sill to sill. Typical ramp sections are 5.0mWx4.0mH.

Vertical development on sublevels and ramp declines average approximately 24m/day. This multi-face development will include the two main declines as priority headings, as well as level accesses, ventilation raise accesses, sumps, muck bays, ore accesses and ore drifts.

2.2 Mine Production

The mining method selected for majority of Trevali’s Santander mine is an AVOCA (Retreat Longhole) method. The stope dimensions vary throughout the mine, however typically level intervals are 17.5 meters, sill to sill. Typically stopes along strike are up to 170mL, with only approximately 30m of ground being opened at a time until fill is added to reduce span. Stope designs will not exceed 18mW, and anything over 8mW requires deep ground support in the way of cable bolts or super swellex. Typical ore development sections along strike are 4.0mWx4.0mH.

3.0 ITEMS OF WORK INCLUDED IN THE CONTRACT

3.1 General Scope of Work

To supply all supervision, labour, tools, materials, equipment and services as required (unless otherwise specified) to develop the Santander Mine at a rate of 24 meters per day to complete approximately 8900 meters of development in twelve (12) months. All blasted material is be evacuated to a surface stockpile indicated on the surface plan view, or placed as unconsolidated backfill in open stopes as appropriate.

3.2 Detailed Scope of Work

This proposed contract is designed as a unit rate, lump sum and cost plus contract. The basis for the contract is as follows:

The contractor will choose and manage what manpower and gear it sees fit to accomplish the ramp/infrastructure excavation on schedule, to spec and within the rate that is bid.

All major construction items/projects with be done on the basis of Field Work Instructions (FWI). This will be signed off by both the company and the

7

Santander Minecontractor before the construction project at hand is begun. Examples of these items include but are not limited to:

o Cap/Powder magso Shopso Refuge Stationso Raises

The Company reimburses the Contractor per each meter that is excavated based on the bid unit price per meter, and in lump sums for completed projects based on the projects negotiated FWI and for hours consumed by equipment and labor for cost plus works. Contractor reimbursements will be based on quantity of work completed as well as the quality at which that work is completed.

3.22 Development

Operate and maintain the equipment fleet of jumbos, scoops, trucks, bolters, scissor lifts, shotcrete machines, service vehicles to maintain development/ construction targets. The dimensions of development headings will vary from heading to heading dependant on size requirements. All major development must be done to design specifications. A drift cross section/driving layout with the specifications (pipe, vent, etc...) required will be provided by Trevali’s Engineering Department. A typical section is defined in the following figure.

8

Santander Mine

Figure 1: Drift Cross Section

The composition of the equipment fleet will be modernized and all equipment will be of a working condition deemed acceptable by the company. This equipment may also change to reflect future requirements.

All roadway maintenance will be accomplished regularly by the contractor. Crushed roadbed material will be supplied by the company.

3.23 Development Schedule

A high level development schedule can be seen in the following figure. A more detailed schedule has been sent with the Tender Document. Please note the dates seen have not been finalized.

DEVELOPMENT STATISTICS

Summary By Heading Type JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DECRamp 294 280 240 240 230 210 254 204 170 220 190 280Level 443 415 504 501 516 518 482 560 586 533 553 434Raise Meters 114 112 117 122 119 124 114 112 124 121 124 121Total (m) 850 807 861 863 865 852 850 876 880 874 867 835

2015

Figure 2: High Level Development Schedule

9

Santander Mine3.23 Ore Production

3.23.1 Outline

Trevali requires the chosen contracting company to supply, operate and maintain the manpower and equipment fleet of drills, scoops, trucks, shotcrete machines and service vehicles to maintain production drilling, loading, blasting, production mucking and backfilling targets. Trevali’s planned production schedule is summarized in the following table. A detailed schedule is attached to this document along with level plans with stopes visually schedule. Please note that the schedule may vary depending on start date of development and operations.

Table 1: High level stope drilling, mucking and backfilling schedule for 2014/2015 Santander mine.

STOPE PRODUCTION STATISTICS

Summary by Activity JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DECDrilling (m) 8,000 7,556 8,667 8,667 11,111 11,111 11,111 11,111 11,111 11,111 11,111 11,111Mucking (t) 60,894 57,823 60,976 60,843 61,792 59,670 59,996 59,996 59,874 59,874 59,996 59,792Backfill (t) 9,381 8,599 9,381 9,381 9,381 7,818 7,818 7,818 7,818 7,818 7,818 9,381

2015

3.23.2 Drilling/Blasting

Ore production requires longhole drilling and blasting of stopes using the following sequence:

-Drill stopes using 2.5”+-10% diameter vertical holes at a 1.5m spacing and 1.5m ring burden square pattern, or other approved pattern recommendations. In addition to this, the first stope of each series of stopes will require a slot raise. There will be approximately 1 slot raise per 45,000T of production. This is shown in the following figure. The manner of which this slot raise is put in place will be left up to the contractor. Detailed layouts of the stope drill patterns will be provided by Trevali engineering during operations. Dimensions above are an average for costing purposes.-Blast stopes using approved blasting agents and detonators, provided by Trevali. -Detailed layouts of the stope blasting patterns and timing will be provided by Trevali engineering during operations. -The above schedules for 2015 will be representative of a yearly schedule for the 6 year mine life

10

Santander Mine

Figure 3Error: Reference source not found: Stope Drilling/Blasting/Mucking Sequence

11

Santander Mine

3.23.3 Mucking/Hauling

Muck the blasted stopes using scoop trams as recommended by the contractor. Please note that majority of mucking (70%) will be done in remote mucking conditions due to the nature of the mining method. All ore material will be hauled to the surface ore pad via the internal ramp using trucks selected by the contractor. All major development will be excavated or slashed to a final dimension of 4.0mW x 4.0mH as a minimum. The average haul distance for the production ore schedule is 3600m from draw point to surface. Truck loading points will be developed within 200 meters of each drawpoint to ensure quick access to loading trucks.

3.23.4 Backfilling

In typical stopes, backfilling will only take place after all recoverable ore is excavated from the stope boundaries. Backfill material will typically come from waste development when available. When waste development isn’t available, backfill material will be backhauled from the surface waste pile (shown on map above) and placed. All backfill is unconsolidated waste rock with no additional compaction.

3.24 Ground Support

Ground support standards vary based on headings, however typically in development headings such as ramps and level accesses, 2.1m rebars are installed with screen in the back, with 2.1m split sets installed in the walls. In ore zones, after primary support has been installed during development, additional deep ground support will be required when the ore zones are slashed out to +8mW. In these types of drifts, slashing is done in sequence with the installation of deep ground support, typically 6.5m cable bolts installed on a 3m diced pattern in the back.

12

Santander Mine3.25 Ventilation

Ventilation will typically be maintained by development crews, however, it should be noted that Trevali may require adjustments to ventilation controls prior to and after stope blasting to ensure effective removal of blast gases. This will be requested by Trevali engineering and will be the responsibility of the contractor to make adjustments.

3.26 Compressed Air

Compressed air supplied by Trevali will be limited, therefore large production drills may require the need for a makeup compressor. This can be confirmed with Trevali prior to commencing work.

3.27 Quality of Work

The contractor will be held to accomplish tasks to company standards and specifications. Any work that has to be re-done as a result of poor quality of work will be done at the contractors cost as well as a deductions will be made if an impact to the schedule is directly related to poor work quality.

3.28 Reservations

The Company reserves the right to perform any or all of the scope through the company organization or by utilizing other contractors.

13

Santander Mine4.0 SUPPLIES AND RESPONSIBILITIESAll activities performed under this contract must be performed in strict adherence to the COMPANY'S and CONTRACTORS safety policies, Terms & Conditions. The table below indicates the responsibilities that will be assumed by the contractor and the company.

Table 2: Responsibility Matrix (Tables 1-5)

RESPONSIBILITY MATRIX GENERAL MINE SERVICES – SURFACE

Table – 1Provide Control Operate and / or

InstallMaintain

Owner Contr. Owner Contr. Owner Contr. Owner Contr.

Compressed Air Plant X X X X

Plant Process Water Supply X X X X

Plant Power Supply X X X X

Main Ventilation System X X X X

Disposals (until sign off to Operations) Refuse X X X X

Sewage X X X X

Lubricants X X X X

Dry Facilities X X X X

Lay down and yard X x X X

Road maintenance to site access road X X X X

14

Santander MineTable – 2 UNDERGROUND SERVICES

Provide Control Operate and / or Install

Maintain

Owner Contr. Owner Contr. Owner Contr. Owner Contr.

Mine Water at Pipe Tie X X X X

Potable Water to Refuge Station X X X X

Minimum 90 psi. Compressed Air to Mine Workings

X X X X

Main / Primary Ventilation / Fans X X X X X X

Auxiliary Ventilation (ramp and level ventilation) X X X X

Sanitary Facilities (existing U/G) X X X X

Sewage X X X X

Electrical Power Supply

Primary (13.8 kV to 4160V) X X X X

Secondary (600V) X X x X

Permanent Lighting X X X X

Temporary Power X X X X

Mine Water Disposal

Block Dewatering X X X X

Level Dewatering X X X X

Temp Dewatering X X X X

Disposals

Refuse from worksite to Surface X X X X

Lubricants to Surface X X X X

Lubricants from Surface to disposal area X X X X

Roadways X X X X

Fire Protection X X X X X X X

Refuge Station X X X X

Shops X X X X

Communications Leaky feeder X X X X

Telephone – Trunk line X X X X

Telephone – temp line X X X X

Fiber optics line X X X X

Powder and Cap Magazines X X X X

Muck Removal from Work Site to designated dump.

X X X X

Muck Removal from designated dump to backfill stope.

X X X X

15

Santander MineTable – 3 ADMINISTRATIVE SERVICES

Provide Control Operate and / or Install

Maintain

Owner Contr. Owner Contr. Owner Contr. Owner Contr.

Surface Office X X X X

Surveying X X X X

Engineering Designs (initial layouts) X X X X

Safety Apparel Safety Belts, Body Harness and all other Personnel safety supplies

X X X X

Surface First Aid X X X X

Site Security X X X X

Site Medical Consults/Consumables X X X X

Cap Lamps & Chargers X X X X

Pre-Site Medical X X X X

Administrative Services Telephone X X X X

Fax X X X X

Photocopier X X X X

Office Furniture Etc. X X X X

Office Supplies X X X X

Computer Equipment X X X X

Camp and Camp Services (food etc) X X X X

Other Communications (Femco,) X X X X

Radios, Leaky Feeder Portable and Fixed Mobile X X X X

Table – 4 TRANSPORTATION SERVICES

Provide Control Operate and / or Install

Maintain

Owner Contr. Owner Contr. Owner Contr. Owner Contr.

Mobilization/Setup (contractor equipment) To Minesite X X X X

Off Loading (surface) / Front End Loader X X X X

Assembly/ Disassembly X X X X

Surface Handling Front End Loader (forklift) X X X X

Light Truck X X X X

Ramp Handling (existing mine) Fuel X X X X

Lubricants X X X X

Materials X X X X

Equipment X X X X

16

Santander MineTable – 5 MATERIAL SUPPLY

Provide Control Operate and / or Install

Maintain

Owner Contr. Owner Contr. Owner Contr. Owner Contr.

All Drilling Bits, Steel, Etc. X X X X

Hose, Fittings X X X X

Drill Supplies X X X X

Drill Accessories X X X X

Mobile Equipment Scoop tram X X X X

Mobile fuel truck X X X X

Haulage trucks X X X X

Jumbo X X X X

Scissor lifts X X X X

Tractor X X X X

Toyota X X X X

Lubricants for mobile equipment oil,grease ,fuel X X X X

Hyd hoses and fittings X X X X

All small tools

Wood Working X X X X

Metal Working X X X X

Welding and Cutting X X X X

Rigging X X X X

All Ground Support & Accessories Timber X X X X

Bolts, Resin, Shot Crete, screen, straps, cable bolts…etc Concrete

X X X X

E plosives and accessories supply to Magazines X X X X

Pipe & Accessories X X X X

Vent Tube & Accessories X X X X

Electrical Cable & Accessories X X X X

Victaulic Fittings X X X X

Valves X X X X

17

Santander Mine5.0 TENDER FORMS SUBMITTED

5.1 Tender Submission Upon submittal of the tender bid, the following forms are requested by the company:

The completed price schedule (See Appendix)

A list of equipment used to successfully complete the project. Trevali will reserve the right to review and approve all equipment prior to it being sent to site at Santander (See Appendix)

Specification of the type and cost of consumables that the contractor is requested to purchase. (Indicated in subsection 4.0)

A note indicating union status and when union contracts are under re-negotiation.

CV’s for all on and off site management involved in the contract

5.2 Company RightsThe Company reserves the right to accept any tender and not necessarily the lowest tender and to reject any or all tenders.

5.3 Notification of AcceptanceCommitment shall not be made by the company in respect of the tender until such time as the tenderer receives written notification of acceptance by the company.

6.0 EXAMINATION OF TENDER DOCUMENTS

The tenderer shall, before submitting his tender, carefully examine the tender documents to satisfy him/herself as to the project conditions and the scope of work.

Should the tenderer find discrepancies in, or omissions from, the tender document, or should be in doubt of their meaning. He/she shall at once notify the company in accordance with clause 7.2 of this section for clarification.

7.0 SITE CONDITIONS

7.1 Site VisitThe tenderer, either personally or through a representative, shall examine the place of work being the Santander Mine site before submitting a tender or shall satisfy him/herself

18

Santander Mineas to the nature of the location and all conditions associated with the work. Facilities provided by the company, access to site, local accommodations etc, must be examined by the tenderer. A general site visit has not been scheduled. Further notice of a site visit will be submitted by Trevali at a later date.

7.2 Inquiries The tenderer is directed to contact the company’s representative at the following address in order to arrange a site visit or for general inquiries.

Trevali Peru S.A.CAv. Jorge Basadre 1035San IsidroLima, Peru

ATTENTION: Bradford Ernst, P.EngSenior Projects Engineer+1-902-579-4522

Paul Keller, P.EngChief Operating Officer+1-705-716-4536+51-989-074-756

8.0 BOND REQUIREMENTS

Not Applicable

9.0 INSURANCE

The successful tenderer shall be required to secure and maintain, at his own expense, machinery, automobile and equipment insurance, bodily injury and property damage insurance, environmental damage insurance, comprehensive general liability insurance and all the insurance demand by labour law. Third party liability should be a minimum of US$2,000,000.00.

10.0 IGV

Prices quoted in the tender are not to include IGV (General Sales Taxes). When the invoices are issued in Peru, IGV will be applied at that time.

11.0 SUBCONTRATORS

19

Santander MineThe tender shall list in the tender form the name of each subcontractor he proposes for use of any portion of the work.

The successful contractor shall be responsible for the administration of any subdivision of work to any subcontractor and ensure that the scope of work is conducted to the satisfaction of the company.

Prior to any subcontractor commencing work, approval is to be obtained by the company.

12.0 CONTRACTORS WORKFORCE

The contractor shall employ only qualified trades people on the company projects.

13.0 FUNDS USED

All lump sums and unit rates quoted in the Tender shall be in American Dollars. A payment shall be made a 30 days upon receipt of the contractors invoice.

14.0 TENDER SUBMITTAL

14.1Bids will be submitted to Bradford Ernst, P.Eng, and Paul Keller, P.Eng, VIA email to:bernst@trevali.com, pkeller@trevali.com

A hard copy of the bid pricing will also be submitted to Bradford Ernst, P.Eng at:

Trevali Peru S.A.CAv. Jorge Basadre 1035San IsidroLima, Per

15.0 DEADLINES

A site tour schedule will be defined and provided by Trevali at a later date.Bids for this project will be submitted for this project by November 30, 2014.

20

Santander Mine

DOCUMENT 2

Appendix

21

Santander Mine1.0 Schedule of Prices

SCHEDULE OF PRICES Santander Mine Tender

Item/DescriptionTotal Units Unit Total $

Lump Sum Mobilization (Show Breakdown) Lump Sum Demobilization (Show Breakdown) Lump Sum Unit Rates - Development

Waste Rock Ramp (5.0mW x 4.0mH) + Hauled to Portal Surface Pad Per Linear Meter

Lateral Level Development Waste (4.0mW x 4.0mH) hauled to Surface Pad Per Linear Meter

Ore Development (4.0mW x 4.0mH) + Hauled to Surface Portal Pad Per Linear Meter Ore Production (Hauled to Surface) Per Metric Tonne Ramp Safety Bay (1.8mx1.8mx2.4m) Per Each Ramp Slashing Per Cubic Meter Level Waste Slashing Per Cubic Meter Level Ore Slashing Per Cubic MeterAdditional Ground SupportGround Support Screen Per Square meter Ground Support 1.8m Rebar Per Unit Ground Support 2.4m Rebar Per Unit Ground Support 3.6m Swellex Per Unit Ground Support 1.5m Split Set Per Unit Ground Support – 6.5m Cable Bolt Per UnitGround Support – 10m Cable Bolt Per Unit Shotcrete Regular (No Fiber) Per Bag (M3)Unit Rates - Production MiningLonghole Slot Raise Per EachLonghole Drilling Per Metric TonneLonghole Blasting Per Metric Tonne Production Mucking Per Metric TonneProduction Backfilling Per Metric Tonne

Equipment Required + Rates Used to Tender (If more room is required use blank page)

22

Santander Mine Equipment Identification (Model/Size/Year) Standby Rate($/hr) Operating Rate($/hr)

Personnel Required + Rates Used to Tender (If more room is required use blank page) Position (i.e. operator, supervisor) Rate ($/hr) Note:Development and Production both involve all work required to keep headings to approved working standard.This includes vent tubing, all piping and ground support etc…

Contractor:_______________________________ Signed:__________________________________

Date:____________________________________

23

Santander Mine

24

Santander Mine

25