Independent Engineering Review of the Agua Rica Projects22.q4cdn.com/899716706/files/doc_news/2014/31-RPM-Report-(FIN… · RPM expressly disclaims any liability to you and any duty

ADV-SA-00028 December 2014 Page i

This report has been prepared for YAMANA and must be read in its entirety and subject to the third party disclaimer clauses

contained in the body of the report

Independent Engineering Review of the Agua Rica Project

Prepared for

Report No: ADV-SA-00028

December 9, 2014

ADV-SA-00028 December 2014 Page ii



Document Control Sheet

Client

YAMANA Gold

Report Name Date

INDEPENDENT ENGINEERING REVIEW: AGUA RICA December 9, 2014

Job N°. Revision N°

ADV-SA-00028 Final

File Name:

SA-00028_AguaRica_IER_Final_Dec92014

Authorship

Name Position Signature Date

Prepared By: RPM Team

Richard Kehmeier, Chief Geologist, C.P.G

Richard Addison, Principal Processing

Engineer, P.E

Terry Brown, Principal Environmental

Specialist, Ph.D.

Sergio Fuenzalida, Principal Mining

Engineer, FAusIMM

5/12/14

Reviewed By: David Pires Consulting Manager - LATAM 9/12/14

Approved By: Philippe Baudry Executive General Manager 9/12/14

Acceptance by Client Representative

Name Position Signature Date

Fernando Porcile Agua Rica Project Manager 8/12/14

Distribution

Organisation Recipient N°of Hard Copies

N°of Electronic Copies

Comment

YAMANA Fernando Porcile 1 1 Email: 9/12/14

YAMANA Glauro Troncoso 1 1 Email: 9/12/14

YAMANA Robert Vallis 1 1 Email: 9/12/14

RungePincockMinarco Gary Poole 1 1 Email: 9/12/14




IMPORTANT INFORMATION ABOUT THIS DOCUMENT

1. Our Client

This report has been produced by or on behalf of RungePincockMinarco (RPM) solely for YAMANA Gold Inc. (the Client).

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The Client’s use and disclosure of this report is subject to the terms and conditions under which RPM prepared the report.

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RPM prepared this report for the Client only. If you are not the Client:

RPM has prepared this report having regard to the particular needs and interests of the Client, and in accordance with the Client’s instructions. It did not draft this report having regard to any other person’s particular needs or interests. Your needs and interests may be distinctly different to the Client’s needs and interests, and the report may not be sufficient, fit or appropriate for your purposes.

RPM does not make and expressly disclaims from making any representation or warranty to you – express or implied – regarding this report or the conclusions or opinions set out in this report (including without limitation any representation or warranty regarding the standard of care used in preparing this report, or that any forward-looking statements, forecasts, opinions or projections contained in the report will be achieved, will prove to be correct or are based on reasonable assumptions).

RPM expressly disclaims any liability to you and any duty of care to you.

RPM does not authorise you to rely on this report. If you choose to use or rely on all or part of this report, then any loss or damage you may suffer in so doing is at your sole and exclusive risk.

4. Inputs, subsequent changes and no duty to update

RPM has created this report using data and information provided by or on behalf of the Client and Client’s agents and contractors. Unless specifically stated otherwise, RPM has not independently verified that data and information. RPM accepts no liability for the accuracy or completeness of that data and information, even if that data and information has been incorporated into or relied upon in creating this report (or parts of it).

The conclusions and opinions contained in this report apply as at the date of the report. Events (including changes to any of the data and information that RPM used in preparing the report) may have occurred since that date which may impact on those conclusions and opinions and make them unreliable. RPM is under no duty to update the report upon the occurrence of any such event, though it reserves the right to do so.

5. Mining Unknown Factors

The ability of any person to achieve forward-looking production and economic targets is dependent on numerous factors that are beyond RPM’s control and that RPM cannot anticipate. These factors include, but are not limited to, site-specific mining and geological conditions, management and personnel capabilities, availability of funding to properly operate and capitalize the operation, variations in cost elements and market conditions, developing and operating the mine in an efficient manner, unforeseen changes in legislation and new industry developments. Any of these factors may substantially alter the performance of any mining operation.




December 9th, 2014

YAMANA GOLD Inc.

Santiago, Chile

RE: Independent Engineering Review of the Agua Rica Project

Dear Sirs,

At the request of YAMANA Gold Inc. (“YAMANA” or the “Client”) RungePincockMinarco (“RPM”) completed an Independent Engineering Review (“IER or “Review”) and prepared this report (the “Report”) for the Agua Rica Project (the “Project”). The Agua Rica Project is located 25 km north of the town of Andalgalá in the province of Catamarca in north-western Argentina, and has been under exploration since the early 1960’s. The property is a large copper-gold-molybdenum porphyry deposit covering an area of approximately 12.5 km

2.

The Project is yet to commence development with only minor infrastructure such as exploration facilities currently located at the nearby Alumbrera site which is currently in operation.

YAMANA gained ownership over the property in 2007, when they acquired all the outstanding securities of the then owner, Northern Orion Resources. YAMANA’s current land position includes the mining claims making up the core “Minas” concessions and the surrounding mineral rights that on average extend for some 30 km north-south and 20 km east-west. In addition, several land easements covering access routes and potential water sources were acquired by the BHP/Northern Orion Joint Venture in the 1990’s.

The Report has been prepared pursuant to a series of corroborating and optimization studies performed by YAMANA Gold (2010 YAMANA Engineering Study), Fluor (2013 Feasibility Study) and Pincock, Allen & Holt (2011 PAH Technical Review Report). PAH is now owned by RPM.

YAMANA currently owns 100 percent of the Agua Rica property and advises that all payments are current and all land titles are in good standing. RPM has accepted YAMANA’s assurance and has not conducted additional land status or legal reviews. The Project is subject to a royalty of three percent (3) net smelter revenue to the province of Catamarca.

The IER is limited to the evaluation of the geology, mineral resources and reserves for the proposed open pit operation, and associated production plans, metallurgy, environmental and economic analysis. The IER excludes an assessment of the port facilities and relative mineral rights.

A Mineral Resource estimate containing Measured and Indicated Resources of 1,110 Mt at 0.47% CuT (Copper total) and Inferred Resources of 642 Mt at 0.34% CuT has been estimated by YAMANA in the 2010 study in accordance with the guidelines of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2004 Edition (the “JORC Code”). The deposit mineralisation is considered to be well understood and compares favourably to other undeveloped large-scale open pit copper projects. In addition to copper, the resource contains molybdenum, gold and silver.

A later resource estimate was prepared as part of the 2013 Study and reported a JORC compliant Mineral Resource estimate containing Measured and Indicated Resources of 1,128 Mt at 0.50% CuT and Inferred Resources of 290 Mt at 0.3% CuT.

The IER includes the evaluation of the following two conceptual development scenarios:

1. Independent Stand-Alone Development

This approach was proposed by YAMANA in the 2010 study and involved:

Runge Serviços de Consultoria do Brasil Ltda trading as

RungePincockMinarco Brasil

Tenco Building Getúlio Vargas Ave, 1300 Room 1801, Funcionários

Belo Horizonte, Minas Gerais CEP 30112-021 Brasil

ADV-SA-00028 December 2014 Page iii



Run-Of-Mine (ROM) ore feed to the process plant at a 90 kilo tonnes per day (ktpd) rate.

Two primary gyratory 63” × 114” crushers: one for ROM ore and the other for waste rock.

Two tunnels of approximately 6.2 km to convey ROM ore and waste material to pass through the steep Sierra de Aconquija mountain range.

Crushed ROM ore will be conveyed to a 90,000 tonne (t) live-capacity coarse ore stockpile (COS) located near the process plant.

Waste rock will be crushed to 300 mm and conveyed approximately 5.8 km to a location called ”El Globo” where it will be placed by stackers.

A Hydrometallurgical Plant to produce a dirty copper (Cu) concentrate and a POX/CIL and SX/EW plant to treat the high As fraction of the concentrate.

Project requires construction of all new on-site and off-site infrastructure including power and water supply.

2. Project Integrated with existing Alumbrera Mine infrastructure.

This approach was proposed in a 2013 Feasibility Study (2013 Study) and involved:

ROM ore production at a capacity rate of 110 ktpd.

ROM ore from the mine site will be transported from the open pit by truck to the primary crusher area and then conveyed through the ore tunnel and then across approximately 35 km of terrain via overland conveyor to the existing Minera Alumbrera Ltd (“MAA”) concentrator.

Three Primary Crushers will be installed on a crusher platform to crush both ROM ore and waste material prior to placement on the conveyor.

A 5 km twinned tunnel will allow the crushed ROM ore and waste to be conveyed through the steep Sierra de Aconquija mountain range and then travel another 30 km to the MAA facilities.

The waste rock will be crushed to 300 mm material size and conveyed to a new, permanent waste emplacement at lower El Globo, in the Campo Arenal area. The waste material will be stacked and spread onto the pile using a mobile, waste stacking system.

This option utilises ore processing infrastructure at Alumbrera site.

RPM further reviewed the project assumptions, production schedules and cost estimates for both of the proposed development options and based on information provided by the Client defined the following alternative options:

Base Case: considering 80% standard concentrates for sale overseas and 20% leached concentrate aimed at reducing As and producing copper cathode for domestic sale using a standard POX/CIL/SX/EW Plant; and

Alternate Case: based on 100% Cathode for a production rate of 90 ktpd using the Sepon process.

Each of the above options were evaluated based on the 2010 Yamana ore reserve estimate, assuming standalone development and integrated development utilising the MAA infrastructure.

The ‘Base Case’ economic analysis undertaken by RPM was completed utilising the JORC Ore Reserve estimate stated in the 2010 YAMANA Study. The Ore Reserves estimated 908.9 Mt at 0.49% Cu grade, with a strip ratio of 1.8:1. Economic results of the Project ‘Base Case’ scenario cash flow model using the MAA

ADV-SA-00028 December 2014 Page iv



infrastructure indicate an after-tax Internal Rate of Return (IRR) of 19.2 percent and an after tax Net Present Value of US $ 1,152.2 million at a 10 percent discount rate.

Economic results of the Project ‘Alternate Case’ scenario cash flow model assuming standalone development indicates an IRR of 15.8 percent with a Net Present Value of US$ 934.9 million at a 10 percent discount rate. YAMANA has indicated that they had undertaken testwork in 2010 to determine the viability of implementation of the Sepon process at Agua Rica. RPM believe that this case is conceptual in nature and requires further study focused on the Sepon process.

The two development scenarios for Agua Rica primarily focused on by RPM in this review are summarized in this report. Although there is a significant amount of historic technical work supporting RPM’s review and development scenarios, the technical analysis is meant to provide order of magnitude estimates. The scenarios are defendable but further work would be required to bring the analysis up to feasibility standard levels.

Based on RPM’s IER of the Project, RPM has identified the following concerns and opportunities with the project which through standard project development practices should be able to be mitigated or explored further. These include:

Geology:

Recent 2012 drilling was not QAQC’d to a standard suitable for use in the estimation of International Compliant Resources. RPM recommends that unless core can be located to complete re-assays then a minimum of 10 twinned holes should be completed from the 176 hole database to verify the historical results. This work should allow for the project to be reported in line with relevant international standards such as JORC or 43-101.

Further infill drilling should be completed to move resources from indicated to measured confidence level and assist in further refining the geometallurgical model for the project. This could increase the level of mineable resources.

There is significant potential to increase the Inferred resources and convert them to Indicated and eventually to reserves through drilling of the outer areas particularly on the east side of the pit and at depth. This has the potential to add significant tonnages of lower grade material to the project.

Mineral Resource Estimate: The resource estimates appears to have been completed in line with industry practices but requires additional and careful validation.

Underground Exploration Targets: Although significant exploration has taken place within the Project, RPM notes that current drilling indicates the potential for underground mining which could further increase the resource base. These targets are near the proposed surface operation and although at an early stage of exploration, warrant additional work in the near term.

Cut-off Grade: A review of the in pit quantities at varying cut off grades indicates the Project is reasonably sensitive to cut-off grade with material increases in ROM quantities occurring with decreasing cut-off grade. RPM notes that several limiting factors have been incorporated into the estimation of the cut-off grade.

Plant Provisions: In the Base Case, provision has been made in the current Alumbrera ore-processing plant to add a ball mill if warranted. Adding this mill would increase plant capacity considerably, probably of the order of 20% and could add considerable economic benefit to the Project. Such an increase would require that the mining fleet be expanded to provide additional ore.

Mining: Potential to reduce CAPEX by reducing the amount of crushers from 3 to 2 which would include one primary ore crusher and one waste crusher. Sufficient crusher capacity can be achieved by raising the capacity of the waste crusher, increasing the crusher open side setting or trucking a portion of the surplus waste material, as indicated in the 2013 Study as options.

Beneficiation: Additional metallurgical testing is recommended to further refine the process flow sheet and increase the confidence in the various metallurgical parameters especially in the areas of impurity reduction. This work should include extensive locked cycle tests with large volume samples with head grades similar to

ADV-SA-00028 December 2014 Page v



those projected. The opportunity to use the Sepon process should be explored further and may allow the company to reduce smelter penalties for concentrate with high Arsenic.

CAPEX and OPEX: RPM has relied on the Company and third party sources to provide the information for OPEX, CAPEX, FOREX and metal pricing used in the financial analysis of the ’Base Case’ and ‘Alternate Case’ options. RPM notes that whilst it has cross checked these assumptions against similar operations in the region further detailed costing analysis is warranted as the project proceeds to the next level of study.

Environmental: Requirements going forward may need to change due to the new mine plan utilizing two tunnels and the majority of waste being deposited in El Globo, additionally further study of the thickened tailings disposal will be required to establish feasibility level parameters including the mitigation procedures to suppress dust.

The IER did not identify any technical concerns that are fatal flaws that would prevent the successful commissioning and operation of the project, but advise potential investors on the requirement for further metallurgical testing of the POX process to treat copper concentrate with high As content. The review of the project financial model indicates that the mine at 110ktpd ROM process capacity rates could be operated profitably and that the forward forecast suggests this is sustainable. The forecast 110 ktpd operation planned to produce concentrate using an integrated project model of MAA facilities including the concentrate, pipeline, water source, power, TSF, Port/Ship-loading facilities, administration and services facilities is foreseen as the most economically feasible option for the operation but will require negotiating with MAA and Yacimientos Mineros de Agua de Dionisio (YMAD) for the use of the facilities and diligent management and planning to be successfully executed.

Selectively mining zones of high and low grade ore may help to mitigate some of the issues relating to product specifications. This will require a detailed mine plan focusing on mining high grade at low As content and strip ratios to maintain cost projections to ensure the planned high tonnage, low operating cost is achieved.

RPM’s technical team (“the Team”) consisted of Principal Mining and Processing Engineers and Senior Geologists. The Team’s qualifications and experience is detailed in Annexure A for reference.

A site visit was conducted by the Team to the Project’s mine site to familiarise themselves with the Project characteristics and gain a better understanding of the Project status. The site visit was undertaken from July 28

th to August 1

st, 2014 by principal mining consultant Mr. Sergio Fuenzalida and senior geologist Adriana

Magalhães. During the site visit the team also inspected the Minera Alumbrera mine site, including the ore processing plant, the tailings storage facility, the water supply system, the power distribution system, and the Andalgalá town built for the inhabitants of the Project area. The team also conducted general inspections of the Project area including examining the core samples. During the site visit, the team had open discussions with the YAMANA personnel on technical aspects relating to the relevant issues. The YAMANA personnel were cooperative and open in facilitating RPM’s work.

Though some engineering was undertaken by RPM to complete the IER, the IER relies largely on information provided by the Company, either directly from the site and other offices, or from reports by other organisations whose work is the property of the Company or its subsidiaries. Statements of mineral resources and reserves within this Report were compiled primarily by the Client and subsequently reviewed and verified as well as reasonably possible by RPM. The IER is based on information made available to RPM as at 29

th September,

2014.

The Client or the Company has not advised RPM of any material change, or event likely to cause material change, to the underlying data, designs or forecasts since the date of asset inspections.

The work undertaken is an IER of the information provided by or on behalf of the Company, as well as information collected during site inspections completed by RPM as part of the IER process. It specifically excludes all aspects of legal issues, marketing, commercial and financing matters, insurance, land titles and usage agreements, and any other agreements/contracts that Company may have entered into.

ADV-SA-00028 December 2014 Page vi



Generally, the data available was sufficient for RPM to complete the scope of work. The quality and quantity of data available, and the cooperative assistance, in RPM’s view, clearly demonstrated the Company’s assistance in the IER process. All opinions, findings and conclusions expressed in the report are those of RPM and its specialist advisors.

Yours faithfully,

David W. Pires, MSc, SME(RM), MAusIMM(CP) Regional Manager Consulting – Latin America RungePincockMinarco




Table of Contents 1 Background .......................................................................................................................................................... 1

1.1 Description of Project ........................................................................................................................................... 1

1.1.1 Site Setting .................................................................................................................................................... 3

1.1.2 Site Infrastructure .......................................................................................................................................... 3

1.2 Mine Planning Studies ......................................................................................................................................... 5

1.2.1 YAMANA 2010 Study - Stand Alone Development 90 ktpd. ......................................................................... 5

1.2.2 2013 Study- Integrated with MAA Development. 110 ktpd. ........................................................................... 5

1.3 Previous Exploration Work .................................................................................................................................. 5

1.4 RPM Work Plan ................................................................................................................................................... 6

1.5 Limitations of the Project ..................................................................................................................................... 7

1.5.1 RPM Comments ............................................................................................................................................ 7

1.6 Units and Abbreviations ....................................................................................................................................... 7

2 Project Ownership ............................................................................................................................................... 9

3 Geology .............................................................................................................................................................. 10

3.1 Geological Description ....................................................................................................................................... 10

3.1.1 Regional Geology ....................................................................................................................................... 10

3.1.2 District Geology ........................................................................................................................................... 12

3.2 Exploration ......................................................................................................................................................... 12

3.2.1 Period 1966-1973 ....................................................................................................................................... 12

3.2.2 Period 1974-1993 ....................................................................................................................................... 12

3.2.3 Period 1994-1999 ....................................................................................................................................... 12

3.2.4 Period 1999 to 2004 .................................................................................................................................... 13

3.2.5 Period 2005-2006 ....................................................................................................................................... 13

3.2.6 Period 2006 to present day ......................................................................................................................... 13

3.3 Data Acquisition ................................................................................................................................................. 13

3.4 Sampling Method and Approach ....................................................................................................................... 14

3.4.1 BHP-NNO JV Period ................................................................................................................................... 14

3.4.2 Option Period (2011-2014).......................................................................................................................... 14




3.5 Sample Preparation, Analysis and Security ....................................................................................................... 14

3.5.1 BHP-NNO JV Period ................................................................................................................................... 14

3.5.2 Option Period (2011-2014).......................................................................................................................... 15

3.6 QA/QC Programs ............................................................................................................................................... 15

3.6.1 BHP-NNO JV Period ................................................................................................................................... 15

3.7 Bulk Density Determinations .............................................................................................................................. 16

3.7.1 BHP-NNO JV Period ................................................................................................................................... 16

3.7.2 Option Period (2011-2014).......................................................................................................................... 16

3.8 Geology Review Conclusions ............................................................................................................................ 16

3.8.1 BHP-NNO JV Period ................................................................................................................................... 16

3.8.2 Option Period (2011-2014).......................................................................................................................... 16

4 Mineral Resource Estimates .............................................................................................................................. 18

4.1 NNO-BHP JV ..................................................................................................................................................... 18

4.2 2010 YAMANA Study ........................................................................................................................................ 18

4.2.1 RPM Comments .......................................................................................................................................... 19

4.3 2013 Study......................................................................................................................................................... 19

4.3.1 RPM Comments .......................................................................................................................................... 19

5 Mineable Quantity Estimates .............................................................................................................................. 20

5.1 2010 YAMANA Study ........................................................................................................................................ 20

5.2 RPM Comments ................................................................................................................................................ 20

6 Mining ................................................................................................................................................................. 21

6.1 2010 YAMANA Study ........................................................................................................................................ 21

6.2 2013 Study......................................................................................................................................................... 21

6.3 RPM AGUA RICA Base Case ........................................................................................................................... 22

6.4 Pit Optimisation .................................................................................................................................................. 23

6.4.1 RPM Comments .......................................................................................................................................... 23

6.5 Modifying Factors .............................................................................................................................................. 23

6.5.1 RPM Comments .......................................................................................................................................... 23

6.6 Mine Design Criteria .......................................................................................................................................... 24

ADV-SA-00028 December 2014 Page iii



6.7 Production Schedule .......................................................................................................................................... 24

6.8 RPM Conclusions .............................................................................................................................................. 28

7 Beneficiation ....................................................................................................................................................... 29

7.1 Mineralogy ......................................................................................................................................................... 29

7.2 Ore Types .......................................................................................................................................................... 29

7.3 Testwork ............................................................................................................................................................ 29

7.3.1 2010 YAMANA Study .................................................................................................................................. 29

7.3.2 2013 Study .................................................................................................................................................. 30

7.4 Source of Samples ............................................................................................................................................ 30

7.4.1 2010 YAMANA Study .................................................................................................................................. 30

7.4.2 2013 Study. ................................................................................................................................................. 30

7.5 Testwork Summary ............................................................................................................................................ 32

7.5.1 RPM Comments .......................................................................................................................................... 33

7.6 Product Recovery .............................................................................................................................................. 34

7.6.1 RPM Comments .......................................................................................................................................... 36

8 Infrastructure. ..................................................................................................................................................... 37

8.1 Mine-Site Facilities ............................................................................................................................................. 37

8.2 Operations Camps ............................................................................................................................................. 37

8.3 Tunnels .............................................................................................................................................................. 37

8.4 Water ................................................................................................................................................................. 37

8.5 Power ................................................................................................................................................................ 38

8.6 Comparing Use of Existing Alumbrera Infrastructure with Constructing New Infrastructure .............................. 38

9 Summary Development Alternatives. ................................................................................................................. 39

9.1 POX/SX-EW Proposed Dual Concentrate Concept ........................................................................................... 41

9.2 A. Independent Alternative (90 KTD) ................................................................................................................. 45

9.3 Transportation to Port/ Smelters. ....................................................................................................................... 45

9.3.1 Alternative A1 (Transport 80% Concentrate/20% Cathodes to Chilean Ports) ........................................... 45

9.3.2 Alternative A2 (Transport 100% Concentrate to Chilean Ports) .................................................................. 45

9.4 Transport Concentrate with the Integrated MAA Facilities, the Concentrate Pipeline, Rail-Road and Port Facilities .......................................................................................................................................................................... 46

ADV-SA-00028 December 2014 Page iv



9.4.1 Alternative A3 (Transport 80% Concentrate/20% Cathodes using MAA facilities) ...................................... 46

9.5 100% Production of Copper Cathodes .............................................................................................................. 46

9.5.1 Alternative A5 (100% Production of Cathodes, transported to Port Facilities) ............................................ 46

9.6 B. Integrated Alternative (110 KTD) ................................................................................................................... 48

9.6.1 Alternative B6 (100% Concentrate, Uses MAA transport facilities) ............................................................. 48

9.6.2 Alternative B7 (80% Concentrate/20% Cathodes, Uses MAA transport facilities) ...................................... 48

9.6.3 RPM Conclusions and Base Case .............................................................................................................. 48

10 Economic Analysis ............................................................................................................................................. 49

10.1 Estimated Product Price and Revenue .............................................................................................................. 49

10.2 Base Case ......................................................................................................................................................... 49

10.2.1 Capital Costs ............................................................................................................................................... 50

10.2.1.1 RPM Comments ............................................................................................................................... 51

10.2.2 Operating Costs .......................................................................................................................................... 51

10.2.2.1 RPM Comments ............................................................................................................................... 52

10.2.3 Cash Flow ................................................................................................................................................... 52

10.2.4 Sensitivity Analysis ..................................................................................................................................... 55

10.3 Alternate Case - 100% Cathode Case ............................................................................................................... 57

10.3.1 Alternate Case - Cash Flow Analysis .......................................................................................................... 57

10.3.1.1 RPM Comment ................................................................................................................................. 61

11 Mine Risks, Concerns and Opportunity Assessment ......................................................................................... 62

11.1 Opportunity/Concerns. ....................................................................................................................................... 62

11.2 Risk .................................................................................................................................................................... 63

11.3 Conclusion ......................................................................................................................................................... 69

12 References ......................................................................................................................................................... 70

13 RPM Qualifications and Experience ................................................................................................................... 72




List of Tables

Table 4-1 1997 JV Model Mineral Resource Estimate as at February 1997 ...................................................................... 18 Table 4-2 1998 JV Model Mineral Resource Estimate as at January 1998 ........................................................................ 18 Table 4-3 1999 JV Model Mineral Resource Estimate as at March 1999 .......................................................................... 18 Table 4-4 JORC YAMANA 2010 Mineral Resource Estimate as at December 2010 .......................................................... 19 Table 4-5 2013 Mineral Resource Estimate as at December 2012 ..................................................................................... 19 Table 5-1 YAMANA 2010 JORC Ore Reserve Estimate as at December 2010 .................................................................. 20 Table 7-1 Ore Characteristics ............................................................................................................................................. 29 Table 7-2 Stage 3 Metallurgical Sampling Program ............................................................................................................ 31 Table 7-3 Summary of Testwork Recoveries into Copper-Molybdenum-Gold Concentrate and Ball Mill Work Indexes ..... 32 Table 7-4 Summary of Testwork Recoveries into Copper-Molybdenum-Gold Concentrate and Ball Mill Work Indexes ..... 32 Table 7-5 Stage 5, Phase II Locked-Cycle Tests, Bulk Concentrate Assays ...................................................................... 33 Table 9-1 CSIRO Optimal Flotation test results generating low-Arsenic and high-Arsenic Concentrates. .......................... 41 Table 9-2 POX/CIL/SX-EW Hydrometallurgical Plan Processing 20% Concentrate ........................................................... 44 Table 9-3 POX/CIL/SX-EW Hydrometallurgical Plan Processing 100% Concentrate ......................................................... 47 Table 10-1 Long-term ARS:USD Exchange Rate Forecast ................................................................................................ 49 Table 10-2 Capital Costs (US$ Million) ............................................................................................................................... 50 Table 10-3 Direct Operating Costs ...................................................................................................................................... 52 Table 10-4 RPM Sensitivity Analysis ................................................................................................................................... 55 Table 10-5 RPM FOREX and Copper Price Sensitivity ....................................................................................................... 55 Table 10-6 Alternate Case – Initial Capital Costs ................................................................................................................ 57 Table 10-7 Alternate Case Direct Operating Costs ............................................................................................................. 57 Table 11-1 Risk Assessment Ranking ............................................................................................................................... 64 Table 11-2 Mine Risk Assessment ..................................................................................................................................... 64 Table A1 - Mining Related IPO and Capital Raising IER Experience .................................................................................. 76

List of Figures

Figure 1-1: Project Location .................................................................................................................................................. 2 Figure 1-2: Site Infrastructure................................................................................................................................................ 4 Figure 3-1: Regional Geology Map ..................................................................................................................................... 11 Figure 6-1: Open Pit Mine Design ....................................................................................................................................... 26 Figure 6-2: Open Pit Mine Progression .............................................................................................................................. 27 Figure 7-1: Rougher Variability Tests .................................................................................................................................. 35 Figure 9-1: Project Development Alternatives ..................................................................................................................... 40 Figure 9-2: SEPON Process ............................................................................................................................................... 43 Figure 10-1: Base Case Cash Flow (Part 1) ....................................................................................................................... 53 Figure 10-2: Base Case Cash Flow (Part 2) ....................................................................................................................... 54 Figure 10-3: Base Case NPV and IRR ................................................................................................................................ 56 Figure 10-4: Alternate Case - 100% Cathodes Cash Flow (Part 1) ..................................................................................... 59 Figure 10-5: Alternate Case - 100% Cathodes Cash Flow (Part 2) ..................................................................................... 60

ADV-SA-00028 December 2014 Page 1



1 Background

At the request of YAMANA Gold Inc. (“YAMANA” or the “Client”) RungePincockMinarco (“RPM”) completed an Independent Engineering Review (“IER or “Review”) and prepared this report (the “Report”) for the Agua Rica Project (the “Project”). The Agua Rica Project is located 25 km north of the town of Andalgalá in the province of Catamarca in north-western Argentina, and has been under exploration since the early 1960’s. The property is a large copper-gold-molybdenum porphyry deposit covering an area of approximately 12.5 km

2.

Agua Rica is one of two major copper-molybdenum-gold resources that are temporally and spatially associated with the Farallón Negro Volcanic Complex, together with the Cu-Au porphyry of Bajo de la Alumbrera (which is 35 km southwest of the Agua Rica project) currently in production.

The IER reviews two conceptual development scenarios and provides perspectives on alternate development opportunities. The two main scenarios comprise:

A. Independent Stand-Alone Development – this option was considered in the YAMANA 2010 Study;

B. Integrated Development with the existing Alumbrera Mine – this option was considered in the Feasibility Study completed in 2013.

RPM reviewed the project assumptions, production schedules and cost estimates for both of the proposed development options and based on information provided by the Client defined an alternative set of options assuming ROM ore production of 110 ktpd and fully-integrated development.

1.1 Description of Project

The Project is located in a well-defined copper-molybdenum belt in Argentina. Agua Rica lies to the east of, and is spatially related to, the prominent Farallón Negro Volcanic Complex covering 700 km

2 and hosting the

producing Alumbrera open pit mine. At a regional and tectonic scale, this complex sits between the high mountainous plateau of the Puna to the northwest and the basin and range province of Sierras Pampeanas, of which the Sierra de Aconquija is one example. Figure 1-1 shows the location of the property.

The Project area has been explored through the sequential and systematic application of exploration programs involving basic mapping and sampling at the earlier stages, through more detailed investigations using ground geophysics and geochemistry, to multiple drilling campaigns from 1972 to 2007 totalling 176 diamond drill holes and underground bulk sampling to confirm grade and provide material for metallurgical test work.


This report has been prepared for YAMANA and must be read in its entirety and subject to the third party disclaimer clauses contained in the body of the report

Project Name:

Prepared for:

1300, Getúlio Vargas Avenue,1801, Funcionários Belo Horizonte, MG, Brazil +5531 3194-2250

Date:

Project Number:

9/12/2014

ADV-SA-0028

YAMANA

Agua Rica Project

Figure 1-1: Project Location




1.1.1 Site Setting

The site terrain elevation climbs to over 3,500 m and is dissected by steeply eroded V-shaped valleys covered by partially consolidated scree, poorly developed soils (<1m thick), and scrubby, sparse vegetation. The terrain in the area is rugged with more than 80 percent having slopes greater than 25 degrees, and over 40 percent with slopes over 35 degrees.

South and north of the Sierra de Aconquija, the mountain range gives way to gentler terrain in basinal areas known as Campo El Arenal (in the north) and Salar de Pipanaco (in the south and west).

1.1.2 Site Infrastructure

The Project is yet to commence development with only minor infrastructure such as exploration facilities currently located at the nearby Minera Alumbrera (MAA) site which is currently in operation. The MAA site is located 35km from the Project and current mine closure is planned for Year 2019. The MAA facilities include a concentrate plant, pipeline, railroad, water source, power, TSF, Port/Ship loading facilities, administration and services facilities of which some infrastructure could be used at the Project site.

The available waste dump capacity at the Project is limited given the mountainous terrain; therefore in the 2010 YAMANA and the 2013 studies, a waste dump site had been selected in an area called "El Globo", located on the northern side of the ridge to the north of the mine site, which separates the mine from the Campo Arenal area. This option requires a crushing and conveying system that will convey the waste material through a tunnel to "El Globo" where it will be placed in the waste dump using a radial spreader. This system is envisaged to be built during the pre-production period.

In the 2010 YAMANA and the 2013 studies, the conveyor system will utilize two parallel tunnels designed to transport the ore and waste through the steep Sierra de Aconquija mountain range, which separates the mine from the Campo Arenal area, where the waste dump (Lower Globo) and the facilities are located

Figure 1-2 details the proposed Project site infrastructure

.




Project Name:

Prepared for:


Date:

Project Number:

Figure 1-2: Site Infrastructure

9/12/2014

ADV-SA-0028

YAMANA

Agua Rica Project




1.2 Mine Planning Studies

1.2.1 YAMANA 2010 Study - Stand Alone Development 90 ktpd.

The 2010 YAMANA Study assumes a standalone development project processing ROM ore at 90 ktpd. It proposes two primary gyratory 63” × 114” crushers located at different elevations: one dedicated to ROM ore and one dedicated to waste rock.

Crushed ore will be conveyed through a tunnel to a 90,000 t live-capacity coarse ore stockpile (COS) located near a new process plant where the ore will be treated. The ore tunnel of approximately 6.2 km length will transport the crushed ore with two 60” regenerative conveyor belts to the COS located at 2,865 masl, a 245 m vertical drop in elevation.

Access will be provided through the ore tunnel for the transport of men and materials to the mine from the El Globo area.

Waste rock will be crushed to a 300 mm size and conveyed through a tunnel to a location called ”El Globo” where it will finally be placed by stackers. The waste tunnel of approximately 5.8 km will have an 84” regenerative conveyor belt exiting at “El Globo” at 3,050 masl, a 205 m drop in elevation.

The 2010 YAMANA study planned to produce low grade As concentrate for five years by targeting areas of the mine with low grade in situ As values. Beyond this time the YAMANA Study planned to then process 20% of the concentrate generated through the Pressure Oxidation (POX) and Carbon-in-Leach (CIL) process or other hydrometallurgical process to produce low As content concentrates for sale locally, with the remaining 80% of the Cu/Au concentrate produced planned to be transported and treated in smelters abroad. YAMANA, in developing this plan, had taken into account that the Alumbrera facilities would be available after the year 2019, and that it may be possible to negotiate with MAA and YMAD (the owners of the Alumbrera Infrastructure after the shut-down) and the Argentina government, for the use of the current concentrate pipeline, the railway and the port facilities.

1.2.2 2013 Study- Integrated with MAA Development. 110 ktpd.

The 2013 study proposed a mine plan based on a 110 ktpd rate to match the processing capacity of the MAA concentrating plant. The design considered three primary crushers, in comparison to two in the YAMANA 2010 study, which would be installed on a crusher platform.

A 5 km, twinned tunnel would be established and allow the ore and waste to pass through the steep Sierra de Aconquija mountain range, which separates the mine from the Campo Arenal area. From the Campo Arenal area the ore is transported by an overland conveyor approximately 35 km to the existing Alumbrera concentrator. The waste rock is conveyed to a new, permanent waste emplacement at lower El Globo. The waste material will be stacked using a mobile waste stacking system.

The 2013 study is based on using the current Alumbrera facilities. The mine site development area also includes the two access routes to the site. These accesses include the west access road (from Route 40) and the south access from Andalgala city. Early project work includes the upgrading of these roads.

The 2013 study contemplated the production and shipment of high arsenic copper concentrate along with assumed corresponding smelting penalties. This study assumes the risk that with the Agua Rica high As content in the concentrate, most smelters will not accept the concentrate as it will likely exceed 0.3% As. content.

1.3 Previous Exploration Work

The Agua Rica Project has been under exploration since the early 1960´s. The principal exploration campaigns were:

Cities Services (1972-73): 7,927m in 38 holes of less than 200m in length. The assay results were not used in the previous mineral resource estimates.

BHP-NNO Joint Venture (1994-1999).




Phase 1 (1994-95): 14,802m in 39 holes to depths of approximately 450m based on diamond core of HQ and NQ diameter.

Phase 2 (1996): 26,995m of HQ and NQ diamond core completed in 64 vertical and inclined drill holes of up to 700m in length.

Phase 3 (1997-98): approximately 23,000m for an accumulated total of approximately 65,000m (176 drill holes) for the BHP-NNO Joint Venture.

BHP-NNO bulk sample (1998-99): two adits totalling 350 m of 2.4m x 2.4m section; 320 tonnes of ore processed through the Mintek pilot plant in South Africa; and 3,300 tons used for ARD pilot waste dump tests.

Minera Agua Rica – NNO (2005 - 2007)

Total 5,566 m distributed in10 DDH in open pit area and 3 DDH along the planned tunnel area.

Total 3,484 m distributed in 10 drill holes. Ground water evaluation at the pit area total 2,120 m distributed in 5 twin drill holes for metallurgical purposes.

Total 4,178 m distributed in the waste dump area near the open pit.

Minera Alumbrera Ltd (2012):

22,086.65 m of HQ diamond core completed in 68 inclined resources drill holes completed by a combination of drilling contractors including Major and Boart Longyear.

Additional 6,120.35 m was completed in 15 holes, drilled specifically for geotechnical purposes focusing on pit wall stability and hydro geological investigations.

1.4 RPM Work Plan

RPM reviewed the previous 2010 YAMANA and 2013 studies and where appropriate refined the technical and economic inputs for the Project, including the production schedule and cost estimates. The RPM Base Case is based on open pit mining to process 110 ktpd ROM, ore at the existing MAA process plant.

A senior, multi-disciplinary review team comprising of professionals who are familiar with large, high tonnage open-pit operations was assembled by RPM. The team included Sergio Fuenzalida, FAusIMM as Project Manager, Richard Kehmeier, C.P.G as Chief Geologist, Richard Addison, P.E, Principal Processing Engineer, Terry Brown as Principal Environmental Specialist, all whom are from RPM’s offices in the Americas.




1.5 Limitations of the Project

1.5.1 RPM Comments

RPM has independently reviewed information and data supplied by YAMANA and its affiliates and consultants.

Although RPM´s opinions expressed in this report rely on the accuracy of the supplied data, RPM has no reason to believe that any material facts have been withheld. YAMANA´s technical staff was open and forthcoming with information. RPM does not accept responsibility for any errors or omissions in the supplied information and does not accept any consequential liability arising from investment or other financial decisions or actions resulting from them.

Mineral resource estimates are inherently forward-looking statements and may be subject to change. Although RPM exercises due diligence in reviewing the supplied information, uncontrollable factors or unforeseen events can have significant positive or negative impacts on mineral resource statements. Uncontrollable factors or unforeseen events consist of risks related to the business such as, the cyclical nature of the mineral industry, the internationally competitiveness of the industry, price fluctuations based on varying levels of demand and international or local monetary or political policy changes. Any one or combination of factors could significantly influence mineral resource statements.

This report uses the terms Measured Mineral Resource, Indicated Mineral Resource and Indicated Mineral Resource. We advise investors to be cautioned not to assume that any part or all of the Mineral Resources in these categories will ever be converted into Mineral Reserves. Inferred Mineral Resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. In accordance with the guidelines of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2004 Edition (the “JORC Code”) JORC rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. Potential investors are cautioned not to assume that any part or all of an Inferred Mineral Resource exists, or is economically or legally mineable.

The results and opinions expressed in this report are based on RPM´s observations and the technical data provided by YAMANA and are conditional upon the technical data being current, accurate, and complete as of the date of this report, and the understanding that no information has been withheld that would affect the conclusions made herein. RPM reserves the right, but will not be obligated, to revise this report and the conclusions contained within if additional information becomes known to RPM subsequent to the date of this report. RPM does not assume responsibility for YAMANA’s actions in distributing this report.

1.6 Units and Abbreviations

Unless otherwise stated, the currency is in United States Dollars and measurements in the metric system. The following abbreviations are used in this report:

Common Technical Symbols

AA Atomic Adsorption

DCF Discounted Cash Flow

Dm EBITDA G&A

Drilled metres Earnings Before Interest, Taxes, Depreciation and Amortisation General and Administrative

In Inch

ISO International Standards Organisation

JORC Australasian Code for Reporting of Exploration Results, Mineral Resources and ROM Reserves

k Thousands

kg kilogram

km Kilometre




ktpd Thousand Tonnes Per Day

M Millions

Mt Million tonnes

Mm millimetres

m³ cubic meter

mtpy Million tonnes per year

My Million years

NPV Net Present Value

Oz Ounces

RPM RungePincockMinarco

ROM Run-of-mine

T or t Metric Tonne (1,000 kg or 2,204.6 lbs)

Tpa or tpy Tonnes per annum

tpd Tonnes per day

tpsd Tonnes per annum

US$ United States Dollar

% Percent by weight Common Chemical Symbols

Arsenic As

Copper Cu

Gold Au

Molybdenum Mo

Silver Ag




2 Project Ownership

The history of Project ownership from the time of initial exploration in the 1970’s is as follows:

Compañia Cities Services Argentina S.A. from 1972 to 1977.

Recursos Americanos Argentinos S.A (RAA) from 1978 to 1993.

Joint Venture between RAA and BHP Minerals Inc. based on Project ownership at 30% RAA and 70% BHP. Also at that time, Northern Orion Explorations Ltd. (NOO) of Vancouver, Canada concluded an agreement with RAA to acquire a majority share of its exploration holdings throughout Argentina, including Agua Rica thus becoming the JV partner with BHP. This arrangement was for the period 1994 to 2004.

In 2007 YAMANA acquired the Project and retains 100% control until today.

In August 2011 YAMANA entered into an option agreement with MAA based on MAA investing in exploration and planning.

Following completion of the 2013 study, MAA and YAMANA were not able to come to terms on a renegotiated agreement and mutually decided to terminate its four year option agreement to purchase the Project.




3 Geology

Agua Rica lies to the east of, and is spatially related to, the prominent Farallón Negro Volcanic Complex covering 700 km

2 and hosting the producing Alumbrera open pit mine. At a regional and tectonic scale, this

complex sits between the high mountainous plateau of the Puna to the northwest and the basin and range province of Sierras Pampeanas, of which the Sierra de Aconquija is one example.

3.1 Geological Description

Agua Rica is a large, medium-grade porphyry Cu-Mo-Au system overprinted by strong advanced argillic alteration and a high sulphidation, epithermal mineralization event. The deposit lies along the contact between early Paleozoic metasediment of the Sierra Aconquija Complex and the Capillitas Granite.

Mineralization at Agua Rica consists of three different stages:

Stage 1 - Early porphyry stage mineralization is associated with the Seca and Trampeadero porphyries and occurs in quartz stockworks and as disseminations. Porphyry stage mineralization consists of pyrite, molybdenite, chalcopyrite and rare bornite and pyrrhotite.

Stage 2 - Epithermal state mineralization followed the porphyry event and is found in the Quebrada Minas hydrothermal breccia pipe and the Trampeadero porphyry. Epithermal stage mineralization consists of pyrite, covellite, enargite, sphalerite and galena in veins and filling vugs within the breccias. Hypogene covellite has an extensive occurrence at Agua Rica. It is thought that this covellite formed by hypogene leaching of porphyry stage chalcopyrite and bornite.

Stage 3 - Supergene stage mineralization is an immature supergene enrichment of hypogene chalcopyrite and covellite by supergene chalcocite and covellite. Remnants of what may once have been a continuous enrichment blanket across the Quebrada Minas Valley are present over both the Seca and Trampeadero porphyries and surrounding lithologies.

The important distinction is between porphyries that have been altered and mineralized by the early, porphyry copper stage and those intruded after this stage. The early stage is most clearly recognized by the presence of A and B quartz veins. The late porphyries lack quartz veins and are intimately associated with the hydrothermal breccias. All intrusives and the breccias have been affected by late-stage advanced-argillic alteration and associated high-sulphidation mineralization.

3.1.1 Regional Geology

The Agua Rica deposit is spatially associated with the coeval Farallón Negro Volcanic Complex, which is located at 27°S latitude. Presently, the Farallón Negro Volcanic Complex consists of a deeply eroded remnant of a stratovolcano and small outlying intrusive and/or volcanic centres.

Two Cu-Au-Mo porphyries, the Bajo de la Alumbrera and the Agua Rica deposits have been studied in detail. Smaller epithermal deposits such as the Capillitas polymetallic vein deposit, mined for the gemstone rhodochrosite and the Farallón Negro silver and gold mine are associated with the same magmatic complex.

Figure 3-1 depicts the regional geology for the planned Agua Rica project.




Project Name:

Prepared for:


Date:

Project Number:

Figure 3-1: Regional Geology Map

9/12/2014

ADV-SA-0028

YAMANA

Agua Rica Project




3.1.2 District Geology

Agua Rica is a large, medium-grade porphyry Cu-Mo-Au system overprinted by strong advanced argillic alteration and a high sulphidation, epithermal mineralisation event. While the lithology of the country and host rocks is relatively straight forward, the alteration and genetic styles of porphyry intrusive and breccias are complex. The deposit lies along the contact between Precambrian or lower Palaeozoic metasediment of the Sierra Anconquija Complex and the coarse-grained, microcline-rich Ordovician Capillitas Granite.

Alteration is distinctive from many other porphyry systems by its lack of well-preserved potassic alteration. A large zone of advanced argillic alteration is centrally located within a district - wide cloud of quartz-sericite (phyllic) alteration.

Structurally, Agua Rica area is characterised by a number of lineaments and structures with dominant NW and NE directions. The most prominent structure is located along the relatively straight, N30°W to N40°W trending Quebrada Minas valley.

3.2 Exploration

3.2.1 Period 1966-1973

The first systematic exploration work began in the early 1970s when Compañia Cities Services Argentina S.A. examined the property (known at that time as Mi Vida) and completed several drill holes. From 1972 to 1973 Cities Services completed 7,927 m in 38 holes of just over 200 m in length, and successfully intercepted porphyry-style mineralisation.

3.2.2 Period 1974-1993

No further exploration was undertaken during this period.

3.2.3 Period 1994-1999

The ownership during the dormant phase passed onto the original Argentinian owner, Recursos Americanos Argentinos S.A (RAA), and in the early 1990’s a JV was formed with BHP Minerals Inc. (BHP) and Northern Orion Explorations Ltd. (NOO) of Vancouver, Canada. From 1994 until late 1998, the JV carried out a series of field programmes, including basic mapping, geochemical (rock chip) sampling, and geophysics and core drilling. From this work, zones of secondary enrichment and evidence pointing to a post-porphyry epithermal stage of precious metals mineralisation were recognised.

In 1995, a major programme of diamond drilling began, together with:

detailed mapping and surface sampling

aerial photography for generation of accurate topography

metallurgical testwork at BHP’s Reno, (USA), Lakefield’s Santiago (Chile), and Mintek’s (South Africa) laboratories.

geophysical investigations to identify locations for the supply of water for a future mining and milling operation

various work programmes to examine technical issues to support an initial feasibility study of the project (1997).the project (1997).

In 1997, the JV completed an initial scoping study investigating two open pit production scenarios, 60,000 tpd and 90,000 tpd of ore processed. Additional drilling in 1998 and in 1999 was incorporated into new kriged resource models. In 1998, the model included the results from 150 holes; in 1999, the model used the results from 176 drill holes. The JV 176 hole model dated March 1999 (using a combination of ordinary and indicator kriging) comprised all of the drilling information available on the property.




3.2.4 Period 1999 to 2004

In 1999 the JV halted all further field exploration activities and no work of any significance was undertaken other than ongoing environmental monitoring took place from that time until 2004.

3.2.5 Period 2005-2006

In the period 2005 to 2007, five holes were twinned and assayed for metallurgical test purposes. An additional twenty holes were drilled specifically for geotechnical purposes including pit wall stability investigations.

3.2.6 Period 2006 to present day

In 2006 YAMANA acquired the project and in 2011 entered into an option agreement with MAA. Under the agreement, Minera Alumbrera Ltd. (MAA) performed Phase 4 of the drilling programme during 2012. This involved a program of 22,086 m of infill drilling with 68 inclined HQ diamond drill holes with lengths up to 600 m. Of the 22,086 m, 5,060 m were drilled to provide metallurgical samples, as follows:

1,043 m: comminution composite (entire core);

4,017 m: flotation composite (half of core);

In addition to the infill drilling of 6,120 m, 15 HQ3 diamond drill holes were drilled to provide geotechnical information about the pit walls and proposed crusher platform. The following summary details the 2012 drilling campaign:

Resource estimation: 22,086 m (68 HQ holes)

DDH geotechnical: 6,120 m (15 HQ3 holes)

In addition to the diamond-drilling program, a small RC drilling program was conducted in the proposed waste dump locations of Rio Blanco and El Melcho, as follows:

DH hydrogeological: 301 m in Melcho - two RC holes (observation holes); 702 m in Rio

Blanco - five RC holes.

DH geotechnical: 150 m in Rio Blanco - three RC holes (observation holes) for SPT tests.

3.3 Data Acquisition

Data acquisition has been carried out in various ways, including the following:

drilling

sampling method and approach

sample preparation and analyses

quality control / quality assurance protocol

density determination

topography and down-hole survey, and

geological mapping.




3.4 Sampling Method and Approach

3.4.1 BHP-NNO JV Period

The BHP-NNO sampling programs as described in the YAMANA 2010 Study have utilised the following general methodologies:

Standard 2 m core samples split in half at site, with one half returned to the core box and the other bagged for sample preparation (in later stages, core was shipped to Andalgalá for preparation).

Logging by qualified geologists recorded an extensive data set of observations and measurements including lithology, alteration mineralogy, sulphide/oxide mineralogy, sulphide percentages, structural features, veining, and iron oxide characteristics.

Geotechnical data collected by qualified technicians included RQD and fracture frequency by 2 m core intervals for use in subsequent geotechnical studies into open pit and underground mining.

All core was routinely photographed before geological and geotechnical logging took place.

All data collected through the logging procedures has been computerised.

All sample preparation and assaying was completed by industry standard laboratories such as Bondar Clegg (early programmes) and by SGS for the later programmes.

The drilling and sampling programme covered the entire extent of known mineralisation on the property both laterally and vertically, and provided a reliable basis for understanding the distribution of mineralisation and variations with rock type and alteration. In the central core of the deposit (Quebrada Minas), some deep holes to +700 m below surface elevation were stopped before reaching the limits of the mineralisation.

This approach formed the basis of the 2010 YAMANA Study.

3.4.2 Option Period (2011-2014)

The 2012 MAA sampling programmes as described in the 2013 Study have followed the same methodology as outlined above, except that geotechnical data collected included GSI and point load testing for subsequent use in geotechnical studies, in addition to RQD. In addition, density determination using the displacement method every 2 m was carried out.

All sample preparation and assaying was completed by industry standard laboratories such as ACME Analytical laboratories S.A and by ALS Patagonia S.A.

This approach formed the basis of the 2013 Study.

3.5 Sample Preparation, Analysis and Security


Two different sample preparation protocols as described in the YAMANA 2010 Study have been used:

Holes AR-1 to AR-39: at a sample preparation facility supervised by Bondar Clegg in Coquimbo, Chile, samples were crushed entire 2m half-core to ~60% passing –8 mesh, with a further step of pulverizing of a 1/8 or 1/16 split to 150 mesh (30g). Assaying completed by Bondar Clegg in La Serena, Chile, using fire assaying for Au an multi-acid digestion for AA assaying of Ag, Cu, Pb, Zn, Mo and As;

Holes AR-40 through the end of the historical drill programs (i.e., the bulk of the drilling programs): core samples crushed under the supervision of the company SGS to produce a sub-sample at 150 mesh (30g). Sample preparation in Mendoza, Argentina, with assaying by SGS, Santiago, Chile, using fire assaying for Au (50g) aqua regia digestion for AA analysis of Ag, Cu, Mo, Pb, Zn, As, Sb and Fe.




Density determinations for 3,500 core samples were made from the drill programs. This data was collected from dried whole-core using the caliper method and classified by lithology and mineralogy.

Approximately 5% of the drill samples were randomly selected for check assaying at independent laboratories. check labs: Bondar-Clegg (Chile), Chemex (Toronto), and Acme (Vancouver).

BHP’s standards program consisted of selecting pulps with less than a 10% relative difference from the four check laboratories and inserting these pulps in the sample stream as their standards.

3.5.2 Option Period (2011-2014)

MAA performed Phase 4 of the drilling program during 2012. MAA’s sampling program, as described in the 2013 Study was designed to maintain standards, continuing with the latest protocol for sample preparation used by BHP-NNO. Samples were prepared in Mendoza, Argentina, with assaying carried out ACME (Santiago, Chile) using fire assaying for Au (50 g), aqua regia digestion for AA analysis of Ag, Cu, Mo, Pb, Zn, As, Sb, and Fe.

Phase 4 drilling samples AR-177 through AR-244 were assayed by ACME in Santiago, Chile, with checks being performed by ALS La Serena (Chile) and ALS Lima (Perú).

All the quality control samples were inserted on site. A total of 11,791 samples were generated, with 10,318 original or primary samples corresponding to HQ diameter (63.5 mm) diamond drill cores. A total of 1,473 control samples were incorporated in the process, which represents 12.5% of the total samples. In addition, 720 duplicated samples were generated in the same laboratory. These were duplicate samples of pulps and coarse rejects (360 of each type).

In the main laboratory, one coarse duplicate and one pulp duplicate, selected at random, were incorporated into each batch. The above-mentioned samples, plus five internal laboratory controls, formed the final batch of 40 samples that match the analytical run of ACME.

3.6 QA/QC Programs


During the initial drilling campaigns, 1972-2007, BHP’s standards program consisted of selecting pulps with less than a 10% relative difference from the four check laboratories and inserting these pulps in the sample stream as their standards.

A statistical evaluation of the check assay results in 1997 indicated a relative low bias of 6% in copper assays between the primary SGS, Santiago laboratory and the check assay results from Chemex and Acme. Because of this bias, BHP retained MRDI to complete an audit of the sampling and assay procedures used by the Joint Venture. MRDI concluded there was good agreement between the laboratories for Au and Mo, but did find a bias in the copper assays which they concluded “,While the bias is conservative, in as much as copper is under-estimated, differences greater than 5 relative percent may affect mine planning, reserve estimation, and net present value; at a minimum, selective re-assaying is warranted.”:

An additional check assaying program was undertaken by BHP in 1998, selecting those samples that had returned significant (±20%) differences between the primary and the three original check laboratories for shipment and assaying at Chemex Laboratories in Vancouver. This involved some 1,700 samples and replacement of the re-assayed Chemex assays in the Agua Rica assay database used for the 176-hole resource model (the latest and most up-to-date resource for the property).

A detailed audit of the assay procedures at Agua Rica was completed in mid-1999 by PAH. PAH noted the data for all elements show a bias and the bias is larger than is usual in analytical data from a porphyry system. The PAH report states ““Normally, PAH would regard these outliers as laboratory blunders; however in the case of Agua Rica they occur in all elements and in all analyses. PAH does not have a physical explanation as to why these outliers occur but they appear to be a statistical part of the analyses for Agua Rica”.




3.7 Bulk Density Determinations


During the BHP campaign, 3,525 density measurements were taken from Agua Rica drill core up to hole AR-168. Most measurements were taken using a simple geometric method for calculating specific gravity on site.

3.7.2 Option Period (2011-2014)

Bulk density determinations were completed for the 2012 drilling using the water displacement method without wax coating. Determines were made every two meters using a split piece of competent core. This was completed in-house.

3.8 Geology Review Conclusions


Based on the description of geology and geological data gathering present in the 2010 YAMANA study, RPM has made the following conclusions:

The geology is well understood.

The porphyry deposit is unique in that it displays aspects of both porphyry deposits and epithermal deposits. The porphyry system has been modified by extensive brecciation and alteration closely associated with epithermal systems. The presence of deleterious elements in the ore such as arsenic is confined to certain portions of the deposit.

The geological data collected was done in a systematic and consistent matter.

The sampling and assaying while not meeting NI 43-101 standards has been studied sufficiently to define its limitations.

Even with the known limitations of the assay program, it is of sufficient quality to support an FS level resource estimate

The historical drilling completed by BHP and others predates the development of international reporting standards such as NI 43-101, but the Mineral Resources are compliant with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The Joint Ore Reserves Committee Code – JORC 2012 Edition).

3.8.2 Option Period (2011-2014)

Based on the description of data gathering present in the 2013 Study, RPM has made the following conclusions:

Drill holes were undertaken for both orebody definition and geotechnical and hydrogeological investigations.

Geological information was collected by various means such as mapping, drilling, sampling, and testing.

The drill hole sampling and assay work is supported by well-defined procedures and QA/QC protocols and is 43-101 compliant.

The downhole surveying and topographic surveying is state-of-the-art and is compliant with NI 43-101 standards.

The drilling completed by MAA reportedly in-filled the historical drilling, collected core for metallurgical testing, and provided more detailed geotechnical information.




The QA/QC on the drilling by MAA followed the industry standard guidelines.

Although no detailed results were reported for the QA/QC program, the 2013 Study concluded the results of the standards, blanks, and duplicate assaying was within industry and corporate limits and verified the assays of the drill samples.

The accuracy test for molybdenum should be re-evaluated because the certified standards did not fulfil the necessary requirements for evaluating the assay methodology used in the 2012 drilling campaign (3 acids digestion methodology). The certified standards were not adequate because they were designed for a 4 acids digestion instead of a 3 acids digestion, which is the methodology used historically for molybdenum determination.

With regards to contamination, it was observed that during the successive stages of preparation and chemical analysis there was no recorded cases. Therefore, the results are considered acceptable.

The precision to analyze the field duplicates, coarse rejects duplicates and pulp duplicates for the three elements of interest is according to industry standard. In general, the duplicates mean and variation coefficient is lower than the originals mean and coefficient. In all cases, the correlation coefficient and the determination coefficient are adequate.

Cross-lab checking carried out at ALS Patagonia S.A. to evaluate the performance of the primary laboratory concluded that data obtained by ACME are reliable. Acceptable results were obtained in all cases to compare the main elements (gold, copper, molybdenum and arsenic) analysed by both laboratories.




4 Mineral Resource Estimates

4.1 NNO-BHP JV

From 1997 to 1999, the NNO and BHP Joint Venture completed a number of independent mineral resource estimates which were completed in accordance with the recommendations of the JORC Code. Tables 4-1, 4-2 and 4-3 summarizes the NNO-BHP mineral resource estimates.

Table 4-1 1997 JV Model Mineral Resource Estimate as at February 1997

Description Quantity (Mt) Cu (%) Mo (%) Ag (g/t) Au (g/t)

Total 103 Holes Measured + Indicated 1,450 0.44 0.028 3.0 0.19 Inferred 217 0.44 0.028 3.0 0.19

Table 4-2 1998 JV Model Mineral Resource Estimate as at January 1998


Total 150 Holes Measured + Indicated 1,329 0.46 0.03 2.19 0.19 Inferred 385 0.32 0.03 2.51 0.11

Table 4-3 1999 JV Model Mineral Resource Estimate as at March 1999


Total 176 Holes Measured + Indicated 932 0.48 0.03 3.1 0.19 Inferred 362 0.48 0.03 3.1 0.19 Notes: Applicable to Table 4-1 to 4-3 1. The Statement of Mineral Resources Reported by BHP were reported in accordance with the JORC Code 2004 edition. 2. Tonnages are metric tonnes. 3. Figures reported are rounded which may result in small tabulation errors. 4. RPM did not review or validate the above mineral resource estimate and cannot comment on the validity of these estimates.

4.2 2010 YAMANA Study

The resource estimate was provided in the 2010 YAMANA study is based on historical data up to 2006. Verification of QA/QC by YAMANA was from the JV documents and independent engineering reviews from PAH and MRDI. The data was considered representative of the mineralization and geology of the deposit at that time.

Geologic continuity at Agua Rica is well established through geologic mapping and drillhole interpretation. Grade continuity has been quantified for each domain and each variable by semi-variogram analysis. The classification procedure used for this deposit employs the grade continuity for copper and molybdenum, considered at this time to be the two most important economic variables.

The classification scheme was as follows: Measured - Blocks estimated in pass 1 for both copper and molybdenum using search ellipse dimensions equal to ¼ the semivariogram ranges.

Indicated - Blocks not classified in pass 1 but estimated in at least pass 2 for both copper and molybdenum using search ellipse dimensions equal to ½ the semivariogram ranges.

Inferred - All remaining blocks estimated.




In June 2010, YAMANA estimated a Mineral Resource estimate based on a cut-off grade of 0.2% Cu, in line with the JORC Code. Table 4-4 details the 2010 Mineral Resource estimate.

Table 4-4 JORC YAMANA 2010 Mineral Resource Estimate as at December 2010


Total Measured 412.0 0.56 0.034 3.64 0.24 Indicated 698.0 0.42 0.032 3.22 0.19 Measured + Indicated 1,109.9 0.47 0.033 3.38 0.21 Inferred 642.1 0.34 0.034 2.33 0.12 1. Tonnages are metric tonnes. 2. Figures reported are rounded which may result in small tabulation errors.

4.2.1 RPM Comments

The historical drilling completed by BHP has been reviewed by RPM and considered to be reasonable.

The Mineral Resources are reported in compliance with the JORC Code and appear to have been completed in line with standard industry practices.

4.3 2013 Study

In 2013 an independent mineral resource estimate was carried out to further incorporate geometallurgical characteristics and infill drilling completed. This geometallurgical block model includes the metallurgical recovery and concentrate grade of economic elements (Cu, Au, Mo, Ag) and of impurity elements (As, Zn, Pb). Also included are SAG Mill Power index (SPI), Bond rod mill work index and Bond ball mill work index data and throughput estimates. This block model is based on 126 metallurgical samples and 71 comminution samples. The mine production plan used this model to determine mill throughput, the grades of the payable metals in concentrate and the grades of the impurity elements in concentrate. Table 4-5 summarizes the mineral resource estimate including total copper (TCu), molybdenum (Mo), silver (Ag) and gold (Au) mineral resources as of 31 December 2012. RPM notes that this estimate has been reported in line with the guidelines of the JORC Code.

Table 4-5 2013 Mineral Resource Estimate as at December 2012

Resource Class Mt Cu (%) Mo (ppm) Au (g/t) Ag (g/t)

Measured 559 0.59 295 0.25 2.99 Indicated 569 0.42 328 0.16 2.58 Measured + Indicated 1,128 0.50 311 0.20 2.78 Inferred 290 0.30 310 0.10 1.90 1. Tonnages are metric tonnes. 2. Figures reported are rounded which may result in small tabulation errors. 3. Statement of Mineral Resource Estimate was prepared under the supervision of Mr. Raúl R. Roco and declared to be compliant

under JORC 2004 Standards.

4.3.1 RPM Comments

RPM has reviewed the 2013 resource estimate and considers it to be reasonable. RPM opine that the estimate appears to have been based on data with no critical flaw and are a good estimation of the in situ resource. The classification of confidence has been completed in line with international industry practices and declared to be compliant with the JORC Code.




5 Mineable Quantity Estimates


In 2010 YAMANA, in conjunction with Metalica Consulting, developed an Ore Reserve estimate for the Agua Rica project using a copper cut-off of 0.20% CuT for that part of the resource occurring above an elevation of 2,500 masl.

The Ore Reserve estimate, determined by design of the ultimate pit, was based on the results of the Whittle Lerchs-Grossmann shell analysis. Whittle is a software package that uses the Lerchs-Grossmann algorithm to determine the approximate shape of a near-optimal pit shell based on applied cutoff grade criteria and pit slopes. These shells are generated from the geologic grade models, economic and physical criteria.

After review of the 3D geological model, economic and physic criteria, RPM believe that cut-off grade of 0.20% CuT is considered reasonable for determination of an Ore Reserve. Table 5-1 details the JORC Ore Reserve estimate reported in 2010.

Table 5-1 YAMANA 2010 JORC Ore Reserve Estimate as at December 2010


Total Proven 384.9 0.56 0.03 3.73 0.25

Probable 524.1 0.43 0.03 3.33 0.21

Grand Total 908.9 0.49 0.03 3.50 0.22 Notes: 1. The Statement of Ore Reserve has been reported by YAMANA Gold. 2. Tonnages are metric tonnes 3. Cut-off Grade of 0.2% Cu applied to all ore types 4. Copper price: $2.25/lb; Molybdenum price: $12/lb; 5. Figures reported are rounded which may result in small tabulation errors.

The Ore Reserve estimate of 909 Mt of ore averaging 0.49 % CuT has been verified by RPM. A marginal difference of 15.2 Mt (1.7% of total Ore reserve) was found by RPM but not considered material as is within industry acceptable practices. RPM notes that this estimate has been reported in line with the JORC 2004 Code as an Ore Reserve. 5.2 RPM Comments

The mineral reserve estimate provided by YAMANA is predominantly Measured (43%) and Indicated (57%) thereby providing a reasonable confidence in the estimate. Hence, RPM considers it is likely there is sufficient ore to meet the forecast production targets.

The mineral reserve estimate declared by YAMANA was used as the base case reserve for the RPM mine plan.




6 Mining


Conventional open pit shovel-truck methods will be used for mining. The milling rate for the 2010 YAMANA Study was based on a 90,000 tpd (32.8 Mtpa) ore for approximately 28 years. The pre-stripping and mining functions was planned to be carried out by the mine operator with purchased and leased equipment. The mine operator would also operate and maintain loading and hauling equipment. Waste stripping will vary by year, from a maximum of 77 Mt in production Year 2 decreasing to 11.2 Mt in production Year 28. The average waste stripping rate is 166,000 tpd which is a life of mine 1.8:1 strip ratio, including waste excavated constructing access roads and facility development.

Mining occurs in six distinct pit phases to balance waste stripping, ore feed, feed grades of both pay metals and deleterious elements and equipment requirements. Mining is scheduled 365 days per year, minus projected downtime of 15 days due to rain, snow and heavy fog. It is assumed that there will be two shifts per day, each consisting of 12 hours. Four crews will rotate on a seven days-in, seven days-out schedule.

As the Project lies in steep terrain a 30-month timeline for the preproduction phase is proposed due to limited flat ground for facilities as well as extensive access road requirements.

The first ore production year consists of a ramp up period of 6 months for ore feed to the mill. The first three months process 3.1 Mt (38% of design capacity) and the next three months at 6.2 Mt (76% of design capacity). Subsequent production is scheduled at 32.8 Mt per year or 90kt tonnes per day. YAMANA´s anecdotal evidence suggest that the arsenic content in the 2010 YAMANA mine plan was based on delay of As content above 0.3 until year 4 in the Life-of-Mine-Plan (“LOMP”) .

A total of 1,601 Mt tonnes of waste will be removed. Of this, approximately 110 Mt will be stored during pre-stripping south of the pit in the dump sites in Quebrada Minas. These dump sites adjacent to the mine have a total capacity in excess of 450 million tonnes. The extra capacity will serve in emergencies whenever the waste crushing and conveying system is not available. Some waste will be used to fill the Upper Quebrada Minas to act as support for the conveyors leading to both mill tunnels. The material for this fill will be the most inert in order to minimize water contamination. The waste crusher, tunnel and conveyor system are projected to be available six months prior to the ore production start.

RPM reviewed the Metálica open pit model (2011) and validated the design and pit limit optimization parameters. The copper price for pit limit optimization analysis was US$ 2.25/lb.

The slope angles and geotechnical analysis used in the mine design were recommended by the consultant Geomecánica Ltda, based on the report “Geotechnical Investigations and Slope Design Recommendations for the Proposed Open Pit”, issued by Piteau Associates Engineering Ltd. in June 2006. Based on the parameters from the Piteau report, the mine design included a safety berm that is 30 m wide every 150 m in pit depth to allow for geotechnical stability support.

RPM considers the pit slope stability studies to have followed generally accepted engineering practices; they appear to be thorough and are considered suitable to support the level of detail required for a PFS and adequate to support the project

6.2 2013 Study

Conventional open pit shovel-truck methods will be used for mining. The mining function will be done by the mine operator with purchased and or leased equipment, with possible development assistance from contractors as required.

Mining will occur in 8 pit phases to balance waste stripping, ore feed tonnage, ore feed grades and equipment requirements. Whittle© 4X software was utilized to determine economic pit limits and guide the mine design process. The ore processed was aligned to the concentrator´s available capacity of 110 ktpd based on operation hours per year and rock specific grinding rates. The strip ratio averages 1.8 over the mine life. The total waste mined is 1,800 Mt.




Mining will occur 24 hours a day for 350 days per year, with projected downtime due to rain, snow, fog and power outages totaling 15 days. It is assumed there will be two shifts per day, each of 12 hours. The management structure for Agua Rica has been based on the existing Minera Alumbrera structure and then customized to address specific project conditions.

One of the key objectives of this mine plan was to delay the mining of high arsenic ore as long as possible. This has been largely achieved except for a peak in Year 7 when the concentrate arsenic grade is estimated at 0.77%. After Year 14 most of the concentrate will contain > 0.5% As.

The Agua Rica crushing and materials handling system has been designed to process up to 42 Mtpa of ore and 70 Mtpa of waste. The preferred solution was to use two 63 in x 114 in waste primary crushers and one identical single ore crusher. In addition to the advantage of having common equipment at all three crushing plants, the design enabled the middle crusher (waste crusher No. 1) to be converted to ore processing in the event the ore crushing plant is not available.

The waste overland conveyor system consists of a single waste conveyor that traverses a 4.8 km tunnel running parallel to the ore conveyor tunnel. This solution requires a crushing and conveying system that will convey the waste material through a tunnel to El Globo area, where it will be placed in the waste dump using a radial spreader. This waste disposal system was considered in both the 2010 YAMANA and the 2013 studies.

The ore overland conveyor system consists of six conveyors traversing approximately 35 km of terrain from the Agua Rica crushing area at Rio Minas, across the El Globo valley, intersecting Route 47, along the existing power line corridor through Campo Arenal, down the Escalares, around the northern edge of the Alumbrera tailings containment area, to the existing Alumbrera facility.

6.3 RPM AGUA RICA Base Case

The economic analysis for the RPM base case was based on the RPM analysis of the Ore Reserve estimate stated in the 2010 YAMANA Study. A marginal difference of 15.2 Mt (1.7% of total reported estimate in the Yamana 2010 Ore Reserve) was found by RPM due to the application of sub-blocked mine modelling method but not considered material as is within industry acceptable practices.

The Mineable Quantity contains 893.7 Mt at 0.489% Cu grade, with a strip ratio of 1.76:1.

The Agua Rica Project is planned to be an open pit copper mining project, which will utilize a combination of hydraulic excavators, large Front End loaders and 290 tonne haul trucks as the primary mining equipment.

Ore extracted from the mine will be transported from the open pit by truck to the primary crusher area and then conveyed through a tunnel and then overland to the to the existing MAA facility.

The crusher area includes one primary ore crusher and one waste crusher. This can be achieved by increasing the capacity of the waste crusher by installation of surge bins to discharge onto the waste overland conveyor, or trucking a portion of the surplus waste material, as indicated in the 2013 study.

These Crushers will each feed a conveyor, which feeds a surge bin, which in turn feeds onto an overland ore and waste conveyor.

The ore conveyor extends (in six segments) 35 km to the Alumbrera process plant, where it will feed the existing stacker conveyor via a new transfer station. The existing surge pile and reclaim into the mill will remain unchanged.

The waste conveyor will travel through the tunnel and feed a new, permanent waste dump at Lower El Globo, in the Campo Arenal area, near the north tunnel portal. The dump will ultimately contain up to 1.8 Bt of material. The waste material will be stacked and spread onto the pile using a mobile waste stacking system.

To route the overland ore and waste conveyor systems through the Aconquija range, approximately 4.8 km of tunnel length will be required. The tunnels incorporate twin parallel tunnels 20 m apart, one for each conveyor, with intermittent connecting tunnels every 250 m.




The ore tunnel will be wider than the waste conveyor tunnel to provide bus transport of mine operators during shift change.

Based on, the mineable resource estimate, the pit development sequence and forecast total production schedule and costs based on a 110 ktpd operation, RPM has estimated the mine life to be approximately 24 years not including a 3 year pre-stripping and ore stockpiling period.

The mine schedule strategy for the open pit project is based on supplying ROM material for the current processing plant located at the Alumbrera site. The crushing and materials handling system will process up to 37 Mtpa of ore and 63 Mtpa of waste.

A stockpile strategy will be implemented to manage the open pit ore blending strategy. RPM has limited the stockpiles generated in its mining schedule to less than 30 Mt at any one time.

6.4 Pit Optimisation

Design of the ultimate pit for the 2010 YAMANA study, was based on the results of the Whittle Lerchs-Grossmann shell analysis. Whittle 4X is a software package that uses the Lerchs-Grossmann algorithm to determine the approximate shape of a near-optimal pit shell based on economic criteria and pit slopes. For the Whittle analysis the grade models for copper, rock density and resource category (measured, indicated and inferred) models were reported by YAMANA and imported into Whittle.

6.4.1 RPM Comments

The parameters used in the pit optimisation, as reported in the 2010 YAMANA study, were reviewed by RPM and found to be reasonable for this type of project.

RPM has reviewed the mine design parameters and they appear reasonable for this style of deposit.

6.5 Modifying Factors

Mining modifying factors refers to parameters used to convert in situ tonnes and grades to run-of-mine (ROM) values. This typically refers to ore loss and dilution parameters.

Previous studies assumed ore loss or dilution did not need to be applied as the geological model block size is equivalent to the smallest mining unit (SMU) for the operation. The SMU is related to the ability of the equipment to select material, the procedures used to translate that data to mineable dig limits, and the efficiency with which the mining equipment excavates those dig limits. The SMU block dimensions that were used in the geological model were 25m x 25m x 15 m.

6.5.1 RPM Comments

In RPM’s opinion this approach of relying on SMU sized blocks in the orebody model to account for mining loss and dilution is reasonable and is commonly used within the mining industry. However, of note is that mining companies often apply an additional global ore loss to account for ore lost on the zone periphery.

RPM also briefly investigated whether it is possible to selectively mine zones of high- and low-grade ore based on the current data. This will be important to blend ore types and manage As content levels to keep them within product specifications. Our high-level investigation suggests it is possible to selectively mine these zones, which is consistent with the successful mining above the proposed ore cut-off grade of 0.20 % CuT.

The cut-off grade formula was based on the economic, physical and technical characteristics. Cut-off grade applied to the 2010 YAMANA mineral reserve estimate was 0.20 % Cut and is considered reasonable.




6.6 Mine Design Criteria

The open pit will be accessed by a 30 m wide haul road and 10 percent gradient and two lane ramps. All required roads and ramps will have two lanes sloped 2.0 cm/m to the sides, drainage ditches placed along roadsides, sub-grade support preparation and placement of a wearing surface. The grades of the haul roads are within the operating range of the mining equipment.

The mine design criteria are listed below:

Two Lane Haulage Road Width: 30 meters;

Haulage Road Grade: 10 percent;

Bench Face Angle: 70 degrees;

Bench Height: 30 m (Double-Benching);

Bench Width: 15m;

Overall Pit Slope: 42 degrees.

RPM have reviewed the geotechnical parameters and considered them to be reasonable for this style of deposit.

6.7 Production Schedule

The 90 ktpd and the 110 ktpd ROM productivity rate examined in the two previous studies are considered by RPM to be reasonable considering the restricted working space for the potential 450m deep open pit within a mountainous and undulating valley terrain. More than 80 percent of the planned open pit has slopes greater than 25 degrees, and over 40 percent with slopes over 35 degrees resulting in restricted working space for mining equipment to effectively produce planned productivity and quality requirements.

A production schedule was created by RPM aimed at determining the most economically viable mining sequence for the Project. Based on the 2010 YAMANA mineral reserve estimate and a 110 ktpd operation, RPM developed an optimised mine plan to define and evaluate the annual ROM (equivalent to 110 ktpd) and waste movement rates, as well as to validate the previously reported YAMANA 2010 study Ore Reserve estimate.

The mining of the open pit operation will be mechanized with progress throughout the prescribed phases advancing in successive benches. Figure 6-1 depicts a cross-section of the primary pit phases.

The excavation of the mineralised material will require the use of drilling and blasting for safe and efficient mining for all material except the weathered rock.

The main mining operations include overburden stripping, waste transportation and disposal, ROM blasting, loading, hauling, and dumping at the processing plant.

Mine scheduling was completed to ensure that product compliance criteria were met and that the potential value of the mineable resource was maximised. Key objectives for scheduling the open pit included:

Deliver required product specifications for each scheduling period;

Maximise mineable resource extraction and minimize bench turnover;

Minimise material stockpiled to within defined limits; and minimise fleet size.

Mining is planned to occur twelve months per year based on working 2 x 12 hour shifts per day.




The mine schedule resulted in an average production rate of 38.5 Mtpa ROM at a 0.5% Cu grade over the life of the Project. Figure 6-2 illustrates the projected mine face advancements.

Using this production schedule, capital and operating cost estimates were developed for the Project, including the mine and processing plant.



Project Name:

Prepared for:


Date:

Project Number:

9/12/2014

ADV-SA-0028

YAMANA

Agua Rica Project

Figure 6-1: Open Pit Mine Design

Phase 1

Phase 2

Phase 3

Phase 4

Phase 5

Phase 6



Project Name:

Prepared for:


Date:

Project Number:

9/12/2014

ADV-SA-0028

YAMANA

Agua Rica - Project Project Name:

Prepared for:


Date:

Project Number: Figure 6-2: Open Pit Mine Progression

PP1-PP3 YR5

YR10 YR28




6.8 RPM Conclusions

The production schedule includes an average annual total material movement during the three year ramp-up period of 25 mtpa.

The long-term blending strategy of delaying arsenic content above 0.3 for the first 5 years of the LOMP is likely to be achieved with the 110 ktpd mine plan.

RPM considers the 320 t haul trucks estimated by the 2013 study, to be reasonable to support the primary loading and hauling fleet for this size operation. In RPM’s opinion there are sufficient loading units in the forecast fleet estimate and sufficient working room in the pit to ensure that six mining fronts can always be mined at one time.

RPM considers that the planned operational efficiency rates of equipment above 70% planned in the fleet estimation of the 2010 YAMANA study is optimistic and may not be achievable over the longer-term duration of the project.

RPM considers the proposed production and development sequence to be reasonable and achievable based on the current mining equipment and designs; however, RPM recommends that further optimisation and rescheduling of the development sequence be undertaken to maximise the profitability of the Project through optimising the blending of ROM ore feed and management of high As content material.




7 Beneficiation

7.1 Mineralogy

Studies have identified that almost all of the copper mineralization is covellite and chalcocite, constituting about 80% of the copper minerals. Chalcopyrite constitutes most of the remaining 20% of copper mineralization but traces of bornite are also present.

All ore types are rich in pyrite. Pyrite constitutes 11% of the ore on average, and constitutes about 90% of the total sulfide minerals present. Pyrite to copper sulfides ratio is 11:1.Arsenic, zinc, and lead are present in the ore and will result in contamination of the copper concentrates with these elements. The arsenic-bearing mineral is principally enargite; the zinc-bearing mineral is principally sphalerite.

7.2 Ore Types

General characteristics of the ore types are shown in Table 7-1. The “clean” ore, that is ore low in arsenic content represents 28 percent of the mineral reserves and will be the first ore mined. The ore types are all compatible for simultaneous processing but have been identified separately in the block model to allow blending strategies to be developed for the control of concentrate grades for marketing.

Table 7-1 Ore Characteristics

7.3 Testwork

7.3.1 2010 YAMANA Study

The metallurgy of the deposit was initially studied in the late 1990’s. More recent testwork has been conducted in 1998-1999, 2005, 2010, and 2013. Descriptions of these tests and results are discussed below. There have been five stages of testwork performed on the Agua Rica ores:

Stage 1:Center for Mineral Technology (CMT), Reno, 1996-1998, Locked-cycle tests

Stage 2:

o Lakefield Research, Chile, 1998-1999, Locked-cycle tests

Ore Wt. % in Cu Mo Au As Zn

Code Ore Body (%) (%) (g/tonne) (%) (%) Principal Minor

MAJOR

Seca Enriched Porphyry SEP 15 0.80 0.016 0.33 Covellite

Chalcocite

Seca Enriched Metasediments SEM 13 0.61 0.029 0.31 Covellite

Chalcocite

Trampeadero Enriched Porphyry TEP 18 0.55 0.028 >0.012 0.057 Sphalerite

Galena

Enargite

Trampeadero Enriched Metasediments TEM 10 0.42 0.057 >0.011 0.038 Sphalerite

Galena

Enargite

Trampeadero Primary Porphyry TPP 9 0.45 0.022 >0.016 0.093 Sphalerite

Galena

Enargite

Primary Hydrothermal Breccia PHB 18 0.52 0.029 >0.026 0.0215 Sphalerite

Galena

Enargite

MISCELLANEOUS 17 0.47 0.042 >0.013 0.081

Seca Primary Porphyry SPP

Seca Primary Metasediments SPM

Trampeadero Partial Leach TPL

Trampeadero Primary Metasediments TPM

Enriched Hydrothermal Breccia EHB

Minas Coarse Covellite MCC

Hydrothermal Breccia - Clay HBC

MineralogyOre Type




o Mintek Laboratories, South Africa, 1999, Pilot-plant tests

Stage 3:

o Lakefield Research, Chile, 2005-2006, Kinetic tests and locked-cycle tests to develop rate constants for a flotation mathematical model that was generated by Amelunxen Mineral Processing Ltd. (Aminpro)

o CSIRO Minerals, Australia, 2006, Exploratory selective arsenic flotation tests

Stage 4:SGS Minerals Services, Santiago, 2010, Rougher bulk flotation tests

7.3.2 2013 Study

The 2013 study included an additional metallurgical testwork stage that included:

ALS Metallurgy Kamloops and SGS Canada, 2013, Comminution tests

Consultoria e Ingenieria Promet101 and ALS Metallurgy Kamloops, 2013, Flotation tests

FLSmidth, 2013, Tailings thickening tests (downstream tests)

7.4 Source of Samples

7.4.1 2010 YAMANA Study

Stage 1. These were drill core samples classified into three main ore zones: Seca Norte, Quebrada Minas, and Trampeadero, according to the fundamental geology, mineralogy and variability across the ore body. The copper grade of these samples ranged between 0.7 and 1.0 copper, significantly higher than the average grade of the ore deposit.

Stage 2. The source of samples for the locked-cycle tests are from drill core and that for the Mintek tests are from exploration adits. The copper grade of the samples used for both the Lakefield and Mintektestwork were significantly higher than that of the ore deposit. The grade discrepancy results in some question as to whether the samples are sufficiently representative of the average ore grade.

Stage 3. For the Stage 3 testwork, samples of the various ore types were extracted from five new drill holes that twinned existing holes specifically drilled for this test program. Table 3-3shows the selected holes for twin drilling and the map of the drillcore locations, respectively. The grades of the samples used for this testwork are close to that of the ore deposit.

Stage 4. Samples for the Stage 4 testwork were 46 sections of drill core representing six of the seven ore types (excluding the MISC category), and 84 percent of the ore expected to be processed in the first seven production years. The grade of the samples used for these tests are higher than that of the average grade of the deposit but reasonably close to that expected in the first seven years of production.

7.4.2 2013 Study.

For the 2013 Study, 67 new diamond-drill holes (DDHs) were drilled in the deposit. Metallurgical samples were taken from 55 of these holes. The samples generated are focused on ore that will be processed in the first decade of operation.

Comminution Samples: 71 composite samples were prepared from 1,038 samples, averaging about 15 samples per composite, from 37 of the 67 DDHs. Each sample was whole drill core with a minimum weight of 100 kg representing about 14 meters of continuous drill core. Of the 71 samples generated 57 corresponded to Operating Years 1–5 and 14 to Operating Years 6-10. Composites were generated of 6 different ore types.




Flotation and Downstream Samples: Various sets of samples were prepared from 55 of the 67 drill holes for the 3 sequential phases of testwork as indicated below:

o Phase I (Exploratory Testing): 6 composite samples representative of 6 of the ore types were prepared from 145 samples. The number of samples making up each composite ranged from 10 to 39, averaging 24 samples per composite.

o Phase II (Variability Testing): 126 separate samples were tested.

o Phase III (Optimization Testing): 8 composite samples representative of 8 of the ore types were prepared from the 126 samples used for the Phase II tests.

Table 7-2 Stage 3 Metallurgical Sampling Program

Parameters Units Hole IDs and Values

Original Diamond Drill Holes

Hole ID AR-28 AR-29 AR-73 AR-149 AR-38 Length meters 432 465 518 572 452

New Diamond Drill Holes

Hole ID MET-AR-28 MET-AR-29 MET-AR-73 MET-AR-149 MET-AR-38 Length meters 360 400 518 450 ASSX 68.915,3 68.578,8 69.692,1 68.328,5 69.545,4 ASSY 69.226,0 68.898,5 69.516,6 69.585,4 69.526,5 ASSZ 3.116,0 3.251,0 3.438,1 3.371,7 3.389,1 Azm degrees 0 0 0 180 0 Dip degrees -90 -90 -70 -70 -90 Overall Average Cu Grade % Cu 0,46 0,08 0,33 0,51 0,86

Ore Types Within Holes

SEP %Cu

0,65

SEM %Cu

0,42

0,62 TEP %Cu 0,42 0,80 TEM %Cu

0,42 0,62

TPP %Cu 0,40 0,54 PHB %Cu 0,37 0,23




7.5 Testwork Summary

Results of testwork including the flotation-mathematical-model-derived values are summarized in Table7-3.

Table 7-3 Summary of Testwork Recoveries into Copper-Molybdenum-Gold Concentrate and Ball Mill Work Indexes

Multi-element analyses of concentrate produced in Stages 1 and 2 locked-cycle tests are shown in Table 7-4 and those from the Stage 5, Phase III tests are shown in Table 7-5.

Table 7-4 Summary of Testwork Recoveries into Copper-Molybdenum-Gold Concentrate and Ball Mill Work Indexes

Table 3-4 - Copper-Molybdenum Concentrate Analyses from Locked-Cycle Tests and Pilot-Plant Tests

Stage 1 Testwork Pilot Plant Stage 2 Testwork

Ore Sample Weighted Testwork Ore Type

Element Units 1A 1B 1C 2A 2B 3 Average

Set

16

Set

19 SEP SEM TEP TEM TPP PHB Average

Cu percent 30,7 30,3 35,7 33,2 32,0 25,1 31,9 41,5 32,5 30,2 27,7 35,0 34,0 33,5

Mo percent 0,59 1,21 0,65 0,32 1,12 0,39 0,75 0,66 0,83 0,50 1,67 0,51 0,77 0,82

Au g/tonne 7,87 3,61 4,14 5,75 4,03 7,77 5,49 0,80 7,87 2,95 2,79 5,24 4,41 4,01

Ag g/tonne 39 258 181 35 194 365 123 37 31 47 66 194 374 125

As percent 0,27 0,16 0,55 0,14 0,73 0,09 0,57 0,08 0,12 0,32 0,65 0,33 0,96 0,41

Zn percent 0,19 4,63 0,98 0,19 4,49 0,59 1,96 Not reported

Pb percent 0,03 1,14 0,24 0,08 1,07 0,03 0,48 0,01 0,01 0,38 0,22 0,49 2,30 0,57

Fe percent 9,5 7,8 11,0 15,0 12,1 14,3 11,8 15,9 20,0 21,4 21,4 12,0 9,0 16,6

S percent 21,9 32,6 33,0 26,9 29,8 20,8 27,6 32,3 34,4 36,8 35,6 36,6 31,6 34,6

Si percent 9,32 4,32 4,75 6,63 4,95 8,39 6,94 2,71 2,95 2,30 2,84 3,38 3,25 2,91

Sb percent 0,003 0,029 0,011 0,004 0,008 0,001 0,010 <0.001 0,004 0,003 0,003 0,017 0,022 0,010

Bi percent 0,022 0,036 0,034 0,022 0,022 0,027 0,035 0,240 0,150 <0.002 <0.002 0,006 0,009 0,026 0,140 0,045

Te percent <0.001 <0.001 <0.001 <0.001 <0.001 <0.001 <0.001 <0.0003 0,000 <0.0003 0,000 <0.0003 <0.0003 0,000

Ni percent 0,020 0,015 0,010 0,022 0,013 0,050 0,018 <0.002 0,004 0,002 0,007 <0.002 0,005 0,005

F percent 0,061 0,065 0,034 0,051 0,038 no

assay 0,051 0,068 0,231 0,020 0,030 0,020 0,040 0,030 0,040 0,030




Table 7-5 Stage 5, Phase II Locked-Cycle Tests, Bulk Concentrate Assays

7.5.1 RPM Comments

The primary grind used in most of the tests was about 80% passing 150 µm. However, there is a significant difference in the fineness of the rougher concentrate regrind prior to cleaning: in Stages 1 through 4 is was generally about 80% passing 40 µm, but for the Stage 5 testwork a grind of about 80% passing 20 µm was determined to be more appropriate.

Table 3-5 - Stage 5, Phase III Locked-Cycle Tests, Bulk Concentrate Assays

Value

Element Units SEP SEM TEM TEP PHB EHB TPM TPP Average

Copper % 30 24 25 24 24 26 28 22 25

Molybdenum % 0,46 0,66 0,96 0,52 0,29 1,20 2,22 0,13 0,81

Gold g/tonne 5 6 4 3 4 3 3 4 4

Silver g/tonne 26 27 106 53 110 53 36 60 59

Arsenic g/tonne 475 1.085 7.021 2.876 5.104 3.819 3.155 1.500 3.129

Lead % 0,05 0,03 1,17 0,06 0,61 0,13 0,05 0,07 0,27

Zinc % 0,10 0,11 1,99 0,56 7,60 5,22 0,30 0,77 2,08

Iron % 26 27 19 26 15 19 21 25 22

Sulfur % 40 40 38 43 42 40 44 50 42

Antimony % <0.001 <0.001 0,004 0,006 0,015 0,005 0,003 0,005 0,006

Selenium g/tonne 91 123 161 155 120 140 138 111 130

Bismuth g/tonne <1 <1 <1 4 190 88 44 272 120

Cadmium g/tonne 10 14 220 40 612 314 38 56 163

Mercury g/tonne <1 <1 <1 <1 <1 <1 <1 <1 <1

Silicon % 1 2 3 1 3 2 1 1 2

Aluminum % 0,4 1,2 1,4 0,7 1,2 0,8 0,5 0,4 0,8

Calcium % 5,50 0,02 0,04 0,03 0,02 0,05 0,00 0,02 0,71

Chlorine g/tonne 70 50 70 130 90 190 <50 <50 100

Fluorine g/tonne 110 290 270 140 200 180 130 80 175

Nickel g/tonne 310 216 408 240 126 180 192 62 217

Cobalt g/tonne 80 94 102 86 54 94 84 80 84

Platinum g/tonne 0,11 0,11 0,12 0,08 0,03 0,07 0,06 0,06 0,08

Palladium g/tonne 0,11 0,16 0,07 0,05 0,03 0,05 0,08 0,05 0,08

Rhenium g/tonne 9,5 13,7 11,6 9,7 4,1 14,8 31,2 3,0 12,2

Carbon % 0,09 0,09 0,09 0,07 0,06 0,09 0,09 0,08 0,08

Magnesium % <0.01 0,004 <0.01 <0.01 <0.01 <0.01 0,002 <0.01 <0.01

Manganese % 0 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01

Phosphorous g/tonne 108 92 69 64 88 18 <10 56 71




7.6 Product Recovery

Almost all of Project’s copper ore is chalcocite or covellite for the first ten years of operation with about 30 percent chalcopyrite in subsequent years. The recoveries vary with ore type and with head grade; the samples tested in some of the test programs are significantly higher grade than the average grade of each particular ore type, especially in relation to copper. The recoveries of copper and arsenic are reasonably consistent but recovery of the other elements varies widely with ore type and with head grade.

The testwork recovery values for molybdenum and gold have been exceptionally erratic, partly as a consequence of the small amount of these metals in comparison with copper, partly a result of the small size of the samples tested, and partly as a consequence of the testwork being primarily focused on the recovery of copper. It is possible that additional testwork oriented to recovery of molybdenum and gold may improve recoveries of these metals.

Figure 7-1 depicts the rougher variability tests for gold and molybdenum recovery versus head grade. These tests were conducted in July 2013 by engineering firm Promet.



Project Name:

Prepared for:


Date:

Project Number:

9/12/2014

ADV-SA-0028

YAMANA

Agua Rica Project

Figure 7-1: Rougher Variability Tests




Life-of-Mine arsenic and zinc content of the concentrates are expected to average about 0.6 percent and 3 percent respectively; those for the first decade are expected to average about 0.3 percent and 2 percent respectively.

For 20 of the 28 years of operation the arsenic content in the copper concentrates will exceed the 0.5 percent level imposed by most smelters. Results of preliminary testwork conducted in 2006 to evaluate the possibility of generating separate high-arsenic and low-arsenic concentrates are provided in Section 6 of this report. The 2006 results appear reasonable but further bench-scale testwork is required.

Should additional bench-scale testwork including locked-cycle tests indicate that the making of separate high-arsenic and low-arsenic concentrates is viable, then pilot-plant tests would need to be instituted in the initial years of operation to substantiate the bench-scale testwork and also to test the viability or otherwise of a POX process such as used at Sepon (referred to later in this report) to the concentrates.

RPM recommends pilot-plant testing to validate the economics of the Sepon (POX ) process prior to the commencement of operations and, should the testwork prove positive, build and operate a POX plant that will be in place from the commencement of operations, so as to generate 100% cathode copper, and thereby eliminate the difficulties and costs of concentrate transportation and the cost of smelter penalties and export taxes.

7.6.1 RPM Comments

RPM assessment of probable recoveries of copper, gold, and molybdenum are as follows:

Copper Recovery - Average copper recovery in the 2013 Study at 86% is probably correct for the life-of-mine. The 2010 YAMANA study concluded that copper recovery would be about 85%. The recent testwork conducted in conjunction with the 2013 Study indicates that copper recovery, at least for the first 10 years of operation, is likely to be about 89%.

Gold Recovery - Average gold recovery in the 2013 Study, at 38%, is low. The 2010 YAMANA Study concluded that gold recovery would be about 53%. The recent testwork conducted in conjunction with the 2013 Study indicates that gold recovery, at least for the first 10 years of operation, is likely to be about 44%. On the basis of the available data, RPM believes that a life-of-mine 45% gold recovery projection is reasonable.

Molybdenum Recovery - Average molybdenum recovery into the bulk concentrate in the 2013 Study is shown as 53% and that for the 2010 YAMANA Study concluded that molybdenum recovery to bulk concentrate would be about 54%. Molybdenum recovery generally drops about 10% in generating the final concentrate from the bulk concentrate. Testing of the flotation of molybdenum from bulk concentrate, as with most copper-molybdenum deposits, has been limited because of the problem of obtaining sufficient samples. Indications are that molybdenum recovery into final concentrate will be more difficult than usual for the Aqua Rica ore because of the unusually fine particle size of the concentrate, the high proportion of pyrite in the concentrate, and the presence of lead minerals. On the basis of the recent testwork and on the presumption that recovery into final concentrate will be about 10% less than in the bulk concentrate, final molybdenum recovery is likely to be about 46%in the initial decade of operation and slightly lower on a life-of-mine basis, of the order of 45%.

After review of the testwork, RPM recommends using the following recoveries, with recovery of molybdenum shown to final molybdenum concentrate (not to bulk concentrate):

Copper: 86 percent

Gold: 45 percent

Silver: 50 percent

Molybdenum: 45 percent

Arsenic: 65 percent

Zinc: 65 percent




8 Infrastructure.

8.1 Mine-Site Facilities

Principal facilities at the Agua Rica mine site will be as follows:

Gatehouse with 70 m2 building and truck scale;

Truckshop: 6-bay shop for trucks and 2 bays for other equipment;

Warehouse: 1,200 m2 building adjacent to the truckshop;

Tire Shop: 1,200 m2 building;

Welding Shop: 640 m2 building;

Shovel Maintenance Shop: 570 m2 building;

Pit Operation Office: 1,250 m2 building;

Haul-Truck Parking Yard: gravel yard;

Truck-Wash: concrete slab with oil separator;

Explosives Magazine: storage for explosives;

First-Aid Clinic;

Diesel Fuel Storage.

8.2 Operations Camps

A camp will be constructed with capacity for 1,450 people at the Capillitas site near the north portal of the ore-conveyor tunnel to serve the mining operation. Personnel will be transported to and from the mine by low-profile buses through the ore-conveyor tunnel.

The existing camp at Alumbrera will serve the ore-processing personnel.

8.3 Tunnels

Two separate tunnels will serve for waste-rock and ore transportation from the mine. Twin parallel tunnels, 4.8 km long, will be constructed 20 m apart with interconnecting tunnels every 250 meters. The tunnels will be self-draining towards Campo Arenal. A series of axial fans will provide ventilation. Smoke detectors, fire-hose stations, and fire extinguishers will be located throughout the tunnels.

The waste-rock tunnel will also serve as a conduit for a diesel pipeline to supply diesel from a storage facility at Campo Arenal to the mine. The ore tunnel will be wider than the waste-rock tunnel to allow buses to transport personnel between the camp and mine.

8.4 Water

The Alumbrera plant in 2012 processed 39.7M tonnes of ore, equal to 110,000 tpd.

The base Agua Rica plan in the 2013 Study was to process ore at the same rate as the Alumbrera Plant with alternatives to reach up to 130,000 tpd. The existing plant draws water from the Campo Arenal basin, the supply of which has not been a restriction to plant throughput up to now. Accordingly, it is expected that the plant will be capable of treating the Agua Rica ore at the same rate.




It is evident however that Alumbrera is experiencing water shortage in that the Annual Plan 2014-2016 includes the following projects:

New wells at Campo Arenal.

Plans to minimize the water level at the reclaim water pond at the TSF to avoid major water loss through evaporation.

Processing ore at a rate higher than 110,000 tpd will require additional water. Prior studies indicated that the Project could draw sufficient water from the Campo Arenal to operate in parallel with Alumbrera. However, a substantial amount of water will also be obtained from the Quebrada Minas gulch in the Agua Rica area during the rainy season, December to March.

A dam wall will be built just before the Quebrada Minas discharges into the Candado creek and thereby prevent discharge of acid water that could contaminate the Candado river.

It is evident therefore that water shortage will not limit the process plant production or mine site operations.

8.5 Power

Adequate power supply to Alumbrera is already in place with a 220 kV line from Tucuman. This line has sufficient capacity to provide the power requirements for Agua Rica when mining ceases at Alumbrera, which would be the case whether Alumbrera is incorporated in the Aqua Rica project or otherwise.

8.6 Comparing Use of Existing Alumbrera Infrastructure with Constructing New Infrastructure

The existing Alumbrera operation has high-quality, established infrastructure that can be used for the ore-processing-related requirements. This includes access roads, camp, service buildings, water supply, power supply, employee transportation, communication systems, and waste systems.

Developing the Agua Rica mine will require considerable new infrastructure dedicated to the mining operation whether the Alumbrera operation were incorporated in the Project or not.




9 Summary Development Alternatives.

The YAMANA 2010 Study assumed that the Project would be a Stand Alone operation.

Conversations with YAMANA senior management have indicated that the Alumbrera operations will be likely decommissioned in or around 2019, presenting an opportunity to utilise the existing infrastructure for the Agua Rica operation. This opens up a range of alternatives that were not previously considered in detail

These options are broadly based around two concepts

1. Use of some or all of the MAA infrastructure. The MAA Infrastructure include:

All existing facilities;

Concentrate plant,

Pipeline,

Filter plant

Rail-road

Port and ship-loading facilities

Power, Water, TSF and service areas.

2. A standalone Agua Rica Mine, Plant and concentrate / cathode transport

A summary of project development opportunities is outlined in Figure 9-1 which requires further detailed engineering study



Project Name:

Prepared for:


Date:

Project Number:

9/12/2014

ADV-SA-0028

YAMANA

Agua Rica Project

Figure 9-1: Project Development Alternatives




9.1 POX/SX-EW Proposed Dual Concentrate Concept

One strategy of dealing with the arsenic content is, while the plant is producing low-arsenic concentrates in the initial years of operation, to test, and if proven worthwhile, install facilities for the following:

Floating separate high-and low-arsenic concentrates, generating high-arsenic concentrate constituting 20% of the product and low-arsenic product constituting 80% of the product

Processing the high-arsenic concentrate through the Sepon process to generate cathode copper, gold-silver doré, and zinc sulphate.

Shipping and selling the low-arsenic concentrate to copper smelters

Preliminary open-circuit flotation testwork using high-arsenic-grade ore was conducted by CSIRO Minerals in Melbourne, Australia in 2006 to ascertain if it might be possible to generate separate low-arsenic and high-arsenic concentrates from Agua Rica ore. Tests showed that initially-produced rougher concentrates when refloated in the first cleaner stage under strong oxidizing conditions provided by the addition of sodium hypochlorite (NaOCl) could be separated into a low-arsenic first-cleaner concentrate which contained 21% of the arsenic in the rougher concentrate and a high-arsenic first-cleaner concentrate.

Results of the CSIRO Optimal Flotation test results for low and high generating arsenics are outlined in Table 9-1.

Table 9-1 CSIRO Optimal Flotation test results generating low-Arsenic and high-Arsenic Concentrates.

The Sepon POX process which is in industrial use at a mine in Laos processing similar ore (high chalcocite and covelite), may resolve the arsenic problem. In application to the Agua Rica concentrates, the plant would utilize the following processes:

Atmospheric leaching of copper and zinc using ferric sulfate, heat, and sulfuric acid generated by autoclave pressure leach oxidation (POX) of pyrite contained in the leach residue.

Flotation of sulfide minerals (primarily pyrite and enargite) in the atmospheric leach residue.

POX of sulfide concentrate generated from atmospheric leach residue to generate ferric sulfate, heat, and sulfuric acid; also within POX, leaching of copper-arsenic minerals with simultaneous precipitation of arsenic as stable ferric arsenate (scorodite).

Recovery of leached copper from atmospheric leach as cathode copper using solvent- extraction/electrowining (SX/EW).




Recovery of zinc as a basic zinc sulfate precipitate (3Zn(OH)2.ZnSO4.5H20) from a neutralized SX/EW raffinate bleed stream.

Leaching of gold and silver in the POX residue with cyanide and subsequent recovery by carbon-in-leach (CIL).

Commingling of flotation tails and leach-circuit tails and placement in the tailings storage facility (TSF).

A flow diagram of the process is shown in Figure 9-2.




Bateman, the designers of the Sepon plant, prepared a study for the possible application of the Sepon process to Agua Rica in 2010. Based on the Bateman study and using the values from the 2013 Study, RPM updated the cost estimate of production, capital and operating costs of a plant processing 20% of the concentrates as outlined in Table 9-2.

Project Name:

Prepared for:


Date:

Project Number:

Figure 9-2: SEPON Process 9/12/2014

ADV-SA-0028

YAMANA

Agua Rica Project




Table 9-2 POX/CIL/SX-EW Hydrometallurgical Plan Processing 20% Concentrate

RPM has reviewed the previous studies pertinent to an Independent operation based on 90 ktpd that was studied by YAMANA in 2010.

Several of the following development alternatives, including the RPM Base Case, consider the use of a dual concentrate system.

Parameter Unit Bateman 2012 20% of 2013 Study

Feed Concentrate

Annually tonnes per year 109500 120000

Daily tonnes per day 300 350

Concentrate Grade

Copper % 29 28

Zinc % 4 2

Gold grams per tonne 9.2 4.9

Silver grams per tonne 145 87

Recovery

Copper % 94.8 94.8

Zinc % 60.5 60.5

Gold % 80.3 80.3

Silver % 62.4 62.4

Production

Copper tonnes per year 30116 33004

Zinc tonnes per year 2648 2902

Gold ounces per year 26023 28518

Silver ounces per year 318735 349299

POX / CIL Plant

Capital Cost US$ Million 86.1 151

Operating Cost US$ / lb Recovered Copper 0.33 0.42

SX/EW Plant

Capital Cost US$ Million 46.2

Operating Cost US$ / lb Recovered Copper 0.20

Total Plant

Capital Cost US$ Million 197.2





9.2 A. Independent Alternative (90 KTD)

Based on the 2010 YAMANA study, all alternatives described below are based on transportation of products by truck to their destination or via the MAA pipeline, port and ship-loading facilities.

9.3 Transportation to Port/ Smelters.

9.3.1 Alternative A1 (Transport 80% Concentrate/20% Cathodes to Chilean Ports)

Alternative A1, assumes a low grade As. content is produced for five years, after which the process plant is modified to produce high and low arsenic concentrate.

Treatment of the high As concentrates by hydrometallurgical methods would allow removal of the arsenic and its conversion to a stable form. Copper in the concentrate could be recovered as electrolytic copper, the gold and silver as doré metal, and the zinc as basic zinc sulfate.

If the flotation separation into clean and dirty concentrates followed by hydrometallurgical treatment proves successful, approximately 31,000 tpa of copper cathodes per year (20 percent of the copper contained) would be produced directly from the copper concentrate.

The other 80% of Cu/Au concentrate could be trucked to either a smelter or to a port to be shipped abroad, through facilities in the III Region of Chile (the Potrerillos smelter or the ports of Caldera or Chañaral). Potrerillos is located about 700 km by road west from the plant site; the port is about 850 km. This alternative is expensive but can be used if a negotiating agreement cannot be reached with MAA and YMAD.

Molybdenum concentrate can be placed in 1.1 tonne capacity fabric bags, placed on pallets and transported by independent truckers to clients in Chile.

Further testwork and engineering studies are required to prove the success of the hydrometallurgical processes.

9.3.2 Alternative A2 (Transport 100% Concentrate to Chilean Ports)

Alternative A2 assumes 100% of concentrate to be trucked to either a smelter or to a port to be shipped abroad, through facilities in the III Region of Chile (the Potrerillos smelter or the ports of Caldera or Chañaral)

Alternative A2 is unlikely to be successful due to restrictions of smelters under current environmental, health and safety regulations which will not treat concentrates with levels above 0.3% As. In the case of the Project, previous studies indicate that the levels of As in the concentrate are above 0.3% As for 20 of the 28 years of operation and hence the arsenic content in the copper concentrates will exceed the level imposed by most smelters.




9.4 Transport Concentrate with the Integrated MAA Facilities, the Concentrate Pipeline, Rail-Road and Port Facilities

In the two alternatives described below (A3 and A4), a project upside would be the possibility of negotiating with MAA and YMAD for the use of the pipeline, railroad, filter plant, port facility, ship-loading facilities to mitigate high initial capex costs.

9.4.1 Alternative A3 (Transport 80% Concentrate/20% Cathodes using MAA facilities)

Alternative A3 proposes to produce low grade As content concentrate for five years and then process 20% of the concentrate through the POX/CIL Process or other hydrometallurgical process.

With regard to the other 80% of the concentrate and taking into account the Alumbrera facilities will be available after the year 2019, it may be possible to negotiate with MAA and YMAD (the owners of the Alumbrera Infrastructure after the shutdown) and the Argentinian government, the use of the current concentrate pipeline, the railway and the port facilities to transport and treat the Cu/Au concentrate in smelters abroad.

The 80% copper concentrate, with As content below 0.3%, could be transported by the existing 316-kilometer long concentrate slurry pipeline to the existing copper-concentrate filter plant at Cruz Alta, located on the outskirts of the city of Tucuman in northern Argentina.

Filtered concentrate will be loaded into rail cars of 53-tonne capacity and 55car trains will be hauled 900 km to an existing ship-loading terminal on the Paraná River near the city of Rosario, in east-central Argentina.

8.4.2 Alternative A4 (Transport 100% Concentrate using MAA facilities)

Alternative A4 is planned to transport 100% concentrate through the MAA´s facilities available to treat the concentrate in smelters abroad paying penalties for the impurities in the concentrates. This alternative is unlikely to be successful as current smelters will not treat concentrates with As. levels above 0.3% due to current environmental, health and safety regulations.

9.5 100% Production of Copper Cathodes

9.5.1 Alternative A5 (100% Production of Cathodes, transported to Port Facilities)

Alternative A5, is to utilize the POX process (2010 Bateman Study on Hydrometallurgy), to treat 100% of the concentrates from the start of the operations, to produce Cu cathodes.

This alternative will have economic advantages in the cost of transportation, Governmental permits and taxes versus the additional Capex and Opex costs of the POX/SX/EW plant.

Some of the key advantages that this alternative has compared with the YAMANA 2010, 2013 Study, and RPM base cases are:

Recover additional copper.

Recover more gold per ton of concentrate.

Recover Zinc as saleable zinc sulphate.

Receive the premium for cathode sale.

Decrease the inland and overseas freight cost.

Cathode could be sold for Argentine internal consumption.

Decrease the port services cost.

Eliminate the penalty for arsenic and other impurities.




The disadvantage is the higher operating costs that the POX/CIL/SX/EW scheme has over the concentrate TC/RC. Further engineering studies are required for this option is required to assess the power and water requirements and supply.

As an alternative to producing and shipping concentrates using the existing MAA facilities which may not be economically competitive or able to be negotiated, consideration should be given to processing all of the concentrates through a POX/CIL process. Such a strategy would minimize concentrate shipment problems and reduce product transportation costs, and more importantly resolve the problem of high arsenic in product concentrate. RPM has estimated the production, capital and operating costs of a plant processing 100% of the concentrates as outlined in Table 9-3.

Table 9-3 POX/CIL/SX-EW Hydrometallurgical Plan Processing 100% Concentrate

Parameter Unit Bateman 2012100% of 2013

Study

Feed Concentrate

Annually tonnes per year 109500 600000

Daily tonnes per day 300 1650

Concentrate Grade

Copper % 29 28

Zinc % 4 2

Gold grams per tonne 9.2 4.9

Silver grams per tonne 145 87

Recovery

Copper % 94.8 94.8

Zinc % 60.5 60.5

Gold % 80.3 80.3

Silver % 62.4 62.4

Production

Copper tonnes per year 30116 159264

Zinc tonnes per year 2648 7260

Gold ounces per year 26023 75902

Silver ounces per year 318735 1047239

POX / CIL Plant

Capital Cost US$ Million 86.1 346

Operating Cost US$ / lb Recovered Copper 0.33 0.39

SX/EW Plant

Capital Cost US$ Million 416


Total Plant

Capital Cost US$ Million 762





9.6 B. Integrated Alternative (110 KTD)

The following alternatives uses the MAA infrastructure, based on the assumption that the current MAA operation ceases in 2019 and accesses is granted for its use.

9.6.1 Alternative B6 (100% Concentrate, Uses MAA transport facilities)

Alternative B6 considers that after MAA shuts down the current operation in 2019, the MAA facilities to process ore, TSF and the power line can be used for the Project. This option has advantages over building a new plant, from a cost, project implementation and permitting perspective.

The 2013 Study concluded that the Alumbrera plant has sufficient capacity to process ore at 110,000-tonnes/day using the existing circuit.

The alternative of using the MAA facilities to process ore and transport 100% of the concentrate to smelters abroad has the risk that with the Agua Rica high As content in the concentrate, most smelters will not treat as it will likely exceed 0.3% As content.

9.6.2 Alternative B7 (80% Concentrate/20% Cathodes, Uses MAA transport facilities)

The possibility exists to negotiate with MAA and YMAD (the owners of the Alumbrera Infrastructure after the shutdown) and the government regarding the use of all the MAA current Infrastructure, the concentrator plant, power, water, TSF, pipeline, railway, port and ship-loading facilities.

Alternative B7 is planned to produce a low grade As content for five to seven years by selective mining and then treat 20% of the concentrates through the POX/CIL Plant concept or other hydrometallurgical process. The other 80% of the concentrate will be transported by the current MAA concentrate pipeline, the railway, the port and ship-loading facilities in Argentina to treat the Cu/Au concentrate in smelters abroad.

9.6.3 RPM Conclusions and Base Case

The RPM Base Case assumes the Project to be an open pit copper mine relying on a mix of conventional mining, near pit crushers and conveying with traditional copper POX/CIL and SXEW hydrometallurgical processing methods.

Alternative B7 which assumes a 110 ktpd operation to produce 20% leached concentrate through a POX (Sepon) hydrometallurgical plant and 80% concentrate in the MAA plant, is foreseen as the most economically feasible option but will require negotiating with MAA and YMAD for the use of the infrastructure and diligent management and planning to be successfully executed. RPM advised that further metallurgical testing of the POX/CIL process needs to be completed to accurately predict product recoveries

RPM would also recommend further study of the 100% copper cathode development option. This option is included in the economic analysis that follows.

This operation scale and planned integration of infrastructure results in limited expansion and capital investment for planned energy and water requirements compared with the Stand Alone operation.




10 Economic Analysis

The economic analysis was completed for two scenarios including:

Base Case considering 80% concentrates and 20% leached concentrate and MAA infrastructure.

Alternate Case based on 100% cathode for a production rate of 90 ktpd.

The following section discusses the capital and operating cost estimate, cash flow and economic parameters for the two cases.

The cash flow model Net Present Value is based on a 10% discount rate. The 10 percent discount rate is considered appropriate for this evaluation as the overall project risks are considered to be relatively low in terms of total capital committed, geologic risk, market risk, etc.

Currencies were provided by YAMANA and based on Bloomberg forecasts. The currencies and are based on converting to the Argentinian Peso at 15 pesos per US Dollar for the long-term exchange rate. Table 10-1 details the long-term forecast exchange rates sourced from Bloomberg as at November 20, 2014.

Table 10-1 Long-term ARS:USD Exchange Rate Forecast

Item Units Q4 2014 2015 2016 2017 2018

Argentinian Peso

Forecast ARS:USD 9.25 12.25 15.90 - - Forward ARS:USD 8.65 12.16 16.12 20.72 24.80

It is important to note that from RPM experience, there is significant potential for an increase in FOREX in the range of 15 pesos per US Dollar and an increase in copper price that may potentially improve project economics.

10.1 Estimated Product Price and Revenue

Under JORC 2012, the approach to commodity pricing for reserves recommends use of consensus long term forecasts, and this is now the standard for ensuring that any reserve should be robust at most foreseeable commodity prices for the LOM. A list of copper projects’ (PEA/PFS/FS) copper price assumption utilized and publically filed over the past 9 months that focused only on development of copper assets were examined by RPM. These price assumptions were also used in RPM evaluation of forward looking pricing assumptions. Commodity price assumptions include the following long term pricing assumptions:

Copper: US$ 3.10/lb

Molybdenum: US$12 /lb

Gold: US$1,300 /oz

Silver: US$21/oz

10.2 Base Case

The Base Case scenario recommended by RPM is based on a 20% leached concentrate operation.




The maximum Argentinian income tax rate of 35 percent on taxable income for copper producers has been assumed. Effective export tax of 9.09% for concentrate and 4.75% for dore was assumed. Cathode copper was assumed to be sold 100% in country and is thus not affected by export tax. Dividend taxes have not been included in the cash flow analysis.

There are a number of taxation incentives for mining producers in Argentina that have potential to reduce taxes. These incentives include:

accelerated amortization of capital spent for the construction or expansion of projects

double deduction for exploration expense spent up to the pre-feasibility stage.

The royalty payable is a federal obligation to the Argentina government based on 3% of the FOB sales revenue. In the Base Case, an 8% employee profit distribution was also assumed.

10.2.1 Capital Costs

The operational management system of owner-operator was adopted for the Project considering economic, social and market relevance, and alignment with current market conditions regarding the restricted supply for consumables, equipment and skilled labour.

RPM estimates that approximately 20% of the capital costs are denominated in the local Argentine Peso. The below capital costs are based on a foreign exchange rate of 15 Argentine Pesos to 1 US dollar.

The total life-of-mine Capital costs are estimated at US$ 3,213.4 million, and comprise US$ 2,216.9 million during the pre-production stage, and US$ 996.5 million for the remainder of the operation. Table 10-2 details the Capital Cost estimate.

Table 10-2 Capital Costs (US$ Million)

Description USD Million

Initial Plant & Infrastructure Ancillary Facilities Concentrator Mine Site Water Management Access Roads General Infrastructure and Waste Handling Crusher, Conveyors, Surge Bins Waste and Ore Tunnels Power transmission Line and Substation Contingency

2,077.3 75.2 74.1

108.4 85.4

539.7 702.7 173.0

75.9 242.9

Mining Mobile Fleet

139.6 139.6

Subtotal- Initial 2,216.9

Sustaining

Plant & Infrastructure Tailing and pipeline Flotation – Dual Concentrate Arsenic Plant – SX / EW Arsenic Plant (POX/CIL) Mining Mobile Fleet

601.3 312.1

46.2 103.5 139.5

395.1 395.1

Subtotal – Sustaining 996.5




Total 3,213.4

The main capital items for the Project include:

Plant, Crusher and Conveyors: US$ 702.7 million

Open Pit: US$ 539.7 million;

Contingency: US$ 242.9 million (11%)

Incorporating the MAA facilities is likely to result in reduced costs in the order of US$ 648 million, reflected by the additional requirements in the 2010 YAMANA study that include a new Concentrator and Tailing storage facilities. This reduction is included in the RPM Base Case capital estimate above.

The reduced Capex of building a new plant and infrastructure requires negotiation with MAA, YMAD and the Government to obtain a reasonable outcome. On Oct 6

th, 2013 YAMANA signed a Memorandum of

Understanding with the provincial Government of Catamarca setting the groundwork for the Company and the Government to work together to consolidate important mining projects and prospective properties in the province, currently consisting of the Agua Rica property and the Cerro Atajo prospect. YAMANA is currently negotiating with YMAD, regarding the use of the infrastructure at Alumbrera.

The RPM review of the mine capital focused on the cost of the mining equipment, appropriateness of the equipment selection, distribution of equipment over time, and quantities required. Both initial and replacement capital were examined and updated based on the RPM database.

10.2.1.1 RPM Comments

The costs in the 2013 Study appear reasonable but RPM recommend the reduction from three to two crushers. Additional working capital has been included to account for civil works for preparation and construction of the crushers and tunnel.

The review identified no issues to suggest the above capital expenditure should be altered. Though the Project may incur additional capital expenditure above the forecast, given it is a relatively isolated operation, these are unlikely to be material for the purposes of the economic assessment.

10.2.2 Operating Costs

The open pit operation targets a mining rate of 110 ktpd. RPM has estimated average mining operating costs based on owner operator management system and updated mining requirements, current market rates for labour, materials, fuel, consumables and project development.

The cost estimate has been derived using zero based costing that is driven by engineering capacities, productivity, hours, fixed and variables costs.

The Operating Costs of the POX/CIL/SX/EW Plant in the cash flow analysis were provided by YAMANA and reviewed and updated by RPM.

The project operating costs is based on an owner-operator management system supported by contractors for specialised services for mobile maintenance and overland crusher and conveyor activities. The planned total workforce for the project, similar to the 2013 Study is 1,450 employees including owner and contractor employees.

RPM estimates that 20% of the global operating costs are denominated in the local currency (Argentine Peso). The 20% factor accounts for labor costs and is considered a conservative estimate. The direct operating cost estimates displayed in table 10-3 are based on a 9.28 USD/ARS exchange rate and have been updated from the 2013 quotations to reflect 2014 market conditions. The Base Case economic analysis is based on an exchange rate of 15 USD/ARS, to reflect current market views of Long-term USD/ARS exchange rate. Table 10-3 detailed the primary direct operating costs for the operation.




Table 10-3 Direct Operating Costs

Description USD /t Milled

Mining and Maintenance Operations 4.54 Concentrate Concentrate Pipeline Molybdenum Plant Pipeline, Port, Plant Labor Differential Flotation POX / CIL SX/EW Other Site Services General & Administration Freight to Market Product Penalties Copper Concentrate Treatment / Refining Molybdenum Concentrate Treatment / Refining Total

6.15 0.32 0.20 0.18 0.13 0.44 0.20 0.13 0.74 1.58 0.01 1.34 0.46

16.43

The project operational cost estimate is based on a 15% contingency and is estimated at 16.43 USD/t milled.

10.2.2.1 RPM Comments

RPM considers the costs to be appropriate for evaluating the economic viability of the project.

10.2.3 Cash Flow

Economic results of the Project Base Case scenario cash flow model indicate an Internal Rate of Return (IRR) of 19.2 percent and a Net Present Value of US $ 1,152.2 million at a 10 percent discount rate. Figures 10-1 and 10-2 detail the project cash flow estimate.

The total project capital cost to produce a 20% leached concentrate is estimated at US$3,213 million. Forecast project operating costs average per year is US$726 million over the Life of Mine. The project life-of-mine average cash cost was estimated at US$1.23/lb Cu.

Based on the projections discussed previously, the project is expected to generate a Revenue of US$ 32,588 million over the 24 year designed mine life. The estimated annual revenue for the Base Case production scenario of 110ktpd for the open pit is US$1,358 million per year average.

The product sales contribution for primary and by-products result in:

Copper – US$ 25,318 million (78%)

Molybdenum – US$ 3,311 million (10%)

Silver – US$ 753 million (2%)

Gold – US$ 3,207 million (10%)



Project Name:

Prepared for:


Date:

Project Number:

8/12/2014

ADV-SA-0028

YAMANA

Agua Rica Project

Figure 10-1: Base Case Cash Flow (Part 1)

Total /

Average 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045

Tonnes milled

Tonnes to copper concentrate (Mt) 750.8 0.0 0.0 0.0 0.0 0.0 23.9 38.3 37.0 38.9 40.8 32.6 32.6 28.4 30.8 31.6 31.9 29.2 30.9 32.6 31.5 32.6 32.1 32.6 32.6 32.6 32.6 32.0 31.1 1.6 0.0

Tonnes to Arsenic concentrate (Mt) 143.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 8.2 8.2 7.1 7.7 7.9 8.0 7.3 7.7 8.2 7.9 8.2 8.0 8.2 8.2 8.2 8.2 8.0 7.8 0.4 0.0

Total tonnes milled (Mt) 893.8 0.0 0.0 0.0 0.0 0.0 23.9 38.3 37.0 38.9 40.8 40.8 40.8 35.5 38.5 39.4 39.8 36.4 38.6 40.8 39.4 40.8 40.2 40.8 40.8 40.8 40.8 40.0 38.9 1.9 0.0

Production from copper concentrate

Copper production (mm lbs) 6,957 -- -- -- -- -- 415 501 352 498 556 324 267 212 240 274 310 222 217 206 253 310 287 253 228 248 239 270 268 9 --

Gold production (koz Au) 2,084 -- -- -- -- -- 125 145 92 72 110 111 124 46 47 78 98 95 79 90 131 105 83 82 79 81 81 70 55 3 --

Silver production (koz Au) 30,411 -- -- -- -- -- 192 653 1,230 1,212 1,364 2,146 2,596 1,442 958 1,008 1,084 1,653 1,129 1,776 2,073 975 1,121 1,485 1,421 1,352 1,225 1,050 1,215 53 --

Production from Arsenic concentrate (SX / EW)

Copper cathode (mm lbs) 1,195 -- -- -- -- -- -- -- -- -- -- 83 69 55 62 71 80 57 56 53 65 80 74 65 59 64 62 70 69 2 --

Production from Arsenic concentrate (POX / CIL)

Gold production (koz Au) 383 -- -- -- -- -- -- -- -- -- -- 28 30 13 13 20 24 23 19 22 31 26 21 20 19 20 20 18 15 1 --

Silver production (koz Au) 4,611 -- -- -- -- -- -- -- -- -- -- 371 420 251 195 202 213 276 206 290 344 211 217 259 246 242 223 207 229 9 --

Total production

Copper production (mm lbs) 6,957 -- -- -- -- -- 415 501 352 498 556 324 267 212 240 274 310 222 217 206 253 310 287 253 228 248 239 270 268 9 --

Copper cathode (mm lbs) 1,195 -- -- -- -- -- -- -- -- -- -- 83 69 55 62 71 80 57 56 53 65 80 74 65 59 64 62 70 69 2 --

Gold production (koz Au) 2,467 -- -- -- -- -- 125 145 92 72 110 139 154 59 60 98 123 118 99 112 162 131 104 103 99 101 101 88 70 3 --

Silver production (koz Au) 35,022 -- -- -- -- -- 192 653 1,230 1,212 1,364 2,518 3,016 1,693 1,153 1,209 1,296 1,929 1,335 2,066 2,416 1,185 1,339 1,744 1,667 1,594 1,448 1,257 1,444 63 --

Molybdenum production (mm lbs) 276 -- -- -- -- -- 5 8 15 21 12 7 8 15 20 14 10 8 8 7 10 14 14 14 13 12 11 12 19 0 --

Cash costs

By-product (US$/lb Cu) $1.23 -- -- -- -- -- $1.30 $1.10 $1.06 $0.96 $1.01 $1.26 $1.23 $1.73 $1.45 $1.41 $1.33 $1.56 $1.74 $1.90 $1.35 $1.29 $1.11 $0.95 $0.98 $0.95 $1.08 $1.08 $1.01 $2.93 --



Project Name:

Prepared for:


Date:

Project Number:

8/12/2014

ADV-SA-0028

YAMANA

Agua Rica Project

Figure 10-2: Base Case Cash Flow (Part 2)

Total /

Average 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045

Revenue (US$ Bn)

Copper 25.3 0.0 0.0 0.0 0.0 0.0 1.3 1.6 1.1 1.5 1.7 1.3 1.0 0.8 0.9 1.1 1.2 0.9 0.8 0.8 1.0 1.2 1.1 1.0 0.9 1.0 0.9 1.1 1.0 0.0 0.0

Gold 3.2 0.0 0.0 0.0 0.0 0.0 0.2 0.2 0.1 0.1 0.1 0.2 0.2 0.1 0.1 0.1 0.2 0.2 0.1 0.1 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.0

Silver 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Molybdenum 3.3 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.2 0.2 0.1 0.1 0.1 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.2 0.0 0.0

Total 32.6 0.0 0.0 0.0 0.0 0.0 1.5 1.8 1.4 1.9 2.0 1.6 1.4 1.1 1.3 1.4 1.5 1.2 1.1 1.1 1.4 1.6 1.5 1.3 1.2 1.3 1.2 1.3 1.4 0.0 0.0

Costs (US$MM)

TCRC costs 3,023 -- -- -- -- -- 164 188 151 217 240 132 113 108 132 123 121 91 95 86 110 144 125 112 103 109 105 120 131 4 --

Operating and processing costs 10,772 -- -- -- -- 143 401 446 385 406 412 486 522 536 513 535 551 515 524 571 535 523 458 387 366 357 373 383 410 35 --

Other costs 3,618 -- -- -- -- (1) 197 210 166 225 230 210 141 110 133 149 155 115 111 104 162 199 152 144 134 140 136 154 152 3 (11)

Total $17,413 -- -- -- -- $142 $761 $845 $702 $848 $882 $827 $776 $754 $779 $807 $828 $721 $730 $761 $807 $865 $735 $644 $602 $606 $614 $656 $694 $42 ($11)

Capital expenditure (US$MM)

Sustaining capex $753 -- -- -- -- -- -- $12 $13 $97 $16 $29 $74 $67 $70 $43 $53 $31 $35 $46 $20 $20 $14 $33 $13 $11 $17 $11 $9 $9 $9

Development capex (Agua Rica) $2,217 -- $312 $639 $674 $566 $27 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --

Sustaining capex (Arsenic plant SX / EW) $103 -- -- -- -- -- -- -- -- $41 $62 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --

Sustaining capex (Arsenic plant POX / CIL) $139 -- -- -- -- -- -- -- -- $56 $84 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --

Total $3,213 -- $312 $639 $674 $566 $27 $12 $13 $194 $162 $29 $74 $67 $70 $43 $53 $31 $35 $46 $20 $20 $14 $33 $13 $11 $17 $11 $9 $9 $9

Unlevered free cash flow (US$MM)

EBITDA $15,175 -- -- -- -- ($142) $746 $1,001 $717 $1,064 $1,161 $753 $630 $367 $501 $585 $693 $432 $373 $313 $560 $710 $721 $687 $611 $674 $611 $688 $706 $2 $11

Current Cash Taxes ($4,186) -- -- -- -- -- -- -- -- ($56) ($560) ($280) ($205) ($130) ($108) ($182) ($208) ($187) ($121) ($101) ($96) ($250) ($279) ($241) ($213) ($206) ($230) ($209) ($256) ($66) --

Residual Cash Taxes -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --

Gold stream option exercise (Upfront Pmt) -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --

Reclaimation -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- ($400)

VAT Receivable -- ($33) ($34) ($4) $11 $57 $3 -- ($15) ($0) $15 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --

Increase / Decrease in Stocks -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --

Changes in Working Capital $0 -- $38 $40 $4 ($7) ($146) ($21) $23 ($5) ($10) $6 $18 $19 ($10) ($11) ($7) $19 $4 $4 ($23) ($13) $4 $7 $4 ($5) $5 ($7) ($2) $70 $1

Total $7,376 -- ($306) ($633) ($673) ($704) $630 $971 $728 $794 $428 $465 $369 $188 $313 $349 $424 $232 $221 $170 $421 $427 $432 $419 $389 $452 $368 $461 $439 ($3) ($397)

NPV (US$MM) $1,152

At 10% discount rate




10.2.4 Sensitivity Analysis

The Project’s IRR and NPV sensitivity to +/- 15 percent changes to key assumptions is shown in Table 10-3. Table 10-4 details the sensitivity analysis comparing ARS:USD foreign exchange rate and copper price.

The Project is most sensitive to product sales copper price variation. Production cost (+/- 15 percent) and exchange rate variation (+/- 0.20) from the Base Case has similar economic impacts.

Spider charts are also shown in Figure 10-3 for Project IRR and NPV with key assumptions varying by plus and minus 15 percent.

Table 10-4 RPM Sensitivity Analysis

Table 10-5 RPM FOREX and Copper Price Sensitivity

Item IRR NPV (US ´000)

Base Case 19.2% 1,152,159

Copper Price +15% 22.9% 1,710,782

Copper Price -15% 15.0% 587,101

Capex Costs +15% 18.6% 876,362

Capex Costs -15% 22.8% 1,243,979

Operating Costs +15% 16.8% 816,180

Operating Costs -15% 21.4% 1,486,301

FOREX 12.75 18.5% 1,080,118

FOREX 17.25 19.7% 1,205,408

NPV (US $000's) USDARS exchange rate

9.28 11.00 13.00 15.00 17.00 19.00 21.00

$2.70 $412,820 $516,983 $603,443 $666,847 $715,333 $753,611 $784,598

$2.90 $655,849 $760,011 $846,471 $909,876 $958,361 $996,639 $1,027,549

$3.10 $898,881 $1,003,043 $1,089,354 $1,152,159 $1,200,187 $1,238,104 $1,268,798

$3.30 $1,141,783 $1,244,962 $1,330,606 $1,393,412 $1,441,050 $1,478,419 $1,508,669

$3.50 $1,383,039 $1,486,133 $1,570,538 $1,632,435 $1,679,768 $1,717,136 $1,747,386

Copper

price

(US$/lb)



Project Name:

Prepared for:


Date:

Project Number:

8/12/2014

ADV-SA-0028

YAMANA

Agua Rica Project

Figure 10-3: Base Case NPV and IRR

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

85% 90% 95% 100% 105% 110% 115%

NP

V (

USD

´´0

0)

Sales Price (Copper) Operating Costs Other Costs Capital Cost FOREX

Base Case - Project Net Present Value

0%

5%

10%

15%

20%

25%

85% 90% 95% 100% 105% 110% 115%

%

Sales Price (Copper) Operating Costs Other Costs Capital Cost FOREX

Base Case - Project Internal Rate of Return




10.3 Alternate Case - 100% Cathode Case

10.3.1 Alternate Case - Cash Flow Analysis

RPM evaluated an alternate economics case based on 100% cathode copper option, provided by YAMANA, containing a Mineable Quantity of 908.9 Mt., at 0.49% CuT grade, for a LOM of 28 years.

RPM believe that this case is conceptual in nature and requires further study focused on the Sepon process.

As previously discussed, this case would minimize concentrate shipment problems by reducing transportation costs and resolve the problem of arsenic in concentrates. Some of the key advantages that this alternative has compared with the YAMANA 2010, 2013 Study, and RPM base cases are:

Recover additional copper

Recover more gold per ton of concentrate

Recover Zinc as saleable zinc sulphate

Receive the premium for cathode sale

Decrease the inland and overseas freight cost

Cathode could be sold for Argentine internal consumption.

Decrease the port services cost

Eliminate the penalty for arsenic and other impurities.

The disadvantage is the higher OPEX that the POX/Leaching/SX/EW process has over the concentrate treatment and refining costs.

The initial capital cost estimated for the Alternate Case is estimated at US$ 3,857 outlined in Table 10-6. Table 10-7 details the alternate case direct operating cost estimate.

Table 10-6 Alternate Case – Initial Capital Costs

Description USD Million

Project 3,095 POX / CIL 346 SX / EW 416

Total 3,857

Table 10-7 Alternate Case Direct Operating Costs

Description USD /t Milled

Mining 4.05

Concentration 6.14 General & Administration POX / CIL SX/EW Cathode trucking Molybdenum Treatment Molybdenum Freight

0.46 3.02 1.38 0.43 0.47 0.04

Total 15.99

The direct operating cost for mining and process plant is considered to be conservative and variable per tonne of production although some cost reductions are likely.

The operating costs for the POX/CIL/SXEW Plant in the Cash flow analysis were provided by YAMANA.




The total project initial capital cost to produce a 100% leached concentrate is estimated at US$3,857 million. Forecast project operating costs average per year is US$489 million over the Life of Mine. The project total cash costs for the life of the project (net of by-product credits) are estimated at US$7,356 million resulting in a life-of-mine average cash cost of US$0.88/lb Cu.

Economic results of the Alternate Case scenario cash flow model indicate a Net Present Value of US$ 934.9 million at a 10 percent discount rate. Figures 10-4 and 10-5 detail the Alternate Case cash flow projection.



Project Name:

Prepared for:


Date:

Project Number:

8/12/2014

ADV-SA-0028

YAMANA

Agua Rica Project

Figure 10-4: Alternate Case - 100% Cathodes Cash Flow (Part 1)

2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E 2034E 2035E 2036E 2037E 2038E 2039E 2040E 2041E 2042E 2043E 2044E 2045E 2046E 2047E 2048E

Mining

Development Ore Mined (kt) – – – 25.6 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 32.9 29.2

Waste Ore Mined (kt) – – – 76.1 68.8 64.5 58.6 58.3 58.0 58.0 58.0 58.0 58.0 58.0 57.9 57.9 57.9 57.9 57.9 57.0 56.8 56.0 55.7 55.6 55.5 51.1 51.1 32.4 19.2 27.0 10.7

Productive Movement (kt) – – – 101.7 101.7 97.4 91.4 91.2 90.8 90.8 90.8 90.8 90.8 90.8 90.7 90.8 90.8 90.8 90.8 89.9 89.7 88.8 88.6 88.5 88.3 83.9 84.0 65.3 52.1 59.8 39.9

Waste:Ore Ratio – – – 3.0 2.1 2.0 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.7 1.7 1.7 1.7 1.7 1.7 1.6 1.6 1.0 0.6 0.8 0.4

Copper Concentrate

Ore to copper concentrate

Ore Milled (000's tonnes) – – – 25,632 32,850 32,850 32,850 32,850 32,850 32,850 32,850 32,850 32,850 32,850 32,850 32,850 32,850 32,850 32,850 32,850 32,850 32,850 32,850 32,850 32,850 32,850 32,850 32,850 32,850 32,850 29,194

Cu Grade (%) – – – 0.91% 0.75% 0.47% 0.66% 0.72% 0.66% 0.49% 0.37% 0.41% 0.43% 0.45% 0.44% 0.46% 0.48% 0.41% 0.34% 0.43% 0.50% 0.50% 0.41% 0.35% 0.37% 0.38% 0.44% 0.54% 0.47% 0.44% 0.50%

Au Grade (g/t) – – – 0.41 0.33 0.19 0.17 0.22 0.27 0.30 0.19 0.16 0.18 0.19 0.21 0.24 0.23 0.19 0.21 0.39 0.27 0.21 0.18 0.17 0.17 0.17 0.19 0.24 0.26 0.19 0.16

Ag Grade (g/t) – – – 2.03 2.19 2.85 3.34 3.47 4.48 6.02 3.80 4.53 3.72 3.33 3.61 3.64 3.33 2.55 2.68 7.05 2.82 3.39 4.31 4.18 3.88 3.53 2.98 2.29 1.72 2.27 3.68

Mo Grade % – – – 0.02 0.02 0.04 0.06 0.04 0.02 0.01 0.02 0.05 0.05 0.04 0.03 0.03 0.02 0.02 0.01 0.02 0.04 0.04 0.04 0.04 0.03 0.03 0.03 0.03 0.03 0.04 0.06

Arsenic Grade % – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

Payable Metal

Copper cathode (kt) Total Average – – – 204.4 215.1 134.1 188.4 205.9 190.4 140.1 105.5 115.3 121.3 125.8 120.6 127.1 133.2 113.1 93.7 117.8 138.3 138.8 113.2 97.8 101.3 104.5 120.5 150.7 130.9 123.0 125.8

Copper cathode (Million lbs) 8,370.0 298.9 0.0 0.0 0.0 450.6 474.2 295.6 415.3 453.9 419.8 308.8 232.6 254.1 267.4 277.4 265.8 280.1 293.6 249.4 206.6 259.6 304.9 306.0 249.6 215.7 223.3 230.3 265.7 332.3 288.6 271.2 277.3

Gold (Moz) 2,803.8 100.1 0.0 0.0 0.0 145.9 150.5 87.4 75.5 100.1 122.8 137.3 85.1 71.3 82.9 85.2 96.4 109.4 105.7 87.4 95.0 174.3 123.9 93.4 81.5 77.8 77.2 76.2 87.4 107.4 118.3 85.0 63.3

Silver (Moz) 28,117.9 1,004.2 0.0 0.0 0.0 459.0 636.2 829.0 969.9 1,009.1 1,301.9 1,748.3 1,104.3 1,314.7 1,081.8 966.0 1,048.3 1,056.8 966.6 742.1 778.2 2,048.3 817.7 984.8 1,251.0 1,214.0 1,127.1 1,026.3 864.8 664.3 498.4 659.5 949.5

Molybdenum concentrate

Moly grade in concentrate % – – – 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00%

Moisture level % – – – 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08% 7.08%

Concentrate Produced - Dry(dmt) – – – 4,290 5,618 11,112 17,014 11,605 6,556 4,305 7,188 13,962 14,117 11,687 9,107 7,529 5,889 4,940 3,992 5,198 11,062 12,012 11,512 10,802 9,779 8,006 7,640 8,072 8,270 11,197 14,511

Concentrate Produced - Wet(wmt) – – – 4,617 6,046 11,958 18,309 12,489 7,055 4,633 7,735 15,025 15,192 12,577 9,800 8,102 6,337 5,316 4,296 5,594 11,904 12,927 12,388 11,625 10,524 8,616 8,222 8,686 8,900 12,050 15,616

Payable Metal

Molybdenum (t) – – – 2,145 2,809 5,556 8,507 5,803 3,278 2,153 3,594 6,981 7,059 5,843 4,553 3,764 2,944 2,470 1,996 2,599 5,531 6,006 5,756 5,401 4,890 4,003 3,820 4,036 4,135 5,599 7,255

Molybdenum (lb) 283,264 10,117 – – – 4,729 6,193 12,249 18,755 12,793 7,227 4,746 7,923 15,390 15,562 12,883 10,038 8,299 6,491 5,446 4,401 5,730 12,194 13,241 12,689 11,907 10,780 8,826 8,422 8,898 9,117 12,343 15,995



Project Name:

Prepared for:


Date:

Project Number:

8/12/2014

ADV-SA-0028

YAMANA

Agua Rica Project

Figure 10-5: Alternate Case - 100% Cathodes Cash Flow (Part 2)

2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E 2034E 2035E 2036E 2037E 2038E 2039E 2040E 2041E 2042E 2043E 2044E 2045E 2046E 2047E 2048E

Financial summary

Revenue

Copper – – – 1,415 1,489 928 1,304 1,425 1,318 970 730 798 840 871 835 880 922 783 649 815 957 961 784 677 701 723 834 1,044 906 852 871

Gold – – – 190 196 114 98 130 160 178 111 93 108 111 125 142 137 114 124 227 161 121 106 101 100 99 114 140 154 111 82

Silver – – – 10 14 18 21 22 28 38 24 28 23 21 23 23 21 16 17 44 18 21 27 26 24 22 19 14 11 14 20

Molybdenum – – – 57 74 147 225 154 87 57 95 185 187 155 120 100 78 65 53 69 146 159 152 143 129 106 101 107 109 148 192

Total Revenue USD Million 0.0 0.0 0.0 1671.1 1772.6 1206.7 1648.1 1730.7 1592.5 1242.5 959.8 1103.6 1157.5 1157.1 1102.9 1144.2 1158.0 978.1 841.8 1154.5 1282.3 1262.4 1068.9 947.5 955.1 950.1 1067.6 1304.2 1180.2 1124.5 1165.6

Treatment charge - MolybdenumUSD Million $1.50 0.0 0.0 0.0 -7.1 -9.3 -18.4 -28.1 -19.2 -10.8 -7.1 -11.9 -23.1 -23.3 -19.3 -15.1 -12.4 -9.7 -8.2 -6.6 -8.6 -18.3 -19.9 -19.0 -17.9 -16.2 -13.2 -12.6 -13.3 -13.7 -18.5 -24.0

Net revenue USD Million 0.0 0.0 0.0 1664.1 1763.3 1188.4 1620.0 1711.5 1581.7 1235.4 947.9 1080.5 1134.2 1137.8 1087.8 1131.8 1148.3 969.9 835.2 1146.0 1264.0 1242.5 1049.9 929.6 938.9 936.9 1055.0 1290.8 1166.6 1106.0 1141.6

Concentrating cost / tonne ($6.14) US$/t ore ($11.73) ($9.63) ($6.00) ($8.43) ($9.22) ($8.52) ($6.27) ($4.72) ($5.16) ($5.43) ($5.63) ($5.40) ($5.69) ($5.96) ($5.06) ($4.19) ($5.27) ($6.19) ($6.21) ($5.07) ($4.38) ($4.53) ($4.68) ($5.40) ($6.75) ($5.86) ($5.51) ($6.34)

Total operating costs USD Million 0.0 0.0 0.0 -736.7 -775.3 -483.4 -679.0 -742.2 -686.3 -504.8 -380.3 -415.5 -437.2 -453.6 -434.5 -458.0 -480.0 -407.8 -337.8 -424.5 -498.5 -500.3 -408.1 -352.7 -365.1 -376.5 -434.4 -543.4 -471.9 -443.5 -453.5

Total transportation USD Million 0.0 0.0 0.0 -21.5 -22.8 -15.3 -21.8 -22.7 -20.4 -14.9 -11.8 -13.9 -14.5 -14.6 -13.7 -14.1 -14.5 -12.3 -10.2 -12.8 -15.8 -16.0 -13.3 -11.6 -11.8 -11.9 -13.4 -16.6 -14.6 -14.2 -15.0

Total export duties USD Million 0.0 0.0 0.0 -13.9 -15.8 -17.8 -23.3 -19.3 -15.7 -14.7 -13.8 -20.2 -20.9 -18.4 -16.5 -15.7 -13.6 -11.3 -10.8 -18.3 -20.0 -19.2 -18.3 -17.3 -16.1 -14.1 -14.2 -15.7 -16.4 -17.6 -20.0

C1 cash costs $0.88 (US$/lb) – – – $1.16 $1.14 $0.87 $0.98 $1.10 $1.09 $0.87 $0.81 $0.66 $0.67 $0.79 $0.80 $0.84 $0.96 $0.98 $0.83 $0.48 $0.75 $0.83 $0.70 $0.60 $0.69 $0.82 $0.91 $0.99 $0.84 $0.81 $0.78

Unlevered FCF

EBITDA 0.0 0.0 0.0 891.9 949.5 671.9 895.9 927.3 859.2 700.9 542.0 630.9 661.6 651.3 623.1 644.0 640.2 538.6 476.4 690.5 729.8 707.0 610.2 548.1 546.0 534.4 592.9 715.2 663.6 630.7 653.2

Less cash taxes 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -154.9 -296.5 -241.1 -185.5 -216.6 -227.3 -223.7 -213.9 -221.1 -219.8 -184.2 -162.5 -237.4 -251.1 -243.2 -209.3 -187.5 -186.8 -182.7 -203.2 -245.9 -227.9 -216.4 -219.7

Less capex -309.5 -923.8 -1,695.2 -928.5 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0

Reclamation 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Unlevered FCF -309.5 -923.8 -1,695.2 -36.6 937.5 659.9 883.9 760.3 550.7 447.8 344.5 402.3 422.3 415.6 397.3 410.9 408.4 342.3 301.9 441.1 466.6 451.8 389.0 348.6 347.2 339.7 377.7 457.2 423.7 402.4 421.4

Discounted Cash flow 10% 934.9 USD Million -232.5 -631.0 -1,052.6 -20.6 481.1 307.8 374.8 293.1 193.0 142.7 99.8 105.9 101.1 90.4 78.6 73.9 66.8 50.9 40.8 54.2 52.1 45.9 35.9 29.2 26.5 23.6 23.8 26.2 22.1 19.1 18.1

IRR 15.8%




10.3.1.1 RPM Comment

RPM generated independent economic models from first principles that focused on operating, capital and sustaining costs associated with the key items for mining, processing and infrastructure.

RPM’s model was developed in annual increments on a “real” basis assuming no escalation. As per current taxation legislation in Argentina, the model assumed a corporate tax rate of 35%.

RPM reviewed the mining and ore processing costs in the 2010 YAMANA study and the 2013 Study financial models against our industry database. Though the cost estimates for mining are optimistic, operational uncertainty still exists.

Barring further study with the 100% Copper Cathode development option, RPM recommends that for the RPM Base Case scenario of 20% leached concentrate at 110ktpd ROM using the MAA concentrate facilities as the most economical and practicable alternative for the Project.

Further market analysis and engineering are recommended to evaluate the alternate case.




11 Mine Risks, Concerns and Opportunity Assessment

11.1 Opportunity/Concerns.

RPM considers that there are several opportunities and concerns within the Project that need to be addressed. These include:

Geology:

Infill drilling should be completed to move resources from indicate to measured. In light of the complexity of the geometallurgical model, this is a realistic target for a final drilling pattern;

Drilling of the outer areas particularly on the east side of the pit and at depth will convert the substantial amount of inferred resources into mineable reserves. This has the potential to add significant tonnages of lower grade material to the project. This may indicate justify building a larger plant at some point in the future and extend the life of the project;

Mineral Resource Estimate: The resource estimates appear to be reasonable but requires additional and careful validations

Underground Exploration Targets: Although significant exploration has taken place within the Project, RPM notes that current drilling indicates the potential for underground mining which could further increase the resource base. This targets are near the proposed surface operation and although at an early stage of exploration, warrant additional work in the near term.

Cut-off Grade: A review of the in pit quantities at varying cut off grades indicates the Project is reasonably sensitive to cut-off grade with material increases in ROM quantities occurring with decreasing cut-off grade. RPM notes that several limiting factors have been incorporated into the estimation of the cut-off grade.

Plant Provisions: Provision has been made in the current Alumbrera ore-processing plant to add a ball mill if warranted. Adding this mill would increase plant capacity considerably, probably of the order of 20% and could add considerable economic benefit to the Project. Such an increase would require that the mining fleet be expanded to provide additional ore and the tailing dam expansion approved.

Mining

The crusher area includes one primary ore crusher and one waste crusher. This can be achieved by raising the capacity of the waste Crusher, increasing the crusher open side setting, using both Crushers at selected times to convey Waste by having surge bins to discharge onto the waste overland conveyor, or trucking a portion of the surplus waste material, as indicated in the 2013 Study as options.

Beneficiation

Complete additional metallurgical testing. It is recommended that extensive locked cycle tests be completed with large volume samples with head grades similar to those projected for large scale production. It is very possible that much of this work could be completed using large diameter reverse circulation drills to take the sample.

Continue with the studies to produce concentrates with impurities levels below the limits of smelter penalties.

Develop in more detail the movement of concentrate and identify smelters who might take the concentrate.




Environmental:

Define in as much detail as possible how the new mine plan utilizing two tunnels and the majority of waste being deposited in El Globo will change the environmental requirements going forward;

Additional study of the thickened tailings disposal to establish the parameters at a FS level including the mitigation procedures to minimize blowing dust.

11.2 Risk

Mining is a relatively high risk business when compared to other industrial and commercial operations. Each mine has unique characteristics and responses during mining and processing, which can never be wholly predicted. RPM’s review of the Mines indicates mine risk profiles typical of large scale mines at similar levels of resource, mine planning and development in Argentina. Until further studies provide greater certainty, RPM notes that it has identified risks and opportunities with the Project as outlined in Table 11-1.

RPM has attempted to classify risks associated with the Mine based on Guidance Note 7 issued by The Stock Exchange of Hong Kong Limited. Risks are ranked as High, Medium or Low, and are determined by assessing the perceived consequence of a risk and its likelihood of occurring using the following definitions:

Consequence of risk:

Major: the factor poses an immediate danger of a failure, which if uncorrected, will have a material effect (>15% to 20%) on the Mine cash flow and performance and could potentially lead to Mine failure;

Moderate: the factor, if uncorrected, could have a significant effect (10% to 15% or 20%) on the Mine cash flow and performance unless mitigated by some corrective action, and

Minor: the factor, if uncorrected, will have little or no effect (<10%) on Mine cash flow and performance.

Likelihood of risk occurring within a 7 year timeframe:

Likely: will probably occur;

Possible: may occur, and

Unlikely: unlikely to occur.

The consequence of a risk and its likelihood of occurring are then combined into an overall risk assessment as shown in Table 11-1 and Table11-2 to determine the overall risk rank.




Table 11-1 Risk Assessment Ranking

Likelihood Consequence

Minor Moderate Major

Likely Medium High High Possible Low Medium High Unlikely Low Low Medium

RPM notes that in most instances it is likely that through enacting controls identified through detailed review of the Mine’s operation, existing documentation and additional technical studies, many of the normally encountered Mine risks may be mitigated.

Table 11-2 Mine Risk Assessment

Risk Ranking

Risk Description and Suggested Further Review

Potential Mitigant Area of Impact

M Construction CAPEX and Timing

Review of project construction CAPEX has increased by US$ 209 million since the latest definitive estimate in early 2013 due to current market conditions. Material capital cost increases may still occur associated with social and unforeseen construction issues. Delays during this time of peak construction could add significant costs.

Regular review and updating of the CAPEX requirement, close management of potential social issues.

Construction Costs and timing, Production Ramp up

M Water Management

Water management planning at conceptual stage.

Detailed management planning should be upgraded to include more detailed information and the design and location of facilities.

Project Startup

M Power-Supply-Line Construction

Power will be supplied from Alumbrera’s existing 220 kV line. A connection off the 220 kV line will be made near the El Globo waste-stacking area to a new substation where the power will be transformed to 33 kV and power distributed to the crushing station and to the overland conveyor drive motors.

Provide assistance to local power company (the power-line installation and operating company) where possible.

Plant Construction Schedule

M Mine Pre-Stripping

Pre-stripping may be delayed due to undulating terrain, restricted waste-dump sites and requirement for construction of conveyors and tunnels. Delay could jeopardize availability ore at the time of plant startup.

Ensure that any delay in preproduction is minimized.

Ore-Processing Plant Startup

M Concentrate Transportation System




Current plan is to truck concentrates all the way from the mine to the port but the possibility of using both trucks and rail is still being considered. A decision needs to be made soon as to which option will be adopted to have the system ready in time.

If the truck only option is adopted it is unlikely that there will be any delay.

Concentrate Shipping

M Seepage Control in the TSF

Seepage Control associated with the Tailings Storage Facility is required as the TSF is a no discharge facility. Also, seepage control will likely prevent contaminants from impacting the water resources in the area.

Use construction methods to prevent seepage through the dam and grouting the underlying bedrock to enhance seepage control. Installation of monitoring wells to determine if the groundwater is impacted that can be used to collect contaminated water, if needed.

Tailings Storage and Water Resource Protection

M Sedimentation Pond Dam

This dam will be located in an area of hard ground. This could result in the possibility of leakage and ground subsidence that could impact the dam structure and its impermeabilization.

Ensure that the design includes adequate impermeabilization and drainage elements to control potential infiltration that could worsen ground condition.

Dam Integrity

M Employee Training

The plan is to employ as many local residents as practical, most of which have little industrial experience. Training these employees is likely to be more difficult and take longer than anticipated.

A training program is already in place for mine machinery operators. Training of plant operators and maintenance personnel could be initiated well in advance of plant startup.

Time to Reach Full Production Rate

M Agua Rica Drainage




Waste rock at Agua Rica could have potential environmental concerns. It would be prudent to initiate studies on how best to handle drainage from the mine and waste dump sooner than later.

Studies could begin at any time.

Agua Rica Drainage

M Key Person Management

RPM considers that retention of the key management personnel onsite are critical to achieving development of the Project on time and within Budget

Discussions with key persons should occur to ensure a smooth transition of ownership.

Project construction, budget and ramp up

L Commodity Price Fluctuations

The revenue stream of the Project is dominated by the Copper concentrate with 10 % from the Mo concentrate and by products. As noted in the RPM valuation report the NPV sensitivity analysis suggests the Project is not highly sensitive to changing commodity rather changing costs and discount rates likely due to high CAPEX required.

Offtake agreements or long terms sales contracts.

Project Economics

L Agua Rica Crusher and Conveyor Installation

The plan is to start mining at Agua Rica in Production Year 4. A start on engineering for the crusher and conveyor that serves this mine, including utility systems, will need to be initiated before the end of Year 3.

Conceptual engineering can be started at any time.

Agua Rica Crusher

L Copper Recovery

The boundary between oxide and sulfide ore is always difficult to determine and some portion of oxide ore is likely to be encountered deep in sulfide ore. This often results in lower metal recoveries in the initial year or two of production.

Assays of both total and acid-soluble copper should be done for grade control when the mine commences operation and boundaries developed as to whether to mill, stockpile, or waste marginal ore.

Grade Control

M Environmental Permits and Approvals

A detailed review of the permitting activities shows that the Project is progressing toward fulfillment of all requirements. The Company Legal Staff is working with the Environmental and Social groups to assure that all permits and authorizations are acquired.

Acquisition of permits is ongoing with some concern regarding the acquisition of a “Social License” to construct and operate due to major social issues

Approvals required to initiate mining, processing and concentrate transport activities.

L Tailings Discharge Flow Characteristics




Flow characteristics of thickened tailings will only really be known when production commences. It will be necessary to vary the pulp density to find the best value to get adequate flow with an acceptable deposition slope.

Ensure operators are aware of the importance of tailings flow characteristics and deposition slope.

Tailings Storage

L Occupation Health and Safety

Occupational Health and Safety Management is a major component of the Feasibility Study completed by Rescan in 2007. The 2013 Study provided a detailed outline of the HSE System that will be implemented for the Agua Rica Project. The system was presented as a general plan that will be required as the Project moves forward.

All aspects of the risk assessment and the mitigation measures expected to be implemented to promote the protection of the human health and safety and the environment include health and safety management measures were included. However, a detailed Health and Safety Management System specifically for the Agua Rica Project has not been provided and therefore was not reviewed during this evaluation

Health & Safety

L Environmental and Social Management System

An ESMS has not

been developed as required by the Equator Principles.

ESMS

M Potential for ARD and LE

Potential for ARD and LE may be an ongoing issue from construction through the post-closure period.

Water treatment may be required into perpetuity.

Operating Phase

M Waste Rock Storage

Seepage from the waste rock storage facilities may be an ongoing management issue through the post-closure period and likely into perpetuity.

The potential impact to the alluvial aquifer is a major concern that may require appropriate mitigation measures such as a liner system.

Mining

L Site Closure and Reclamation




Closure Plans have not been developed for environmental and social aspects of the Project.

The potential impact is delays to project implementation, licensing and social issues.

Operating Phase

L Biodiversity Management

A biodiversity management plan was not available for review.

Existing springs (vega habitat) and streams may be considered critical habitat and require special consideration as noted in the Equator Principles and the IFC Principles and Guidelines.

Operating Phase

H Concession Agreement

YAMANA’s current land position includes the mining claims making up the core “minas” concessions and the surrounding mineral rights that on average extend for some 30 km north-south and 20 km east-west.

RPM (RPM) accepted YAMANA’s assurance and did not conduct an independent land status review primarily due to the lack of documentation provided for this review.

Operating Phase

L Social Management program

A detailed social management program has not been developed at the time of this evaluation.

Current social unrest will greatly impact the Project moving forward

Operating Phase

H

High Arsenic content

A detailed metallurgical test work program and market study is required to determine the technical limitations of copper concentrate with high As content.

Current uncertainty of ability to sell As content above 0.3 for most international steel makers.

Operating Phase




11.3 Conclusion

The IER has not identified any technical fatal flaws which would prevent the successful commissioning and operation of the project. Further metallurgical process testwork is recommend to understand the technical and market limitations of processing and selling copper concentrate with high As content.

The review of the project financial model indicates that the mine at 110kt/d ROM process capacity rates could be operated profitably and that the forward forecast suggests this is sustainable. The forecast 110 ktpd operation planned to produce 20% leached concentrate using an integrated project model of MAA facilities including the concentrate, pipeline, water source, power, TSF, Port/Ship-loading facilities, administration and services facilities is foreseen as the most economically feasible option for the operation but will require negotiating with MAA and YMAD the use of the facilities and a diligent management and planning to be successfully executed.

RPM believes that further metallurgical testing of a POX and flotation process such as that used at SEPON needs to be completed to accurately predict product recoveries.

Selectively mining zones of high- and low- grade ore may help to mitigate some of the issues relating to product specifications, this will require a detailed mine plan focusing on mining high grade at low As content and strip ratios to maintain cost projections to ensure the planned high tonnage low operating cost is achieved.

RPM identified no material issues or fatal flaws as part of the mining review; however further investigation is recommended into the medium to long term mining strategy forecast pertinent to As content.




12 References

Section 1 – Background

Fluor, 2013. Minera Alumbrera Limitada – Agua Rica Feasibility Study.

Pincock, Allen, Holt, March 2011. Updated NI 43-101 Technical Report of the Agua Rica Project, Catamarca Province, Northern Argentina (unpublished).

YAMANA, 2010: Agua Rica Technical Report.

Section 2 – Project Ownership

BHP-NNO, 1997. Exploration Study – Agua Rica Project.

HATCH -NNO, 2007. Independent Technical Report NI 43-101.

Section 4 – Mineral Resource Estimates

JORC Code, 2004 Edition. Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore reserves.

Section 5 – Mineable Quantity Estimates

Metalica Consulting, 2010. Capítulo Minería para Reporte NI 43-101 Proyecto Agua Rica.

Section 6 – Mining

Piteau Associates Engineering Ltd, June 2013. Minera Alumbrera – Agua Rica Geotechnical Investigations and Slope Design Recommendations.

Pincock, Allen & Holt, 2010. Optimization Study of the Minera Agua Rica Copper-Gold-Molybdenum Project, Northern Argentina.

Schlumberger Water Services, August 2013. Hidrologia Superfical y El Sistema de Manejo de las Aguas Superficiales del Proyetco Agua Rica.

Section 7 – Beneficiation

ALS Metallurgy Kamloops, May 2013. Metallurgical Assessment of the Agua Rica Project.

ALS Metallurgy Kamloops, April 2013. Variability Communition Test Work for the Agua Rica Project.

Consultoria e Ingenieria, 2013. Promet101 and ALS Metallurgy Kamloops, Flotation tests.

FLSmidth, 2013, Tailings thickening tests (downstream tests).

Section 8 – Infrastructure

Jacob Associates, April 2012. Agua Rica Mine Conveyor Tunnel, Argentina.

SAXUM, September 2012. Consideraciones Generales Campamento Permanente.

Southmark Logistics S.A, August 2012. Route Survey Detallado – Proyecto Agua Rica.




Section 9 - Summary of Development Alternatives

BATEMAN Engineering Pty Ltd, 2010. Agua Rica Hydrometallurgy Report.

Knight Piéshold Consulting, January 2012. Evaluación de la Amplicaón del Dique de Colas de Minera Alumbrera.

Section 10 – Economic Analysis

AMEC, May 2010. Estudio Revisión Estimación de Costos.

Section 11 – Mine Risks, Concerns and Opportunities

Golder Associates, April 2012. Proyecto Agua Rica: Revisión crítica del Informe de Impacto Ambiental.




13 RPM Qualifications and Experience

RPM’s advisory division operates as independent technical consultants providing services across the entire mining life cycle including exploration and project feasibility, resource and reserve evaluation, mining engineering and mine valuation services to both the mining and financial services industries.

RPM is the market leader in the innovation of advisory and technology solutions that optimise the economic value of mining assets and operations. RPM has serviced the industry with a full suite of advisory services for over 45 years and is the largest publicly traded independent group of mining technical experts in the world having completed over 11,000 studies across all major commodities and mining methods, and worked in over 118 countries globally. This report was prepared on behalf of RPM by technical specialists, details of whose qualifications and experience are set out in Annexure A.




A1. Annexure A – Qualifications and Experience

David Pires – Consulting Manager – LAM, Bsc. Mine Surveying and Engineering, Msc, Mining Engineering, GradCert, Mineral Economics. Registered Member of Society of Mining, Metallurgy, and Exploration Organization (SME), Member, Chartered Professional of Australasian Institute of Mining and Metallurgy (AusIMM). Mr. D. Pires has ober 15 years experience in mining operations of gold, copper, iron ore and coal, working in major international miner companies such as KCGM, Rio Tinto, HWE and BHP. David has a diverse range of mining experience within the resources industry including mine operations, finance and asset management areas. Within these areas, such functions include mine design, drill and blast design, operational leadership, project management, mine simulation, life cycle costing, equipment selection, business analysis including operational budgets and labour modelling. Operational roles held by David include production supervisor, shotfirer, specialist mine engineer, production engineer, quarry manager, surveyor and equipment operator. With relevant experience in a wide range of commodity and deposit types, David meets the requirements for Qualified Person for 43-101 reporting, and Competent Person (“CP”) for JORC reporting for most metalliferous Mineral Reserves. Mr. Pires is fluent in Portuguese and English.

Philippe Baudry – General Manager – China and Mongolia, Bsc. Mineral Exploration and Mining Geology, Assoc Dip Geo science, Grad Cert Geostatistics, MAIG Philippe is a geologist with over 15 years of experience. He has worked as a consultant geologist for over 6 years first with Resource Evaluations and subsequently with Runge after they acquired the ResEval group in 2008. During this time Philippe has worked extensively in Russia assisting with the development of two large scale copper porphyry Mines from exploration to feasibility level, as well as carrying out due diligence studies on metalliferous Mines throughout Russia. His work in Australia has included resource estimates for BHPB, St Barbara Mines and many other clients both in Australia and overseas on most styles of mineralisation and metals. Philippe furthered his modelling and geostatistic skills in 2008 by completing a Post Graduate Certificate in Geostatistics at Edith Cowan University. Philippe relocated to China in 2008 and has since Mine managed numerous Due Diligences and Independent Technical Reviews for private acquisitions and IPO listings purpose mostly in China and Mongolia. Prior to working as a consultant Philippe spent 7 years working in the Western Australian Goldfields in various positions from mine geologist in a large scale open cut gold mine through to Senior Underground Geologist. Before this time Philippe worked as a contractor on early stage gold and metal exploration mines in central and northern Australia. With relevant experience in a wide range of commodity and deposit types, Philippe meets the requirements for Qualified Person for 43-101 reporting, and Competent Person (“CP”) for JORC reporting for most metalliferous Mineral Resources. Philippe is a member of the Australian Institute of Geoscientists. Richard Kehmeier – Chief Geologist, Msc. Geology, Bsc. Geological Engineering, Chartered Professional - American Institute of Professional Geologist and fellow Member of the Society of Economic Geologists. Mr. Kehmeier has over 40 years of international experience in driving exploration concepts from discovery to final feasibility. Throughout his career he has discovered or caused to be discovered by managed exploration programs over 15 million ounces of gold and over a billion pounds of copper in multiple deposits in varied geologic and political environments. His experience includes feasibility and pre-feasibility studies, numerous preliminary economic evaluations, developing CAPEX and OPEX costs for open pit (large and small) and underground narrow vein mines, and authoring numerous 43-101 reports on gold and copper properties. Mr. Kehmeier has achieved positions of progressive responsibility ranging from Mine Geologist to Vice President, Exploration.




Richard Addison, P.E., Principal Process Engineer. M.S. Metallurgical Engineering, Colorado School of Mines, 1968, A.C.S.M. (Honors), Camborne School of Mines, 1964. Registered Member of Mining, Metallurgy and Exploration (SME)4, Registered Engineer, Nevada, Chartered Engineer, U.K, Eur. Ing., EEC. Mr. Addison has over 45 years of diversified experience in the mineral processing and extractive metallurgy field. He is a well-known authority in the field of mineral processing with particular emphasis on complex ores and base and precious metals, having worked on numerous projects throughout his career. He has evaluated the processing facilities and operations of many domestic and foreign metals operations involving both oxide and complex refractory type ores. Copper experience includes the appraisal of existing and proposed facilities, production, and costs of the Ilo smelter for Southern Peru Copper Company; the Ellatzite Copper Mine Feasibility Study, Bulgaria; the Alumbrera Copper/Gold Mine Competent Persons Report, Argentina; Batu Hijau Copper Mine Completion Test, Indonesia; the Independent Engineers assignment on the Candaleria Project in Chile and the Los Pelambres Copper Mine Completion Test, Chile. Mr. Addison is fluent in Spanish. Terry H. Brown, Ph.D., Pincipal Environmental Specialist. Ph.D. Soil and Environmental Chemistry, University of Idaho, 1986, M.S. Soil Chemistry/Morphology, Washington State University, 1977, B.S. Forest Management, Washington State University, 1974. Member of American Chemical Society, RCPAC Certified Professional Soil Scientist # 1742 American Society for Surface Mining and Reclamation, Soil Science Society of America (American Society of Agronomy) Over 35 years of U.S. and International experience serving in environmental management positions with two coal mining companies, a U.S. federal coal mining/environmental regulatory agency, an international research institute and with an International environmental consulting company. Specializing in soil and water management activities including: Water Management - potential for development of acid rock drainage in mineral and coal mines, metals dissolution, tailings storage, waste rock management, water treatment, erosion and sedimentation control, and water and soil chemistry; Soil Management - soil chemistry, soil morphology/mapping, soil fertility and soil microbiology/bioremediation;. Significant experience in environmental impact analysis, development of impact mitigation measures, permitting of mine construction and operations, reclamation/mine closure planning, pit lake development, environmental monitoring, soil mapping, evaluation of compliance with environmental standards, liability determinations, and environmental cost accounting. Adriana Magalhães, Senior Geologist. Geology, Univeristy of Ouro Preto, Brazil. Registered Member of the Australasian Institute of Mining and Metallurgy (AusIMM).

Ms. Maglhães has 17 years experience in field geology, exploration, geological modeling and 3D modeling. Her experience includes sampling control, QAQC, design and control of exploration drilling activities, drilling and surface mappings, ore control, ore feeding control to plant, and mine-plant grade reconciliations. Prior to joining RPM, Ms. Maglahães worked as Resource Geologist with VALE and BHP Billiton. She is proficient in the use of Vulcan and Gslib.

Sergio Fuenzalida, Principal Mining Engineer. B.Eng, Mining Engineering, University of Chile, M.Sc., Executive Management, Australian Institute of Management. Fellow Member of the Australasian Institute of Mining and Metallurgy (AusIMM).

Mr. Fuenzalida has over 40 years’ experience in the minerals industry including project evaluations in Australia, Phillipines, Chile, Colombia and Canada. Mr. Fuenzalida has held operational, consulting, senior and general management roles for major mining companies including BHP, Dampier Mining Company, Groote Eylandt Mining Company and Minera Escondida Limitada. Mr. Fuenzalida´s mining operations experience is complimented by extensive knowledge in development, finance, human resources, industrial relations, exploration, the administration of port logistics and public relations. Mr. Fuenzalida is fluent in Spanish and English languages.




Company’s Relevant Experience

RungePincockMinarco (RPM) is the market leader in the innovation of advisory and technology solutions that optimise the economic value of mining assets and operations. RPM has serviced the industry with a full suite of advisory services for over 45 years and is the largest publicly traded independent group of mining technical experts in the world.

RPM has completed over 11,000 studies across all major commodities and mining methods, having worked in over 118 countries globally.

RPM has operations in all of the world’s key mining locations enabling them to provide experts who understand the local language, culture and terrain. RPM’s global team of technical specialists are located in 18 offices around the world. Through their global network, RPM can provide you access to the right specialist technical skills for your project.

RPM’s advisory division operates as independent technical consultants providing services across the entire mining life cycle including exploration and project feasibility, resource and reserve evaluation, mining engineering and mine valuation services to both the mining and financial services industries.

RPM’s trusted advisors typically complete assignments across all commodities in the disciplines of:

Geology;

Mining Engineering;

Minerals Processing;

Coal Handling and Preparation;

Infrastructure and Transportation;

Environmental Management;

Contracts Management;

Mine Management;

Finance and Project Funding;

Commercial Negotiations.

RPM was founded in Australia and as a result, has a solid understanding of and is committed to compliance with the codes which regulate Australian corporations and consultants.

Over the past 45 years, RPM has grown into an international business which has continued to provide clients and those that rely on its work the confidence that can be associated by the use of the relevant global industry codes some of which include:

The Australasian Institute of Mining and Metallurgy Code of Ethics;

The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves;

The Australian Institute of Geoscientists Code of Ethics and Practices;

Society for Mining, Metallurgy and Exploration Code of Ethics; and

The National Instrument 43-101 Standards of Disclosure for Mineral Projects.

RPM has conducted numerous independent mining technical due diligence studies and reporting for IPO’s and capital raisings under the requirements of all key mining equity markets over the past six years, with involvement in capital raisings worth more than US$44 billion. Some of this and other work is summarised in Table A1.

RPM leverages the power of its specialist knowledge to also provide cutting edge mining software that is sought after globally for mine scheduling, equipment simulation and financial analysis. RPM software is relied on by mining professionals to understand how to structure their long and short term operations efficiently using auditable best practice methodologies and solutions.




Table A1 - Mining Related IPO and Capital Raising IER Experience

2014 Hidili International Development Company., Ltd; Competent Persons Report of Mineral Resources and Ore Reserves under JORC and Independent Technical Review for inclusion in a HKSE Circular to support the divestment of Multiple Coal Mines, Yunnan Province, China.

2013 China Molybdenum Company., Ltd; Competent Persons Report of Mineral Resources and Ore Reserves under JORC and Independent Technical Review for inclusion in a HKSE Circular to support the acquisition of the Northparkes Copper and Gold Mine, Central West NSW, Australia.

2012 China Gold Resources International., Ltd; Tibet Jiama Copper-Polymetallic Phase II NI 43-101 HKEx Pre-Feasibility Study. China

2012 China Precious Metal Resources Holdings Co., Ltd Competent Persons Report of Mineral Resources and Ore Reserves under JORC and Independent Technical Review for inclusion in a HKSE Circular to support the acquisition of an Gold Operation Yunnan Province, China.

2012 Kinetic Mines and Energy., Ltd; Competent Persons Report of Mineral Resources and Ore Reserves under JORC and Independent Technical Review for inclusion in a HKSE Circular to support the IPO of an underground coal asset in Inner Mongolia Province, China.

2012 China Daye Non-Ferrous Metals Mining., Ltd; Competent Persons Report of Mineral Resources and Ore Reserves under JORC and Independent Technical Review for inclusion in a HKSE Circular to support the acquisition of 4 operating underground copper, lead, zinc assets in Hubei Province, China.

2012 Huili Resources Group ., Ltd; Competent Persons Report of Mineral Resources and Ore Reserves under JORC and Independent Technical Review for inclusion in a HKSE Circular to support the IPO of multiple underground nickel, lead, zinc, copper and gold mining assets in Xinjiang and Hami Province, China.

2011 China Polymetallic Limited Mining., Ltd; Competent Persons Report of Mineral Resources and Ore Reserves under JORC and Independent Technical Review for inclusion in a HKSE Circular to support the IPO of a lead zinc silver polymetallic underground mining assets in Yunnan Province, China.

2011 China Precious Metal Resources Holdings Co., Ltd; Competent Persons Report of Mineral Resources and Ore Reserves under JORC and Independent Technical Review for inclusion in a HKSE Circular to support the acquisition of multiple underground gold mining assets in Henan Province, China.

2011 HaoTian Resources Group Limited; Competent Persons Report of Mineral Resources and Reserves under JORC and Independent Technical Review for inclusion in a HKEx Circular to support acquisition of and underground coal mines in Xinjiang Autonomous Region, China.

2011 King Stone Energy Group., Ltd; Competent Persons Report of Mineral Resources and Reserves under JORC and Independent Technical Review for inclusion in a HKEx Circular to support acquisition of 2 underground coal mines in Shanxi Province, China.

2010 China Precious Metals Holdings Co., Ltd; Competent Persons Report of Mineral Resources and Ore Reserves under JORC and Independent Technical Review for inclusion in a HKEx Circular to support the acquisition of multiple underground gold mining assets in Henan Province, China.

2010 Century Sunshine Group Holdings Limited; Competent Persons Report of Mineral Resources and Ore Reserves under JORC and Independent Technical Review for inclusion in a HKEx Circular to support the acquisition of a serpentinite mining asset in Jiangsu Province, China.

2010 Doxen Energy Group Limited; Independent Technical Review and estimation of Mineral Resources under JORC for inclusion in a HKEx Circular to support the acquisition of a coal mining asset in Xinjiang Autonomous Region, China.




2010 KwongHing International Holdings (Bermuda) Limited; Independent Technical Review for inclusion in a HKEx Circular to support a Very Substantial Acquisition.

2009 Metallurgical Corporation Of China Ltd (“MCC”); Independent Technical Review for inclusion in a Prospectus to support a stock exchange listing on the Hong Kong Stock Exchange.

2009 Nubrands Group Holdings Limited, Guyi Coal Mine; Independent Technical Review for inclusion in a Stock Exchange Circular to support a mining asset purchase by a listed Hong Kong Company.

2008 China Blue Chemical Limited, Wangji and Dayukou Phosphate Mines: Independent Technical Review for inclusion in a Stock Exchange Circular to support a mining asset purchase by a listed Hong Kong Company.

2008 Kenfair International (Holdings) Limited, Shengping Coal Mine: Independent Technical Review for inclusion in a Stock Exchange Circular to support a mining asset purchase by a listed Hong Kong Company.

2007 China Railway Company Limited, African Copper/Cobalt Assets: Capital raising for mining assets on the Hong Kong Stock Exchange. Preparation of Competent Persons Report for planned IPO on the HKEx.

2007 China Railway Company Limited, African Copper/Cobalt Assets: Capital raising for mining assets on the Hong Kong Stock Exchange. Preparation of Competent Persons Report for planned IPO on the HKEx.

2007 Gloucester Coal Limited – Independent Technical Review for Australian Stock Exchange Scheme of Arrangement.

Documents

Independent Engineering Review of the Agua Rica Projects22.q4cdn.com/899716706/files/doc_news/2014/31-RPM-Report-(FIN… · RPM expressly disclaims any liability to you and any duty