MINERA VALLE CENTRAL OPERATION RANCAGUA, REGION VI, … · 2018-08-10 · 19.0 MARKET STUDIES AND...

MINERA VALLE CENTRAL OPERATION

RANCAGUA, REGION VI, CHILE

43-101 TECHNICAL REPORT

Prepared for:

Amerigo Resources Ltd

Prepared by:

Robert D. Henderson P. Eng.

Effective Date:

31 December 2016

Filing Date:

30 March 2017

MINERA VALLE CENTRAL March 30, 2017 TECHNICAL REPORT of 121

TABLE OF CONTENTS

1.0 SUMMARY ...................................................................................................................................... 8

1.1 Introduction ........................................................................................................................ 8 1.2 Project Description and Location ....................................................................................... 8 1.3 History ................................................................................................................................ 8 1.4 Geological Setting and Mineralization................................................................................ 8 1.5 Drilling, Sampling and Analyses ........................................................................................ 9 1.6 Metallurgical Testwork ....................................................................................................... 9 1.7 Mineral Resource Estimate .............................................................................................. 10 1.8 Recovery Methods ........................................................................................................... 11 1.9 Environmental Studies and Permits ................................................................................. 11 1.10 Contracts and Royalties ................................................................................................... 11 1.11 Preliminary Economic Assessment .................................................................................. 12 1.12 Conclusions and Recommendations ............................................................................... 12

2.0 INTRODUCTION ........................................................................................................................... 13

2.1 Introduction ...................................................................................................................... 13 2.2 Qualified Persons ............................................................................................................. 13 2.3 Information Sources ......................................................................................................... 13 2.4 Previous Technical Reports ............................................................................................. 13 2.5 Cautionary Statement Regarding Forward-Looking Statements ..................................... 14

3.0 RELIANCE ON OTHER EXPERTS .............................................................................................. 16

4.0 PROJECT DESCRIPTION AND LOCATION................................................................................ 17 4.1 Property Location ............................................................................................................. 17 4.2 Property Description......................................................................................................... 17 4.3 Royalties .......................................................................................................................... 18 4.4 Permits ............................................................................................................................. 18

5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ......................................................................................................................... 21 5.1 Access .............................................................................................................................. 21 5.2 Climate ............................................................................................................................. 21 5.3 Local Resources and Infrastructure ................................................................................. 22 5.4 Physiography ................................................................................................................... 22

6.0 HISTORY ...................................................................................................................................... 23 6.1 Chronological Summary ................................................................................................... 23 6.2 El Teniente’s Tailings Production History ........................................................................ 24 6.3 MVC’s Production History ................................................................................................ 24

7.0 GEOLOGICAL SETTING AND MINERALIZATION ...................................................................... 29

7.1 Source of Tailings ............................................................................................................ 29 7.2 Lithology and Mineralogy ................................................................................................. 30


8.0 DEPOSIT TYPES .......................................................................................................................... 31

9.0 EXPLORATION ............................................................................................................................. 32

10.0 DRILLING ...................................................................................................................................... 33

10.1 Summary .......................................................................................................................... 33 10.2 2012 Campaign ................................................................................................................ 33 10.3 1983 Campaign ................................................................................................................ 35

11.0 SAMPLE PREPARATION, ANALYSES AND SECURITY ............................................................ 37

12.0 DATA VERIFICATION .................................................................................................................. 38 12.1 Fresh Tailings Records .................................................................................................... 38 12.2 Colihues Production Records and Additional Sampling .................................................. 39 12.3 Cauquenes Additional Sampling ...................................................................................... 44

13.0 MINERAL PROCESSING AND METALLURGICAL TESTING ..................................................... 45

13.1 Fresh Tailings ................................................................................................................... 45 13.2 Colihues ........................................................................................................................... 46 13.3 Cauquenes ....................................................................................................................... 48

14.0 MINERAL RESOURCE ESTIMATES ........................................................................................... 53

14.1 Summary .......................................................................................................................... 53 14.2 Cauquenes Deposit.......................................................................................................... 54 14.3 Colihues Deposit .............................................................................................................. 65 14.4 Fresh Tailings ................................................................................................................... 68

15.0 MINERAL RESERVE ESTIMATES .............................................................................................. 69

16.0 MINING METHODS ...................................................................................................................... 70

16.1 El Teniente Tailings.......................................................................................................... 70 16.2 Colihues Tailings .............................................................................................................. 71 16.3 Cauquenes Tailings ......................................................................................................... 74

17.0 RECOVERY METHODS ............................................................................................................... 81

17.1 Current Process Description ............................................................................................ 81 17.2 Cauquenes Plant Expansion ............................................................................................ 83

18.0 PROJECT INFRASTRUCTURE ................................................................................................... 85

18.1 Power Supply ................................................................................................................... 85 18.2 Water Supply .................................................................................................................... 85 18.3 Security ............................................................................................................................ 85 18.4 Assay Laboratory ............................................................................................................. 86 18.5 Offices .............................................................................................................................. 86


19.0 MARKET STUDIES AND CONTRACTS ...................................................................................... 87 19.1 Tailings Supply Contracts ................................................................................................ 87 19.2 El Teniente Royalties ....................................................................................................... 87 19.3 Other Royalties ................................................................................................................ 90 19.4 Copper Concentrate Smelting and Refining Contract ...................................................... 91 19.5 Molybdenum Concentrate Smelting and Refining Contract ............................................. 91 19.6 Power Supply Contract .................................................................................................... 92 19.7 Minera Maricunga Tolling Contract .................................................................................. 92

20.0 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT ........... 93

20.1 MVC Operations Environmental Management ................................................................ 93 20.2 Cauquenes Environmental Impact Management ............................................................. 93 20.3 Permitting Requirements ............................................................................................... 100 20.4 Community Requirements ............................................................................................. 103 20.5 Mine Closure Requirements and Costs ......................................................................... 103

21.0 CAPITAL AND OPERATING COSTS ......................................................................................... 104

21.1 Capital costs ................................................................................................................... 104 21.2 Operating Costs ............................................................................................................. 106 21.3 Project Schedule ............................................................................................................ 107

22.0 ECONOMIC ANALYSIS .............................................................................................................. 108 22.1 Summary ........................................................................................................................ 108 22.2 Taxes ............................................................................................................................. 109 22.3 Royalties ........................................................................................................................ 110 22.4 Annual Production Schedule .......................................................................................... 110 22.5 Annual Cash Flow Forecast ........................................................................................... 112 22.6 Sensitivity Analysis......................................................................................................... 113

23.0 ADJACENT PROPERTIES ......................................................................................................... 114

24.0 OTHER RELEVANT DATA AND INFORMATION ...................................................................... 115

24.1 Risk and Opportunity Analysis ....................................................................................... 115 24.2 Risks .............................................................................................................................. 115 24.3 Opportunities .................................................................................................................. 115

25.0 INTERPRETATION AND CONCLUSIONS ................................................................................. 116

26.0 RECOMMENDATIONS ............................................................................................................... 118

27.0 REFERENCES ............................................................................................................................ 119


LIST OF FIGURES

Figure 4-1 Location of the Minera Valle Central Operations ....................................................................... 17

Figure 4-2 Aerial Photograph of the MVC Site ............................................................................................ 19

Figure 4-3 Photograph of the MVC Grinding and Flotation Plants ............................................................. 19

Figure 4-4 Photograph of the MVC Cascade Flotation Plants .................................................................... 20

Figure 4-5 Photograph of the MVC Thickeners, Moly Plant and Offices .................................................... 20

Figure 7-1 Aerial View of the Cauquenes and Colihues Tailings Deposits ................................................ 29 Figure 10-1 MVC Drill Hole Locations ......................................................................................................... 33

Figure 10-2 CIMM Hole Location ................................................................................................................ 35

Figure 13-1 Coarse Fresh Tailings Grind Size versus Recovery ................................................................ 45

Figure 13-2 Colihues Coarse Tailings Grind Size versus Recovery ........................................................... 47

Figure 13-3 Cauquenes Copper Cleaner Flotation ..................................................................................... 51

Figure 13-4 MVC’s Plant Testwork Summary 2016) .................................................................................. 51 Figure 14-1 Cauquenes Drilling 1984 and 1998 ........................................................................................ 54

Figure 14-2 Histogram CuT......................................................................................................................... 55

Figure 14-3 Histogram CuS ........................................................................................................................ 55

Figure 14-4 Histogram Mo .......................................................................................................................... 56

Figure 14-5 Correlation CuT-CuS ............................................................................................................... 56 Figure 14-6 Correlation CuT-Mo ................................................................................................................. 57

Figure 14-7 Correlation CuS-Mo ................................................................................................................. 57

Figure 14-8 Variogram CuT vertical ............................................................................................................ 58

Figure 14-9 Variogram CuT horizontal ........................................................................................................ 58

Figure 14-10 Variogram Mo vertical ............................................................................................................ 59

Figure 14-11 Variogram Mo horizontal ....................................................................................................... 59 Figure 14-12 Grades of Copper (%CuT) for Bench 704 ............................................................................. 60

Figure 14-13 Grades of Copper (%CuT) for Bench 699 ............................................................................. 60

Figure 14-14 Grades of Copper (%CuT) for Bench 694 ............................................................................. 61

Figure 14-15 Grades of molybdenum (%Mo) for Bench 704 ...................................................................... 61

Figure 14-16 Grades of molybdenum (%Mo) for Bench 699 ...................................................................... 62

Figure 14-17 Grades of molybdenum (%Mo) for Bench 694 ...................................................................... 62 Figure 16-1 El Teniente Fresh Tailings Launder......................................................................................... 70

Figure 16-2 Colihues Hydraulic Monitor ...................................................................................................... 72

Figure 16.3 Colihues Geotechnical recommendations ............................................................................... 73

Figure 16-4 Hydraulic Extraction Schematic ............................................................................................... 75


Figure 16-5 Fresh Tailings Bypass Discard Schedule (tpa) ....................................................................... 76

Figure 16-6 Cauquenes Construction 2014 ................................................................................................ 77

Figure 16-7 Cauquenes Initial Production 2015 ......................................................................................... 77

Figure 16-8 Cauquenes Full Production 2016 ............................................................................................ 78

Figure 16-9 Cauquenes Zone B1 2022 ....................................................................................................... 78

Figure 16-10 Cauquenes extraction complete 2030 ................................................................................... 79

Figure 16-11 Cauquenes 2037 ................................................................................................................... 79

Figure 17-1 Current Process Plant ............................................................................................................. 82 Figure 17-2 Cauquenes Expansion Process Plant ..................................................................................... 84

Figure 21-6 Expansion Project Schedule .................................................................................................. 107

Figure 22-1 MVC Sensitivity to Copper Price ........................................................................................... 113

LIST OF TABLES

Table 1-1 MVC Copper Inferred Mineral Resource Estimate – Dec 31, 2016 ............................................ 10

Table 1-2 MVC Molybdenum Inferred Mineral Resource Estimate – Dec 31, 2016 ................................... 10

Table 1-3 Summary MVC Economic Analysis ............................................................................................ 12 Table 5-1 Seasonal Temperatures in Degrees Centigrade ........................................................................ 21

Table 5-2 Precipitation in mm ..................................................................................................................... 21

Table 6-1 El Teniente Tailings delivered to Cauquenes (1936 to 1977) .................................................... 25

Table 6-2 El Teniente Tailings delivered to Colihues (1977 to 1986) ......................................................... 26

Table 6-3 MVC Production History (2003 to 2016) ..................................................................................... 26

Table 6-4 MVC Fresh Tailings Production History (2003 to 2016) ............................................................. 27 Table 6-5 MVC Colihues Tailings Production History (2003 to 2016) ........................................................ 27

Table 6-6 MVC Cauquenes Tailings Production History (2015 to 2016) .................................................... 28

Table 7-1 El Teniente Mine Mineralogy ...................................................................................................... 30

Table 10-1 MVC Drill Hole Assays .............................................................................................................. 34

Table 10-2 CIMM Drill Results .................................................................................................................... 36

Table 12-1 MVC Fresh Tailings Feed ......................................................................................................... 38 Table 12-2 El Teniente Tailings Contract Plan ........................................................................................... 39

Table 12-3 MVC’s Colihues Production History .......................................................................................... 40

Table 12-4 Assay Results for MVC August 2001 Sampling Program......................................................... 40

Table 12-5 Assay Results for MVC October 2001 Airlift Sampling Program .............................................. 41

Table 12-6 Assay Results for AMEC 2002 Sampling Program .................................................................. 41


Table 12-7 Comparison of Colihues Production, Sampling and Historical Records................................... 43

Table 12-8 Comparison of 2012 and 1988 Twin Holes .............................................................................. 44 Table 13-1 Colihues Mineralogy ................................................................................................................. 46

Table 13-2 Colihues Particle Size Distribution (P80 200 um) ..................................................................... 47

Table 13-3 Cauquenes Particle Size Distribution (P80 115 um) ................................................................ 48

Table 13-4 Cauquenes Mineralogy ............................................................................................................. 49

Table 13-5 Cauquenes Coarse Fraction, pH 9.5, Rougher Flotation Average Results .............................. 50

Table 13-6 Cauquenes Fine Fraction, pH 9.5, Rougher Flotation Average Results ................................. 50 Table 13-7 Cauquenes Fine Fraction, LPFI Process, Rougher Flotation Average Results ....................... 50

Table 14-1 MVC Copper Inferred Mineral Resource Estimate – December 31, 2016 ............................... 53

Table 14-2 MVC Molybdenum Inferred Mineral Resource Estimate – December 31, 2016 ...................... 53

Table 14-3 Cauquenes resource estimate grade tonnage table ............................................................... 63

Table 14-4 Comparison of model vs. drill hole average grades ................................................................ 63

Table 14-5 Comparison of model vs. drill hole bench grades .................................................................... 63 Table 16-1 Fresh Tailings Processing Schedule ........................................................................................ 71

Table 16-2 Colihues Production Schedule .................................................................................................. 74

Table 16-3 Cauquenes Production Schedule ............................................................................................. 80

Table 19-1 Fresh Tailings Supply ............................................................................................................... 89

Table 19-2 MVC Typical Copper Concentrate Analysis ............................................................................. 91 Table 19-3 MVC Typical Molybdenum Concentrate Analysis ..................................................................... 91

Table 20-1 Environmental impacts Evaluated in the EIA ............................................................................ 94

Table 20-2 Environmental Mitigation Measures – Construction Stage ....................................................... 95

Table 20-3 Environmental Mitigation Measures – Operations Stage ......................................................... 96

Table 20-4 Environmental Mitigation Measures – Operations Stage ......................................................... 97

Table 20-5 Environmental Compensation Measures – Construction Stage ............................................... 97 Table 20-6 Air Quality Monitoring Plan ....................................................................................................... 98

Table 20-7 Vegetation Monitoring Plan ....................................................................................................... 99

Table 21-1 Cauquenes Expansion Project Capital Costs ......................................................................... 104

Table 21-2 MVC Initial and Sustaining Capital Cost Schedule ................................................................. 105

Table 21-3 Average Annual Operating Costs ........................................................................................... 106

Table 22-1 Summary MVC Economic Analysis ........................................................................................ 108 Table 22-2 MVC Plant Production Schedule ............................................................................................ 111

Table 22-3 MVC Annual Cash Flow Forecast ........................................................................................... 112

Table 22-4 Economic Sensitivity Analysis ................................................................................................ 113


1.0 SUMMARY

1.1 Introduction

This Technical Report (the Technical Report) has been prepared for the Minera Valle Central operations located near Rancagua in Chile. Minera Valle Central, S.A. (MVC) is a wholly owned subsidiary of Amerigo Resources Ltd. (Amerigo), a company listed on the Toronto Stock Exchange. Amerigo will be using this Technical Report in support of disclosure and filing requirements with the Canadian Securities Regulators. On April 8, 2014, MVC and Corporacion Nacional del Cobre de Chile (Codelco), Division El Teniente (DET) entered into an agreement granting to MVC the rights to process the historic tailings in the Cauquenes deposit and amending each of the contracts with Codelco for the processing of tailings from the current production of the El Teniente mine (Fresh Tailings) and tailings from the Colihues deposit. The term of the Fresh Tailings contract has been extended from 2021 to 2037. The first phase of the Cauquenes expansion project was completed in 2015 which has enabled extraction of the high grade historic tailings into the existing plant at MVC. The second phase of the project is planned to improve flotation recovery efficiency and expand the existing facilities to an output of 85 to 90 million pounds of copper per year.

1.2 Project Description and Location

The MVC operation is located in Region VI (Libertador Bernardo O’Higgins Region) of central Chile. The site is 8 km east of the city of Rancagua and 90 km south of Santiago. Personnel and supplies are transported by road between the site and Rancagua or Santiago. The MVC plant is located at an elevation of 650 m above sea level with a Mediterranean-type climate characterized by long, warm, dry summers (8 months) and mild, rainy winters (4 months).

MVC has been in operation since 1992 and produces copper and molybdenum concentrates by reprocessing tailings produced by the El Teniente mine, which is owned and operated by Codelco. MVC has the rights from Codelco to process the Fresh Tailings generated at the El Teniente mine. The Fresh Tailings are transported to MVC via a 36 km long launder. MVC also has the rights from Codelco to remove and process tailings from the historic Colihues and Cauquenes tailings deposits located south of the MVC plant. MVC currently mines the Cauquenes deposit with hydraulic monitors.

The MVC processing facility has a capacity of 185,000 tonnes per day and consists of grinding and flotation plants to recover copper and molybdenum concentrates. Once the tailings have been reprocessed by MVC, they are returned to the El Teniente tailings launder and transported to the Carén tailings impoundment located approximately 50 km to the west of the MVC site. In 2016, MVC processed 63 million tonnes of tailings and produced 57 million pounds of copper and 0.5 million pounds of molybdenum.

MVC operates in material compliance with applicable environmental laws and regulations and there are no known material environmental concerns at MVC. MVC has an approved mine closure plan under Chilean Law 20.551 and has provided a financial guarantee in accordance with the approved schedule.

1.3 History

The El Teniente mine commenced copper production in 1904 and the mill concentrator tailings have been deposited in four separate impoundments: Barahona (1919 - 1936), Cauquenes (1936 - 1977), Colihues (1977 – 1986) and Caren (1986 – present). MVC commenced operation in 1992 and Amerigo acquired MVC in 2003.

1.4 Geological Setting and Mineralization

El Teniente is a porphyry copper-molybdenum deposit located in the Andes of central Chile. Most of the high grade copper ore at El Teniente is hosted by vertically extensive hydrothermal breccia pipes hosted


in a mafic intrusive complex. The deposit is zoned from a barren core through a narrow zone of bornite rich mineralization outwards into the main chalcopyrite dominant mineralized breccias. Several phases of breccia emplacement with associated copper and molybdenum mineralization occurred over a period of 2 million years. El Teniente has been in production since 1904 and in 2015, the mine produced 471,000 tonnes of fine copper. In 2022, El Teniente plans to complete their New Mine Level project at a cost of US$ 5.1 billion. With this initiative, the world’s largest underground mine is expected to be able to extend its useful life by more than 50 years. For the year end 2015, El Teniente’s total ore reserves (Proven and Probable in accordance with Law 20.235 of the Chilean Republic) are 1,683 million tonnes of ore at a grade of 0.89% copper containing 15.0 million tonnes of fine copper.

Codelco’s historical records of El Teniente’s mill tailings represent a detailed account of the tonnage and grade of material stored in the Cauquenes and Colihues impoundments. From 1935 to 1977 approximately 364 million tonnes of tailings at a 0.31% Cu grade were deposited in the Cauquenes tailings impoundment. From 1977 to 1986 approximately 216 million tonnes of tailings at a 0.26% Cu grade were deposited in the Colihues tailings impoundment. A limited amount of drilling has been conducted on both deposits and independent mineral resource estimates have been completed on Cauquenes and Colihues.

1.5 Drilling, Sampling and Analyses

A total of 30 holes have been drilled on the Cauquenes deposit in four separate campaigns. The most recent drilling by MVC in September 2012 consisted of six reverse circulation (RC) drill holes on Cauquenes to obtain confirmatory samples for grade, mineralogy and metallurgy tests. The drilling was performed in 6 inch diameter casings and the holes were vertical, down to a depth of 30m.

MVC personnel supervised the sample preparation according to company standards. The samples were handled and prepared in MVC’s laboratory, which was administered by an independent company, Alfred H. Knight International Limited Chile Ltda. The laboratory is ISO 9001 certified. The samples were assayed for total copper, soluble copper, molybdenum and iron.

Measures were taken to ensure the security of the samples and the samples did not leave MVC premises. The samples were bagged and labeled according to MVC standards. Comparisons of duplicate samples were used to ensure full quality control. Five percent of the samples were randomly selected for duplicate analysis. No abnormal data was reported.

1.6 Metallurgical Testwork

MVC has been processing El Teniente’s Fresh Tailings since 1992. The current processing plant at MVC employs primary cyclone classification to separate coarse and fine fractions. The fine fraction is processed in unconventional scavenger cascade flotation cells. The coarse fraction is ground in ball mills to a particle size of 80% passing 120 microns and then processed in conventional rougher and cleaner flotation circuits to produce a sulphide concentrate. Copper recovery from the Fresh Tailings over the period 2011 to 2016 has averaged 21%. MVC is planning to install additional flotation cells to improve copper recovery. Once this plant improvement project is complete, average annual copper recovery from the Fresh Tailings is expected to improve to 24%.

MVC has been processing tailings from the Cauquenes deposit since 2015 and the average copper recovery over this period has been 31%. Mineralogical testwork on the Cauquenes deposit has confirmed that copper is present in chalcocite and covellite with lesser amounts in chalcopyrite and oxides. Metallurgical testwork has demonstrated that a recovery process consisting of regrinding and flotation is appropriate. Additional mechanical flotation cells are required at MVC to efficiently process the Cauquenes material. The coarse fraction and the fine fraction should be processed separately in order to maximise recovery. Once this plant improvement project is complete, average annual copper recovery for Cauquenes is estimated to be 49%.


1.7 Mineral Resource Estimate

There is sufficient geological and economic evidence to conclude that MVC’s contracts with El Teniente for Fresh Tailings plus the historic Cauquenes and Colihues tailings deposits constitute an inferred mineral resource. MVC has a long operating record of economic extraction of copper and molybdenum from Fresh and Colihues tailings and MVC’s December 2016 development plan demonstrates that the Cauquenes deposit can be profitably extracted.

The Cauquenes tailings deposit has an inferred mineral resource estimate of 305 million tonnes at a grade of 0.267% Cu and 0.021% Mo with 847 million pounds of recoverable copper and 28 million pounds of recoverable molybdenum after application of mining and mill recovery losses.

MVC’s total inferred mineral resource estimate for the Fresh, Colihues and Cauquenes tailings and after application of mining and mill recovery losses, is 1,179 million tonnes at a grade of 0.159% Cu and 0.010% Mo with 1,461 million pounds of recoverable copper and 38 million pounds of recoverable molybdenum.

Summaries of MVC’s inferred mineral resources estimated after application of mining and mill recovery losses, are presented in Table 1-1 and Table 1-2. Inferred mineral resources are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized.

Table 1-1 MVC Copper Inferred Mineral Resource Estimate – Dec 31, 2016 Tailings Deposit Tonnes Grade Mill Recoverable

Recovery Copper(t) (% Cu) (% ) (M lbs)

Colihues 77,280,000 0.229 37 145Cauquenes 305,000,000 0.267 47 847Fresh 796,267,115 0.111 24 469Total 1,178,547,115 0.159 35 1,461

Table 1-2 MVC Molybdenum Inferred Mineral Resource Estimate – Dec 31, 2016

Tailings Deposit Tonnes Grade Mill RecoverableRecovery Molybdenum

(t) (% Mo) (% ) (M lbs)

Colihues 77,280,000 0.010 21 4Cauquenes 305,000,000 0.021 20 28Fresh 796,267,115 0.005 7 6Total 1,178,547,115 0.010 15 38


1.8 Recovery Methods

MVC produces copper and molybdenum concentrates by reprocessing tailings produced by the El Teniente mine. MVC’s December 2016 development plan presents an expansion of the existing facilities from 60 to 90 million pounds of copper per year. The Cauquenes Phase Two Expansion Project is planned to augment MVC’s existing plant facilities to improve flotation recovery efficiency. Confirmatory metallurgical studies on Cauquenes in 2016 concluded that copper recovery can be increased from 34% to 49%. Equipment required includes rougher and cleaner flotation cells, desliming cyclones, a concentrate regrind mill and a concentrate thickener. The $30 million project will take 18 months to build.

The Cauquenes tailings are planned to be hydraulically extracted and pumped to the modified existing processing circuit at an average rate of 62,500 tpd. El Teniente’s Fresh Tailings tonnage is expected to vary between 140,000 tpd and 100,000 tpd. Processing of the historic Colihues deposit is planned to be restarted in 2031 when the historic Cauquenes deposit is depleted.

The tailings channel launder from MVC to the Caren tailings impoundment has a volumetric transport constraint of approximately 185,000 tonnes per day. Therefore, MVC does not expect to be able to simultaneously process both the Fresh Tailings and Cauquenes tailings at their maximum rates. Surplus tonnage from the Fresh Tailings is planned to be discarded and deposited into the voids created in the Colihues and Cauquenes impoundments.

1.9 Environmental Studies and Permits

MVC operates within the specifications and guidelines established by the Ministry of Mining, Sernageomin (National Mining and Geology Service), other local environmental authorities and relevant international conventions. MVC is not aware of any significant environmental, social or permitting issues that would prevent exploitation of the Cauquenes deposit.

The Cauquenes Expansion Project Environmental Impact Assessment study was filed with the Chilean authorities in 2013, requesting an increase in historic tailings processing rate via an expansion to the MVC plant. Environmental approval was received in 2014 and MVC is in receipt of the necessary sectorial permits to commence construction.

1.10 Contracts and Royalties

MVC has the right to process tailings from both the Cauquenes and Colihues deposits and the Fresh Tailings from El Teniente up to 2037. El Teniente receives a royalty based on the quantity of copper and molybdenum produced by MVC and the respective LME metal prices.

MVC’s copper concentrate is currently delivered to El Teniente under a long term tolling or “maquilla” contract and MVC’s molybdenum concentrate is currently processed under smelting contracts with Molymet. Copper concentrates at a grade of approximately 29% Cu are currently trucked by DET to the Las Ventanas smelter located north of Valparaiso approximately 240 km from MVC. The MVC copper concentrate is high quality with minor silver credits and no penalty elements. Molybdenum concentrates at a grade of approximately 40% Mo are currently trucked to Molymet’s smelter located approximately 70 km north of MVC. The MVC molybdenum concentrate is high quality with no penalty elements.

Power is MVC’s largest single operating cost and in February 2016, MVC entered into a contract with Endesa, Chile’s largest electric utility company for a fixed price power supply. The term of the contract extends to 2027 at a base rate of $91.1/MwH (at February 2016 indexed rates) for 100% of the power supplied to MVC. MVC’s average cost of power was $0.10/kWh in 2016.


1.11 Preliminary Economic Assessment

The results of the preliminary economic assessment represent forward-looking information that is subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in such information. This information speaks only as of the date of this Technical Report, and is based on a number of assumptions which are believed to be true but which may prove to be incorrect in future. The preliminary economic assessment is preliminary in nature and it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the preliminary economic assessment will be realized. Please refer to subsection 2.5 of this Report.

MVC’s contract with El Teniente has extended the mine life to 2037 and construction of the $30 million Phase Two Cauquenes Expansion project is expected to be completed in Q4-2018. Equipment required includes rougher and cleaner flotation cells, desliming cyclones, a concentrate regrind mill and a concentrate thickener. MVC’s December 2016 development plan presents an economic assessment of producing 1,461 million pounds of copper and 38 million pounds of molybdenum contained in sulphide concentrates with metal production based on the inferred mineral resource estimates for Fresh, Cauquenes and Colihues tailings.

Annual production over the initial ten year period (2019-2028) is estimated to be 85 to 90 million pounds of copper per year at a cash cost of production of approximately $1.51/lb Cu, excluding royalties. Royalties are estimated to be $0.88/lb Cu at the base case metal prices used in the economic analysis. At a 7% discount rate, the unlevered after tax net present value for the Project is estimated to be approximately US$480 million at an assumed long term copper price of $3.30/lb Cu. Over the life of the contract, total EBITDA for MVC is estimated to be $2.5 billion, of which $1.2 billion is the estimated El Teniente royalty.

Using these parameters, the preliminary financial analysis summary in Table 1-3 indicates that MVC has a positive net cash flow and supports the further development of the Cauquenes deposit.

Table 1-3 Summary MVC Economic Analysis

Copper Price (US$/lb) Base Case 2.50 3.00 3.50 4.00

NPV7% after tax (US$ millions) $480 $217 $389 $543 $679

1.12 Conclusions and Recommendations

In the opinion of the QP, the Project that is outlined in this Technical Report has met its objectives. Mineral resources have been estimated for the Project, and a feasible development plan has been presented. The data supporting the inferred mineral resource estimates were appropriately collected, evaluated and estimated, and the Project objective of identifying tailings mineralization that could potentially support future processing operations has been achieved.

The recommendation of the QP is to proceed with construction of the MVC plant expansion. This work program is expected to cost $30 million and is planned to be complete in Q4-2018.


2.0 INTRODUCTION

2.1 Introduction

This Technical Report (the Technical Report) has been prepared for the Minera Valle Central operations located near Rancagua in Chile. Minera Valle Central, S.A. (MVC) is a wholly owned subsidiary of Amerigo Resources Ltd. (Amerigo), a company listed on the Toronto stock Exchange. This Technical Report has an effective date of December 31, 2016.

Amerigo will be using this Technical Report in support of disclosure and filing requirements with the Canadian Securities Regulators. On April 8, 2014, MVC and Corporacion Nacional del Cobre de Chile (Codelco), Division El Teniente (DET) entered into an agreement granting to MVC the rights to process the historic tailings in the Cauquenes deposit and amending each of the contracts with Codelco for the processing of tailings from the current production of the El Teniente mine (Fresh Tailings) and tailings from the Colihues deposit. The term of the Fresh Tailings contract has been extended from 2021 to 2037. Details of the contract are presented in Section 19.0 of this report. MVC’s January 2017 Cauquenes Phase Two Project development plan presents an expansion of the existing facilities to an output of 85 to 90 million pounds of copper per year.

The measurement units used in this Technical Report are metric unless stated otherwise, and currency is expressed in US dollars unless stated otherwise. Where we say “we”, “us”, “our” or “Amerigo” in this Technical Report, we mean Amerigo Resources Ltd.

2.2 Qualified Persons

The Qualified Person for this Technical Report is Robert Henderson, P. Eng. and Chief Executive Officer for Amerigo. Mr. Henderson visits the MVC operation on a regular basis and visited the site most recently on January 18, 2017. During the site visit, Mr. Henderson discussed health and safety goals, reviewed the Q4 2016 results and production with Operations staff, inspected the processing plant and reviewed the Cauquenes engineering and development plan with Project staff.

2.3 Information Sources

Information used to support this Technical Report was derived from previous technical reports on the property, and from the reports and documents listed in the References section of this Technical Report.

The mineral resource estimate for the Colihues deposit was based on work done by Roger Moss, Ph.D. and P.Geo., a consulting geologist. The mineral resource estimate for the Cauquenes deposit was based on work done by Marco Antonio Alfaro Sironvalle, PhD, a Doctor in Geostatistics with SRK Consulting. The production plan, estimates for capital and operating cost and the financial analysis are based on the Cauquenes Phase Two Project development plan prepared by Christian Caceres of MVC.

2.4 Previous Technical Reports

Amerigo has filed three previous technical reports on the MVC operations.

Henderson R., 2014: Minera Valle Central Operation, Rancagua, Region VI, Chile. 43-101 Technical Report, December 31, 2013.

Moss R. and Poblete R., 2006: Technical Review of Operations at Minera Valle Central, Rancagua Region VI: unpublished technical report prepared for Amerigo Resources Ltd, March 11, 2006.

Maycock A., 2003: Technical Review of Operations at Minera Valle Central, Rancagua Region VI: unpublished technical report prepared for Amerigo Resources Ltd, May 2003.


2.5 Cautionary Statement Regarding Forward-Looking Statements

This Technical Report contains contains certain forward-looking information and statements as defined in applicable securities laws (collectively referred to as "forward-looking statements"). These statements relate to future events or our future performance. All statements other than statements of historical fact are forward-looking statements. The use of any of the words "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "should", "believe" and similar expressions is intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. These statements speak only as of the date of this Technical Report. These forward-looking statements include but are not limited to, statements concerning:

• forecast production and operating costs; • our strategies and objectives; • our estimates of the availability and quantity of tailings, and the quality of our mine plan

estimates; • prices and price volatility for copper and other commodities and of materials we use in our

operations; • the demand for and supply of copper and other commodities and materials that we produce, sell

and use; • sensitivity of our financial results and share price to changes in commodity prices; • our financial resources; • interest and other expenses; • domestic and foreign laws affecting our operations; • our tax position and the tax rates applicable to us; • decisions regarding the timing and costs of construction and production with respect to, and the

issuance of, the necessary permits and other authorizations required for our expansion projects, including the expansion for the Cauquenes tailings deposit;

• the production capacity of our operations, our planned production levels and future production; • potential impact of production and transportation disruptions; • our planned capital expenditures and estimates of asset retirement obligations and other costs

related to environmental protection; • our future capital and production costs, including the costs and potential impact of complying with

existing and proposed environmental laws and regulations in the operation and closure of our operations;

• our financial and operating objectives; • our environmental, health and safety initiatives; • the outcome of legal proceedings and other disputes in which we may be involved; • the outcome of negotiations concerning treatment charges and royalties; • our dividend policy; and • general business and economic conditions.

Inherent in forward-looking statements are risks and uncertainties beyond our ability to predict or control, including risks that may affect our operating or capital plans; risks generally encountered in the permitting and development of mineral projects such as unusual or unexpected geological formations, unanticipated metallurgical difficulties, delays associated with permit appeals, ground control problems, adverse weather conditions, process upsets and equipment malfunctions; risks associated with labour disturbances and availability of skilled labour and management; fluctuations in the market prices of our principal commodities, which are cyclical and subject to substantial price fluctuations; risks created through competition for mining projects and properties; risks associated with lack of access to markets; risks associated with availability of tailings and mine plan estimates; risks posed by fluctuations in exchange rates and interest rates, as well as general economic conditions; risks associated with environmental compliance and changes in environmental legislation and regulation; risks associated with our dependence on third parties for the provision of critical services; risks associated with non-


performance by contractual counterparties; title risks; social and political risks associated with operations in foreign countries; risks of changes in laws affecting our operations or their interpretation, including foreign exchange controls; and risks associated with tax reassessments and legal proceedings.

Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this Technical Report. Such statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to, assumptions about:

• general business and economic conditions; • interest rates; • changes in commodity and power prices; • acts of foreign governments and the outcome of legal proceedings; • the supply and demand for, deliveries of, and the level and volatility of prices of copper and other

commodities and products used in our operations; • the timing of the receipt of permits and other regulatory and governmental approvals; • our costs of production and our production and productivity levels, as well as those of our

competitors; • changes in credit market conditions and conditions in financial markets generally; • the availability of funding on reasonable terms; • our ability to procure equipment and operating supplies in sufficient quantities and on a timely

basis; • the availability of qualified employees and contractors for our operations; • our ability to attract and retain skilled staff; • the satisfactory negotiation of collective agreements with unionized employees; • the impact of changes in foreign exchange rates and capital repatriation on our costs and results; • engineering and construction timetables and capital costs for our expansion projects; • costs of closure of various operations; • market competition; • the accuracy of our mine plan estimates (including, with respect to size, grade and recoverability)

and the geological, operational and price assumptions on which these are based; • tax benefits and tax rates; • the outcome of our copper concentrate treatment and refining charge negotiations; • the resolution of environmental and other proceedings or disputes; • the future supply of reasonably priced power; • our ability to obtain, comply with and renew permits in a timely manner; and • our ongoing relations with our employees and entities with which we do business.

We caution the reader that the foregoing list of important factors and assumptions is not exhaustive. Other events or circumstances could cause our actual results to differ materially from those estimated or projected and expressed in, or implied by, our forward-looking statements. You should also carefully consider the matters discussed under "Risk Factors" in in Amerigo’s Annual Information Form, which is filed each year under Amerigo’s profile on the SEDAR website, www.sedar.com. Except as required by law, we undertake no obligation to update publicly or otherwise revise any forward-looking statements or the foregoing list of factors, whether as a result of new information or future events or otherwise.


3.0 RELIANCE ON OTHER EXPERTS

Robert Henderson P. Eng. is the Qualified Person who supervised the preparation of this report. He has relied upon written reports and statements of other individuals and companies and believes that the basic assumptions are factual and accurate, and that the interpretations are reasonable. The Qualified Person has no reason to believe that any material facts have been withheld and has taken all appropriate steps, in his professional judgment, to ensure that the work, information, or advice from the noted individuals and companies is sound and the Qualified Person does not disclaim any responsibility for the report.


4.0 PROJECT DESCRIPTION AND LOCATION

4.1 Property Location

The MVC operation is located in Region VI (Libertador Bernardo O’Higgins Region) of central Chile at latitude 34° 14’ south and longitude 70° 41’ west (UTM 621000N, 345000E). The site is 8 km east of the city of Rancagua and 90 km south of Santiago (Figure 4-1).

Figure 4-1 Location of the Minera Valle Central Operations

Source: Ingeniera Proyecto “Aumento de Capacidad de Beneficio” MVC, January 2013

4.2 Property Description

MVC has been in production since 1992 and produces copper and molybdenum concentrates by reprocessing tailings produced by the El Teniente mine, which is owned and operated by Codelco. MVC has the rights from Codelco to process the Fresh Tailings generated at the El Teniente mine. The Fresh Tailings are transported to MVC via a 36 km long cement launder. MVC also has the rights from Codelco to remove and process tailings from the Colihues and Cauquenes tailings deposits located south of the MVC plant (Figure 4-2). MVC currently mines the Cauquenes deposit with hydraulic monitors.

MINERA VALLE CENTRAL March 30, 2017 TECHNICAL REPORT of 121 The MVC processing plant has a capacity of 185,000 tonnes per day and consists of grinding and flotation to recover copper and molybdenum concentrates. Once the tailings have been reprocessed by MVC, they are returned to the El Teniente tailings launder and transported to the Carén tailings deposit located approximately 50 km to the west of the MVC site. Figures 4-3, 4-4 and 4-5 present photographs of the MVC plant layout.

In 2016, MVC processed 62 million tonnes of tailings and produced 57 million pounds of copper and 0.5 million of molybdenum.

El Teniente, located 44km east of Rancagua, is the world’s largest underground copper mine and has been in production since 1904. In 2015, El Teniente produced 471,000 tonnes of fine copper. In 2022, El Teniente plans to complete their New Mine Level project at a cost of US$ 5.1 billion. With this initiative, the world’s largest underground mine is expected to be able to extend its useful life by more than 50 years after being in operation for over a century. The project includes the construction of a new mine level, under the current mine level, highly automated and remotely operated from the city of Rancagua.

El Teniente mining methods include panel caving, panel caving with pre-undercut, and block caving. The ore is processed at a rate of 130,000 tonnes per day in the lower Colón concentrator and the Sewell concentrator. Processing consists of SAG and ball milling, followed by flotation, thickening and filtration. The copper concentrate is delivered to the Caletones smelter, a short distance further down the valley.

4.3 Royalties

El Teniente receives a royalty based on the quantity of copper and molybdenum produced from MVC and the respective LME metal price. Details of the royalties are presented in Section 19.0 of this report.

4.4 Permits

MVC has been in operation since 1993 and operates within the specifications and guidelines established by the Ministry of Mining, Sernageomin (National Mining and Geology Service), other local environmental authorities and relevant international conventions. MVC is not aware of any significant environmental, social or permitting issues that would prevent exploitation of the Cauquenes deposit.

The Cauquenes Project Environmental Impact Assessment study was filed with the Chilean authorities on January 7, 2013, requesting an increase in historic tailings processing rate via an expansion to the MVC plant. The EIA was approved in 2014 and MVC is in receipt of the sectorial permits required to construct the plant expansion from various agencies that have authority over environmental resources, construction, operation and closure of the Project.

MVC operates in material compliance with applicable environmental laws and regulations. There are no known material environmental concerns at MVC. For the year ended December 31, 2016, Amerigo estimates the site restoration costs at MVC in 2038 (under Chilean Law 20.551) at approximately $12.1 million. MVC has posted a financial guarantee in accordance with the approved schedule.


Figure 4-2 Aerial Photograph of the MVC Site

Figure 4-3 Photograph of the MVC Grinding and Flotation Plants


Figure 4-4 Photograph of the MVC Cascade Flotation Plants

Figure 4-5 Photograph of the MVC Thickeners, Moly Plant and Offices


5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

5.1 Access

The MVC site is accessed by driving approximately one hour (90 km) on the Pan American Highway south from Santiago to Rancagua and a further 15 minutes (8 km) east to the MVC offices. Approximately 7 km of the road from the highway is paved and the remaining 1 km is a well-maintained, all-weather, dirt road to the MVC offices.

There are good road connections from Rancagua to Santiago (90 km) and the ports of San Antonio (159 km) and Valparaiso (207 km).

Personnel and supplies are transported by road between the site and Rancagua or Santiago. Copper concentrates are transported to the Codelco Las Ventanas smelter via road and the molybdenum concentrates are transported to the Molymet smelter at Nos, approximately 70 km north of MVC

Most of the MVC employees live in Rancagua, which is the nearest large town with a population of approximately 214,000.

5.2 Climate

The MVC plant is located in an area that has a Mediterranean-type climate with clearly defined seasons characterized by long, warm, dry summers (8 months) and mild, rainy winters (4 months). Road access and operations are not normally affected by adverse weather conditions.

In Rancagua (approximately 9 km to the west) the average annual precipitation is approximately 300 mm. The rainy months are May to August. The average day temperatures range from 7.5°C in the winter to 30°C in the summer.

Tables 5-1 and 5-2 show the temperatures and precipitation for Rancagua.

Table 5-1 Seasonal Temperatures in Degrees Centigrade

Season Maximum Minimum Winter 21.3 2.1 Spring 29.6 6.1

Summer 32.5 7.6 Autumn 22.5 5.3

Table 5-2 Precipitation in mm

Season Average Winter 85.4 Spring 8.5

Summer 5.2 Autumn 188


5.3 Local Resources and Infrastructure

Rancagua is the capital of Chile’s Region VI, Region del Libertador General Bernardo O’Higgins. The region’s main activities are agriculture, wine making and mining. The region has a population of approximately 700,000.

Rancagua has many service companies oriented to the mining industry and most supplies and services are available there. More specialized items and services can be quickly obtained from Santiago. Chile has a long history of mining therefore consumables, equipment and services are readily available. Community services, hospitals, etc. are available in Rancagua.

5.4 Physiography

The site is on the south side of the Rio Claro de Cauquenes river valley and the physiography consists of rolling hills and foothills of the Andes Mountains. The process plant is at an elevation of 650 metres above sea level (masl) and the offices are at 590 masl. The top of the Colihues tailings deposit is at 670 masl and the top of the Cauquenes tailings deposit is 722 masl.

The MVC property is located in a high risk seismic zone with an earthquake rating similar to the city of Santiago. The US Geological Survey map reports a peak ground acceleration value of 3.2 to 4 m/s2 with 10% probability of exceedance in 50 years. The Modified Mercalli Scale rating for the region is VIII – Destructive. On February 27, 2010, the Pichilemu earthquake occurred with a magnitude of 6.9 on the Richter scale. The El Teniente tailings launder was damaged and MVC’s operations were suspended for approximately one week until power and tailings flow were restored to MVC’s plant. No damage occurred at MVC.


6.0 HISTORY

6.1 Chronological Summary

The El Teniente mine commenced copper production in 1904 and the mill concentrator tailings have been deposited in four separate impoundments: Barahona (1919 - 1936), Cauquenes (1936 - 1977), Colihues (1977 – 1986) and Carén (1986 – present). MVC commenced operation in 1992 and Amerigo acquired MVC in 2003. The following is a summary time line of the project’s history:

• 1904 – Braden Copper Company commenced production at El Teniente. Braden was later acquired by Kennecott Copper Corporation and in 1971, El Teniente became a state owned mine, operated by Codelco upon its creation in 1976.

• 1936 to 1977 – Approximately 364 million tonnes of El Teniente tailings were deposited in the Cauquenes tailings impoundment.

• 1977 to 1986 - Approximately 216 million tonnes of El Teniente tailings were deposited in the Colihues tailings impoundment.

• 1986 - El Teniente commenced tailings deposition into the Carén tailings impoundment.

• 1989 – Codelco issued a tender to bidders for the rights to operate a tailings retreatment plant for the tailings from El Teniente. MVC was the successful bidder.

• October 1992 – MVC commenced operation with a simple cascade frothing and flotation cleaning circuit at a cost of US$8 million to recover copper from the fine fraction of the tailings.

• 1996 – MVC added four ball mills and a new treatment plant to enhance the recovery of the metal contained in the coarse fraction of the tailings. An investment of $21 million was required to add sections for fine grinding and conventional flotation of the copper.

• 2002 - MVC negotiated the right to treat up to 10,000 tpd of higher grade tailings from Colihues, the historic tailings impoundment located near MVC's plant.

• 2003 – On July 3, 2003 Amerigo acquired MVC.

• 2004 – MVC announced an agreement in principle to increase the maximum rate of extraction of Colihues feed material from 10,000 tpd to 45,000 tpd.

• 2005 - The plant expansion was completed including four additional ball mills and a Molybdenum recovery plant. Production of molybdenum commenced. In 2004 and 2005, MVC incurred $37 million in capital expenditures.

• 2006 to 2009 – MVC invested $80m over this four year period into capital plant such as water reclaim thickeners, self-generating power, Colihues extraction and mill refurbishments.

• 2010 – MVC reached an agreement with El Teniente to study the potential for processing the Cauquenes deposit and started engineering studies and construction of a pilot plant.

• 2015 – MVC invested $57 million into the infrastructure and equipment to extract material from Cauquenes into the existing plant facilities.

• 2016 – MVC reported record annual production of 57 million pounds of copper


6.2 El Teniente’s Tailings Production History

Codelco’s historical records of El Teniente’s mill tailings represent a detailed account of the tonnage and grade of material stored in the Barahona, Cauquenes and Colihues impoundments (Codelco, 2008: Proyecto Tratamiento Relaves Embalses Barahona y Cauquenes, Estudio de Perfil). From 1919 until 1936, El Teniente’s tailings were deposited in the Barahona tailings impoundment located near the mine site. Mine records show approximately 35 million tonnes of tailings at a grade of 0.32% Cu were deposited into Barahona. From 1935 to 1977 approximately 364 million tonnes of tailings at a grade of 0.31% Cu were deposited in the Cauquenes tailings impoundment. From 1977 to 1986 approximately 216 million tonnes of tailings at a grade of 0.26% Cu were deposited in the Colihues tailings impoundment.

Recovery of molybdenum commenced in the late 1950s when Noke’s reagents were introduced to the Sewell concentrator and in 1960, El Teniente constructed a new plant to selectively recover molybdenum.

Tables 6-1 and 6-2 summarize the El Teniente mine records of annual tonnage and copper grade of tailings delivered to the Cauquenes and Colihues tailings impoundments respectively.

6.3 MVC’s Production History

The MVC plant currently processes Fresh Tailings from the El Teniente concentrator and Cauquenes tailings from the historic tailings deposit. Since Amerigo’s purchase of MVC in 2003 to 2016, annual copper production has steadily increased from 12,000 tonnes to over 24,000 tonnes of copper. MVC’s plant throughput has increased mainly due to the increasing tonnages mined from the higher grade historic tailings. In addition, since 2013, MVC has been toll treating copper concentrates from Minera Maricunga. The quantities of copper produced from Maricunga for 2013, 2014, 2015 and 2016 are: 671, 966, 1,257 and 1,358 tonnes respectively.

MVC commenced production of molybdenum in 2005 and produced 469,175 pounds of molybdenum in 2016.

In 2003 MVC commenced production from the Colihues deposit and suspended operations from Colihues in 2015. Total tonnage of material extracted from the Colihues deposit, up to the end of December 2016 was 72,742,245 tonnes. Total quantity of copper produced from Colihues, up to the end of December 2016 was approximately 55,975 tonnes.

In 2015 MVC commenced production from the Cauquenes deposit. Total tonnage of material extracted from the Cauquenes deposit, up to the end of December 2016 was 72,742,245 tonnes. Total quantity of copper produced from Cauquenes, up to the end of December 2016 was approximately 16,787 tonnes.

Tables 6-3, 6-4 and 6-5 present the production history of MVC from 2003 up to the end of 2016.


Table 6-1 El Teniente Tailings delivered to Cauquenes (1936 to 1977)

Year Annual Copper Accumulated Accumulated Contained Accumulated Tailings Grade Tonnes Grade Cu Cu Contained Cu (tonnes) % (tonnes) % (tonnes) (tonnes) 1936 3,520,562 0.234 3,520,562 0.234 8,238 8,238 1937 6,570,479 0.358 10,091,041 0.315 23,522 31,760 1938 5,812,469 0.312 15,903,510 0.314 18,135 49,895 1939 5,804,596 0.338 21,708,106 0.320 19,620 69,515 1940 5,110,592 0.337 26,818,698 0.323 17,223 86,738 1941 6,130,421 0.310 32,949,119 0.321 19,004 105,742 1942 6,777,404 0.357 39,726,523 0.327 24,195 129,937 1943 7,758,091 0.406 47,484,614 0.340 31,498 161,435 1944 6,887,988 0.366 54,372,602 0.343 25,210 186,645 1945 6,762,549 0.382 61,135,151 0.348 25,833 212,478 1946 4,348,121 0.362 65,483,272 0.349 15,740 228,218 1947 5,982,818 0.442 71,466,090 0.356 26,444 254,662 1948 6,910,680 0.389 78,376,770 0.359 26,883 281,545 1949 6,159,374 0.298 84,536,144 0.355 18,355 299,900 1950 6,921,559 0.324 91,457,703 0.352 22,426 322,326 1951 8,260,912 0.307 99,718,615 0.349 25,361 347,687 1952 8,088,069 0.316 107,806,684 0.346 25,558 373,245 1953 6,683,235 0.343 114,489,919 0.346 22,923 396,168 1954 5,186,604 0.343 119,676,523 0.346 17,790 413,958 1955 7,151,162 0.310 126,827,685 0.344 22,169 436,127 1956 8,566,066 0.311 135,393,751 0.342 26,640 462,768 1957 8,557,570 0.325 143,951,321 0.341 27,812 490,580 1958 8,729,544 0.282 152,680,865 0.337 24,617 515,197 1959 8,797,678 0.273 161,478,543 0.334 24,018 539,215 1960 9,049,863 0.300 170,528,406 0.332 27,150 566,364 1961 8,593,098 0.300 179,121,504 0.331 25,779 592,143 1962 8,593,098 0.300 187,714,602 0.329 25,779 617,923 1963 8,593,098 0.300 196,307,700 0.328 25,779 643,702 1964 8,593,099 0.300 204,900,799 0.327 25,779 669,481 1965 9,515,358 0.292 214,416,157 0.325 27,785 697,266 1966 7,798,192 0.278 222,214,349 0.324 21,679 718,945 1967 10,168,657 0.289 232,383,006 0.322 29,387 748,333 1968 9,855,699 0.300 242,238,705 0.321 29,567 777,900 1969 10,770,993 0.304 253,009,698 0.320 32,744 810,644 1970 11,421,679 0.309 264,431,377 0.320 35,293 845,937 1971 14,235,041 0.344 278,666,418 0.321 48,969 894,905 1972 14,807,915 0.279 293,474,333 0.319 41,314 936,219 1973 14,280,630 0.289 307,754,963 0.318 41,271 977,490 1974 10,051,583 0.281 317,806,546 0.316 28,245 1,005,735 1975 18,039,211 0.273 335,845,757 0.314 49,247 1,054,982 1976 19,313,790 0.246 355,159,547 0.310 47,512 1,102,494 1977 9,087,793 0.246 364,247,340 0.309 22,356 1,124,850


Table 6-2 El Teniente Tailings delivered to Colihues (1977 to 1986)

Year Annual Copper Accumulated Accumulated Contained Accumulated Tailings Grade Tonnes Grade Cu Cu Contained Cu (tonnes) % (tonnes) % (tonnes) (tonnes) 1977 9,767,003 0.246 9,767,003 0.246 24,027 24,027 1978 19,538,624 0.229 29,305,627 0.235 44,743 68,770 1979 20,441,864 0.257 49,747,491 0.244 52,536 121,306 1980 20,320,355 0.275 70,067,846 0.253 55,881 177,187 1981 18,943,890 0.271 89,011,736 0.257 51,338 228,525 1982 22,453,713 0.297 111,465,449 0.265 66,688 295,212 1983 23,381,476 0.271 134,846,925 0.266 63,364 358,576 1984 23,764,923 0.251 158,611,848 0.264 59,650 418,226 1985 26,493,078 0.247 185,104,926 0.261 65,438 483,664 1986 31,383,984 0.27 216,488,910 0.263 84,737 568,401

Table 6-3 MVC Production History (2003 to 2016)

Year Tonnes Copper Copper Copper MolybdenumProcessed Grade Recovery Produced Produced

(tonnes) (% Cu) (%) (tonnes) (pounds)2003 33,671,886 0.110 32.3 11,988 02004 43,844,672 0.113 28.5 14,117 02005 45,836,836 0.118 25.0 13,552 631,8442006 39,088,829 0.114 25.2 11,189 674,5492007 38,529,330 0.130 30.1 15,065 639,0202008 45,523,128 0.133 25.9 15,707 769,1422009 50,389,155 0.136 25.8 17,674 594,8122010 52,755,676 0.150 26.8 21,137 777,3042011 54,176,727 0.149 24.6 19,810 785,0682012 56,108,797 0.157 26.6 23,455 1,057,7172013 55,740,934 0.160 22.5 20,046 809,0572014 57,811,530 0.139 22.0 17,649 580,4722015 51,782,348 0.150 20.2 15,682 97,8832016 62,671,103 0.154 25.3 24,419 469,175

*Excludes copper produced from toll processing Minera Maricunga concentrates.


Table 6-4 MVC Fresh Tailings Production History (2003 to 2016)

Year Tonnes Copper Copper Copper

Processed Grade Recovery Produced(tonnes) (% Cu) (%) (tonnes)

2003 33,254,528 0.108 32.0 11,4802004 42,942,903 0.110 27.8 13,1032005 44,653,199 0.114 24.0 12,2222006 38,599,167 0.112 25.0 10,7632007 37,762,909 0.127 30.1 14,4922008 42,687,834 0.125 26.5 14,0812009 45,274,144 0.118 25.5 13,6062010 42,938,486 0.116 24.7 12,3552011 45,261,856 0.121 20.0 10,9292012 44,997,096 0.126 22.3 12,6312013 44,484,008 0.132 20.0 11,7442014 44,951,132 0.114 21.4 10,9622015 44,472,506 0.116 21.0 10,7932016 42,031,933 0.116 19.6 9,566

Table 6-5 MVC Colihues Tailings Production History (2003 to 2016)

Year Tonnes Copper Copper CopperProcessed Grade Recovery Produced

(tonnes) (% Cu) (%) (tonnes)2003 417,359 0.305 40.0 5092004 901,769 0.281 40.0 1,0142005 1,183,638 0.282 39.9 1,3302006 489,661 0.276 31.5 4262007 766,421 0.249 30.0 5732008 2,835,295 0.262 21.9 1,6252009 5,115,012 0.294 27.1 4,0692010 9,817,191 0.295 30.3 8,7822011 8,914,872 0.290 34.3 8,8812012 11,111,702 0.283 34.4 10,8232013 11,256,926 0.270 27.3 8,3022014 12,860,398 0.227 22.9 6,6872015 7,072,004 0.226 18.5 2,9552016 0 0.000 0.0 0


Table 6-6 MVC Cauquenes Tailings Production History (2015 to 2016)


(tonnes) (% Cu) (%) (tonnes)2015 4,557,676 0.220 19.3 1,9342016 20,639,169 0.232 31.1 14,853


7.0 GEOLOGICAL SETTING AND MINERALIZATION

7.1 Source of Tailings

The historic Cauquenes and Colihues tailings impoundments (Figure 7-1) are man-made deposits that were generated as sites for the containment of tailings produced during the processing of copper-molybdenum ore at the El Teniente mine owned by Codelco.

Cauquenes tailings were deposited over the period 1936 to 1977 and the Colihues tailings were deposited over the period 1977 to 1986.

El Teniente is located in the Andes of central Chile and is a porphyry copper-molybdenum deposit. Most of the high grade copper ore at El Teniente is hosted by vertically extensive hydrothermal breccia pipes hosted in a mafic intrusive complex. The deposit is zoned from a barren core through a narrow zone of bornite rich mineralization outwards into the main chalcopyrite dominant mineralized breccias. Several phases of breccia emplacement with associated copper and molybdenum mineralization occurred over a period of 2 million years. Focused intrusive activity with attendant mineralization at the intersection of major structures over such an extended period of time resulted in the formation of the El Teniente deposit. (Skewes et al., 2005).

Figure 7-1 Aerial View of the Cauquenes and Colihues Tailings Deposits

Cauquenes

MVC Plant

Colihues


7.2 Lithology and Mineralogy

Over the period 1910 to 1979, approximately 75% of the El Teniente mine production was from the CMET zone (Complex Mafic El Teniente) and the remaining volume was mined from intrusive felsic zones (Sewell Tonalite) and magmatic-hydrothermal breccias, principally brechias of tourmaline and sericite.

Copper production was primarily via flotation of high grade secondary copper mineralization, consisting of chalcocite and covellite, with some pockets of remnant oxide copper (chlorides, carbonates and silicates) with atacamite, malachite and chrysocolla; occasionally cuprite and native copper. The contribution of chalcopyrite over this period was relatively low and gradually increased as the depth of the mine increased.

Table 7-1 shows the dates of extraction, the ore grade and the predominant ore minerals associated with the respective underground mine sectors.

Table 7-1 El Teniente Mine Mineralogy


8.0 DEPOSIT TYPES

The historic Colihues and Cauquenes tailings impoundments are man-made deposits that were generated as sites for the containment of tailings produced during the processing of copper-molybdenum ore at the El Teniente Mine.

Please refer to Sections 6 and 7 for details regarding production history and records of tonnage and grades of copper and molybdenum deposited in Cauquenes and Colihues.


9.0 EXPLORATION

Please refer to Section 10 “Drilling” for details regarding sampling programs carried out on the Cauquenes and Colihues deposits.


10.0 DRILLING

10.1 Summary

A total of 30 holes have been drilled on the Cauquenes deposit in four separate campaigns: CIMM in 1983, SRK in 1988, MVC in 2011 and MVC in 2012. Details for the two major campaigns are presented in the following sections.

10.2 2012 Campaign

In September 2012, MVC completed a six hole reverse circulation (RC) drill program on Cauquenes to obtain confirmatory samples for grade, mineralogy and metallurgy tests. The drilling was performed in 6 inch diameter casings, with a DTH drill and a 14 bar screw compressor rated at 760 CFM. The holes were vertical, down to a depth of 30m.

The six holes drilled in Zone A of Cauquenes during 2012 were located immediately adjacent to four (4) holes corresponding to the CIMM drilling campaign in 1983 and two holes from the SRK campaign in 1998. The objective was to validate the results obtained previously.

Figure 10-1 presents the locations of the holes, the numerical vales next to the dots represent the depth of the holes in meters. Table 10-1 presents the assay analyses for the six holes.

Figure 10-1 MVC Drill Hole Locations

E

F G H

I J


Table 10-1 MVC Drill Hole Assays

MVC E MVC F MVC G MVC H MVC I MVC J MVC E MVC F MVC G MVC H MVC I MVC J0 - 5 0.259 0.245 0.279 0.163 0.300 0.290 0 - 5 0.009 0.011 0.008 0.010 0.009 0.0125 - 10 0.254 0.298 0.230 0.211 0.272 0.359 5 - 10 0.014 0.013 0.014 0.015 0.012 0.01410 - 15 0.254 0.279 0.248 0.234 0.281 0.250 10 - 15 0.023 0.017 0.018 0.022 0.015 0.01815 - 20 0.246 0.258 0.255 0.276 0.234 0.306 15 - 20 0.025 0.021 0.024 0.028 0.025 0.02020 - 25 0.233 0.248 0.242 0.291 0.270 0.308 20 - 25 0.024 0.024 0.025 0.027 0.024 0.02825 - 30 0.246 0.243 0.235 0.270 0.300 0.375 25 - 30 0.025 0.023 0.025 0.026 0.025 0.025

MVC E MVC F MVC G MVC H MVC I MVC J MVC E MVC F MVC G MVC H MVC I MVC J0 - 5 0.114 0.078 0.113 0.037 0.117 0.084 0 - 5 3.350 3.680 3.200 3.220 3.620 3.5605 - 10 0.067 0.070 0.053 0.058 0.058 0.051 5 - 10 3.560 4.100 3.350 3.720 3.900 3.92010 - 15 0.065 0.055 0.047 0.046 0.050 0.043 10 - 15 3.170 3.750 3.260 3.580 3.850 3.64015 - 20 0.055 0.054 0.061 0.062 0.046 0.060 15 - 20 3.130 3.590 3.266 3.360 3.720 4.02020 - 25 0.054 0.072 0.075 0.070 0.047 0.031 20 - 25 3.260 3.640 3.280 3.480 3.640 3.57025 - 30 0.045 0.068 0.072 0.061 0.037 0.041 25 - 30 3.170 3.680 3.280 3.200 3.490 3.730

Depth m% MoT

Depth m% FeT

Depth m% CuT

Depth m% CuNS


10.3 1983 Campaign

In 1983, CIMM completed a ten hole drilling campaign on Cauquenes. The 3 inch and 24 inch holes were drilled to a depth of 45 to 50m. Figure 10-2 presents the location of the holes and Table 10-2 presents the assay results for copper and molybdenum.

Figure 10-2 CIMM Hole Location


Table 10-2 CIMM Drill Results

depth in

metres SC - 01 SC - 02 SC - 03 SC - 04 SC - 05 SC - 06 SC - 07 SC - 08 SC - 09 SC - 100 to 5 0.242 0.250 0.220 0.268 0.311 0.255 0.273 0.271 0.231 0.2235 to 10 0.303 0.250 0.270 0.258 0.291 0.306 0.263 0.251 0.261 0.303

10 to 15 0.281 0.230 0.273 0.208 0.306 0.277 0.294 0.310 0.330 0.28015 to 20 0.321 0.271 0.243 0.250 0.227 0.178 0.137 0.310 0.330 0.30020 to 25 0.283 0.210 0.208 0.257 0.206 0.193 0.207 0.238 0.241 0.36625 to 30 0.253 0.210 0.257 0.247 0.324 0.243 0.256 0.248 0.312 0.26730 to 35 0.279 0.250 0.288 0.242 0.267 0.260 0.239 0.200 0.305 0.20035 to 40 0.428 0.271 0.480 0.252 0.465 0.260 0.269 0.20040 to 45 0.380 0.236 0.240 0.245 0.218

> 45 0.255 0.308

depth inmetres SC - 01 SC - 02 SC - 03 SC - 04 SC - 05 SC - 06 SC - 07 SC - 08 SC - 09 SC - 100 to 5 0.138 0.102 0.053 0.135 0.098 0.134 0.108 0.074 0.071 0.0595 to 10 0.053 0.112 0.108 0.135 0.062 0.186 0.137 0.062 0.125 0.086

10 to 15 0.076 0.052 0.078 0.089 0.063 0.063 0.048 0.160 0.153 0.10215 to 20 0.100 0.095 0.078 0.101 0.056 0.042 0.033 0.140 0.055 0.11320 to 25 0.113 0.055 0.053 0.112 0.063 0.064 0.066 0.072 0.053 0.18925 to 30 0.059 0.066 0.058 0.102 0.059 0.088 0.087 0.111 0.061 0.07230 to 35 0.040 0.100 0.048 0.109 0.036 0.129 0.055 0.067 0.049 0.05635 to 40 0.036 0.100 0.035 0.086 0.030 0.069 0.063 0.05740 to 45 0.027 0.065 0.074 0.086 0.043

> 45 0.088 0.037

depth inmetres SC - 01 SC - 02 SC - 03 SC - 04 SC - 05 SC - 06 SC - 07 SC - 08 SC - 09 SC - 100 to 5 0.0068 0.0098 0.0101 0.0090 0.0081 0.0080 0.0085 0.0114 0.0070 0.00945 to 10 0.0165 0.0091 0.0090 0.0090 0.0095 0.0095 0.0085 0.0094 0.0070 0.0091

10 to 15 0.0129 0.0213 0.0060 0.0188 0.0160 0.0094 0.0110 0.0099 0.0097 0.009515 to 20 0.0279 0.0263 0.0271 0.0254 0.0231 0.0122 0.0110 0.0160 0.0140 0.011420 to 25 0.0248 0.0219 0.0230 0.0238 0.0246 0.0195 0.0206 0.0244 0.0137 0.021925 to 30 0.0218 0.0198 0.0230 0.0248 0.0305 0.0282 0.0294 0.0229 0.0274 0.023930 to 35 0.0261 0.0292 0.0286 0.0253 0.0290 0.0250 0.0233 0.0190 0.0305 0.019535 to 40 0.0311 0.0282 0.0256 0.0224 0.0329 0.0250 0.0224 0.012640 to 45 0.0230 0.0230 0.0180 0.0125 0.0241

> 45 0.0120

% Copper Total - Drill Holes CIMM 1983

% Copper Soluble - Drill Holes CIMM 1983

% Molybdenum Total - Drill Holes CIMM 1983


11.0 SAMPLE PREPARATION, ANALYSES AND SECURITY

In September 2012, MVC completed a six hole reverse circulation (RC) drill program on Cauquenes to obtain confirmatory samples for grade, mineralogy and metallurgy tests.

Sample preparation was completed to Codelco protocol CNAM Standard 012, "Standard Operations to be followed during sampling operations". Composites were created every 5 meters for a total of 36 samples submitted for analysis. The Codelco protocol CNAM Standard 013 "Quality assurance in sample preparation for chemical analysis" was followed to ensure that the information generated met industry standard precision and accuracy requirements. Procedures and equipment used for drying, pulverizing, screening, mixing, separation and splitting of the samples were done strictly as defined in the protocol.

MVC personnel supervised the sample preparation according to company standards. The samples were handled and prepared in MVC’s laboratory, which was administered by an independent company, Alfred H. Knight International Limited Chile Ltda (AHK). The laboratory was ISO certified by the Bureau Veritas Certification, ISO 9001.

Measures were taken to ensure the security of the samples and the samples did not leave MVC premises. The samples were bagged and labeled according to MVC standards.

The samples were assayed by AHK for total copper, soluble copper, molybdenum and iron. Analysis was based on atomic spectrometry and electrothermal atomization. The procedures for preparation, analysis and quality control samples followed the methods described and accredited to ISO -17025 NCh Of2005. Analysis was based on methods described by “Minerals and Non-Metallic Industrial Products”, Leonardo Balabanoff, Inés Game, Editorial Universidad de Concepción 1984 Part IV and “Minerals of Copper and Molybdenum. Instrumental Analysis” Skoog Leary, Mac Graw Hill Editorial fourth edition, Naucalpan, Mexico 1994, Chapter 10.

Comparisons of duplicate samples were used to ensure full quality control. Five percent of the samples were randomly selected for duplicate analysis. No abnormal data was reported.

Mineralogical assessment of the samples was completed by David Ayala Berenguela Metallurgical EIRL, mineralogy advisor for Codelco Chile. Samples were studied in a light reflected polarizing microscope universal Olympus model B - Max41, with standard techniques for recognizing sulfur species. The objective was to study the mineral composition of the primary components (number, size and distribution) and to determine the degree of liberation.

In the QP’s opinion, sufficient work has been done on Cauquenes sample preparation, analysis and security to ensure the data is appropriate for resource reporting and mine planning purposes.


12.0 DATA VERIFICATION

12.1 Fresh Tailings Records

Historically there have been minor differences in the tonnages and grades of tailings delivered to MVC as planned by El Teniente and as measured by MVC.

The MVC values are determined from flow and pulp density measurements. MVC takes pulp samples throughout the plant to provide shift composites according to normal industry practice. The samples are prepared and assayed in an on-site laboratory. There appears to be excellent historical correlation between MVC’s metallurgical balance for copper produced and the receipts of copper in concentrate at the Codelco smelter.

The on-site laboratory was operated by an independent company in 2012, Alfred H. Knight Chile S.A. (AHK). AHK is a reputable company which provides analytical services to the mining industry. The key plant samples are taken by automatic sample cutters approximately every 20 minutes. Every 3 hours, the pulp composites of these samples are taken to the laboratory for filtration, drying, and analysis. Each truck load of concentrate dispatched to the smelter is sampled at various points in the load using a tube sampler. A composite sample from each load is dried and analysed.

Raul Poblete has reviewed the protocols for sampling and analysis and is of the opinion that they meet recognized industry standards.

Tables 12-1 and 12-2 compare the Fresh Tailings contract plan with the actual data as measured by MVC over the period 2004 to 2012.

Table 12-1 MVC Fresh Tailings Feed MVC Actual

Year Tonnes Copper Copper Cumulative Processed Grade Contained Cu contained (tonnes) (% Cu) (tonnes) (tonnes)

2004 42,942,903 0.110 47,067 47,067 2005 44,653,199 0.114 50,977 98,044 2006 38,599,167 0.112 43,058 141,102 2007 37,762,909 0.127 48,111 189,213 2008 42,687,834 0.125 53,221 242,434 2009 45,274,144 0.118 53,354 295,789 2010 42,938,486 0.116 50,016 345,805 2011 45,261,856 0.121 54,734 400,540 2012 44,997,096 0.126 56,630 457,170


Table 12-2 El Teniente Tailings Contract Plan

DET Contract Plan Year Tonnes Copper Copper Cumulative

Processed Grade Contained Cu contained (tonnes) (% Cu) (tonnes) (tonnes)

2004 44,412,105 0.120 53,295 53,295 2005 44,418,310 0.110 48,860 102,155 2006 44,423,785 0.120 53,309 155,463 2007 44,380,715 0.120 53,257 208,720 2008 44,361,735 0.120 53,234 261,954 2009 44,330,710 0.130 57,630 319,584 2010 44,335,820 0.130 57,637 377,221 2011 44,339,105 0.120 53,207 430,428 2012 44,390,205 0.110 48,829 479,257

It can be seen that that there is a good match between actual and contract Fresh Tailings tonnes and grade. Over the period 2004 to 2012, the contained copper delivered to MVC was 457,170 tonnes versus El Teniente’s contract plan for 479,257 tonnes. There is a minor difference of +5% in planned cumulative contained copper delivered to MVC since 2004 compared to actual. The El Teniente Contract Plan is slightly optimistic in both tonnes and grade delivered to MVC. El Teniente’s annual production plan is submitted to MVC every year and the actual plan varies slightly from the Contract plan. This low variation over a long period of time demonstrates that El Teniente have a proven, reliable and dependable production planning process and their future plans can be reasonably assumed to be accurate.

12.2 Colihues Production Records and Additional Sampling

MVC’s production records from the Colihues deposit since 2003 were examined as an independent check of the variability of grade in the tailings. The table below shows that annual grades have varied between a low of 0.249 % Cu to a high of 0.305% Cu. The average grade processed from Colihues since start-up in 2003 is 0.287% Cu.


Table 12-3 MVC’s Colihues Production History


(tonnes) (% Cu) (%) (tonnes)2003 417,359 0.305 40.0 5092004 901,769 0.281 40.0 1,0142005 1,183,638 0.282 39.9 1,3302006 489,661 0.276 31.5 4262007 766,421 0.249 30.0 5732008 2,835,295 0.262 21.9 1,6252009 5,115,012 0.294 27.1 4,0692010 9,817,191 0.295 30.3 8,7822011 8,914,872 0.290 34.3 8,8812012 11,111,702 0.283 34.4 10,8232013 11,256,926 0.270 27.3 8,302

Tot / Avg 52,809,844 0.283 31.0 46,333

Several sampling programs described in the AMEC Report (Hodgson et al., 2002) were carried out prior to the start of production from the Colihues deposit. Three of the programs were conducted by MVC during April 1998, August 2001 and October 2001. In addition, AMEC undertook an independent sampling program during 2002. The sampling programs were as follows:

• April 1998 – MVC: 15 near surface pit samples were collected between the Barge and the Island

• August 2001 – MVC: 8 samples were collected from pits in the east portion near wall B.

• October 2001 – MVC: 14 samples were collected from in front of the Barge using an airlift drill.

Table 12-4 Assay Results for MVC August 2001 Sampling Program

Pit # Cu Total

% Cu Sulphide

% Mo %

1 0.31 0.19 0.0105

2 0.315 0.17 0.0100

3 0.285 0.17 0.0115

4 0.294 0.17 0.0110

5 0.272 0.15 0.0105

6 0.249 0.13 0.0105

7 0.282 0.14 0.0095

8 0.262 0.15 0.0100

Average 0.284 0.16 0.0104


Table 12-5 Assay Results for MVC October 2001 Airlift Sampling Program

Distance from Pump Station raft

Cu Sulphide %

Mo %

0 0.16

50 0.15

100 0.25

150 0.22

200 0.24

250 0.25

Average 100 –250 0.239 0.0104

Table 12-6 Assay Results for AMEC 2002 Sampling Program

Cu Cu Cu Sample N° Total Soluble Insoluble

% % % 2036-20 +100 0.075 0.021 0.054 2036-20 +325 0.053 0.014 0.039 2036-20 -325 0.111 0.031 0.080 2036-21 +100 0.330 0.145 0.185 2036-21 +325 0.171 0.106 0.065 2036-21 -325 0.386 0.307 0.079 2036-22 +100 0.387 0.152 0.235 2036-22 +325 0.208 0.120 0.088 2036-22 -325 0.529 0.411 0.118 2036-50 +100 0.184 0.058 0.126 2036-50 +325 0.101 0.053 0.048 2036-50 -325 0.280 0.203 0.077 2036-51 +100 0.356 0.150 0.206 2036-51 +325 0.216 0.130 0.086 2036-51 -325 0.474 0.380 0.094 2036-52 +100 0.201 0.075 0.126 2036-52 +325 0.121 0.064 0.057 2036-52 -325 0.275 0.204 0.071 2036-53 +100 0.166 0.068 0.098 2036-53 +325 0.115 0.059 0.056 2036-53 -325 0.237 0.160 0.077 2036-70 +100 0.133 0.047 0.086



% % % 2036-70 +325 0.079 0.039 0.040 2036-70 -325 0.236 0.118 0.118 2036-71 +100 0.312 0.148 0.016 2036-71 +325 0.204 0.123 0.081 2036-71 -325 0.475 0.370 0.105 2036-72 +100 0.180 0.069 0.111 2036-72 +325 0.112 0.059 0.053 2036-72 -325 0.257 0.183 0.074 2036-73 +100 0.182 0.070 0.112 2036-73 +325 0.115 0.064 0.051 2036-73 -325 0.279 0.198 0.081 2036-80 +100 0.197 0.036 0.161 2036-80 +325 0.069 0.027 0.042 2036-80 -325 0.207 0.108 0.099 2036-81 +100 0.160 0.011 0.149 2036-81 +325 0.074 0.009 0.065 2036-81 -325 0.147 0.032 0.115 2036-82 +100 0.335 0.049 0.286 2036-82 +325 0.125 0.045 0.080 2036-82 -325 0.338 0.210 0.128 2036-83 +100 0.401 0.064 0.337 2036-83 +325 0.128 0.045 0.083 2036-83 -325 0.361 0.233 0.128

2036-100 +100 0.030 0.005 0.025 2036-100 +325 0.025 0.005 0.020 2036-100 -325 0.089 0.015 0.074 2036-101 +100 0.289 0.003 0.286 2036-101 +325 0.090 0.004 0.086 2036-101 -325 0.103 0.009 0.094 2036-102 +100 0.689 0.076 0.613 2036-102 +325 0.172 0.064 0.108 2036-102 -325 0.430 0.282 0.148 2036-120 +100 0.093 0.017 0.076 2036-120 +325 0.057 0.015 0.042 2036-120 -325 0.131 0.055 0.076 2036-121 +100 0.214 0.088 0.126 2036-121 +325 0.156 0.089 0.067 2036-121 -325 0.400 0.298 0.102 2036-122 +100 0.301 0.133 0.168 2036-122 +325 0.185 0.110 0.075



% % % 2036-122 -325 0.450 0.337 0.113 2036-123 +100 0.290 0.127 0.163 2036-123 +325 0.186 0.106 0.080 2036-123 -325 0.442 0.319 0.123

Avg +100 (no dups) 0.248 0.071 0.177

Avg -100+325 (no dups) 0.123 0.060 0.063 Avg -325 (no dups) 0.295 0.197 0.098

AVERAGE 0.235 0.119 0.117

Table 12-7 Comparison of Colihues Production, Sampling and Historical Records

Company Date Cu Total %

Mo % Reference

MVC 2003 to 2013 0.283 - Production records (see table 12-3)

AMEC 2002 0.235 0.0131* Hodgson et al., 2002

MVC October 2001 - 0.0104 Hodgson et al., 2002

MVC August 2001 0.284 0.0104 Hodgson et al., 2002

MVC April 1998 0.290 Hodgson et al., 2002

CODELCO February 2002 0.263 Budinich, 2002

* average of 15 sub-samples from 5 samples

Independent checks on the grades of MVC’s sampling programs and production records have shown consistently higher values than the average grade calculated from the historical records of Codelco. The average eleven-year Colihues production grade of 0.283% Cu is 8% higher than the historical recorded grade of 0.263%. Therefore it is considered that the Colihues historical recorded grades of 0.263% Cu and 0.010% Mo are conservative estimates of the actual grade and are appropriate as a basis of a conservative estimate of the resource grade.


12.3 Cauquenes Additional Sampling

In September 2012, MVC completed a six-hole reverse circulation (RC) drill program on Cauquenes to obtain confirmatory samples for grade, mineralogy and metallurgy tests. The six drill holes were located in Zone A of Cauquenes immediately adjacent to four (4) holes corresponding to the CIMM drilling campaign in 1983. The twin holes were MVH and SC01, MVCE and SC02, MVCI and SC03, MVCF and SC04. Figure 10-1 in Section 10.0 “Drilling” presents the locations of the holes. Comparisons of the twin hole assays for copper and molybdenum are presented below in Table 12-8.

Table 12-8 Comparison of 2012 and 1988 Twin Holes

% CuT % CuT % CuT % CuTMVC H SC01 Var MVC E SC02 Var MVC I SC03 Var MVC F SC04 Var

0 - 5 0.163 0.242 0.079 0.259 0.250 -0.009 0.300 0.220 -0.080 0.245 0.268 0.0235 - 10 0.211 0.303 0.092 0.254 0.250 -0.004 0.272 0.270 -0.002 0.298 0.258 -0.04010 - 15 0.234 0.281 0.047 0.254 0.230 -0.024 0.281 0.273 -0.008 0.279 0.208 -0.07115 - 20 0.276 0.321 0.045 0.246 0.271 0.025 0.234 0.243 0.009 0.258 0.250 -0.00820 - 25 0.291 0.283 -0.008 0.233 0.210 -0.023 0.270 0.208 -0.062 0.248 0.257 0.00925 - 30 0.270 0.253 -0.017 0.246 0.210 -0.036 0.300 0.257 -0.043 0.243 0.247 0.004Average 0.241 0.281 0.040 0.249 0.237 -0.012 0.276 0.245 -0.031 0.262 0.248 -0.014

% MoT % MoT % MoT % MoTMVC H SC01 Var MVC E SC02 Var MVC I SC03 Var MVC F SC04 Var

0 - 5 0.010 0.007 -0.003 0.009 0.010 0.001 0.009 0.010 0.001 0.011 0.009 -0.0025 - 10 0.015 0.017 0.001 0.014 0.009 -0.005 0.012 0.009 -0.003 0.013 0.009 -0.00410 - 15 0.022 0.013 -0.009 0.023 0.021 -0.002 0.015 0.016 0.002 0.017 0.019 0.00215 - 20 0.028 0.028 0.000 0.025 0.026 0.002 0.025 0.027 0.002 0.021 0.025 0.00420 - 25 0.027 0.025 -0.002 0.024 0.022 -0.003 0.024 0.023 -0.001 0.024 0.024 0.00025 - 30 0.026 0.022 -0.004 0.025 0.020 -0.005 0.025 0.023 -0.002 0.023 0.025 0.002Average 0.021 0.018 -0.003 0.020 0.018 -0.002 0.018 0.018 0.000 0.018 0.018 0.001

Depth m

Depth m

The comparisons of copper and molybdenum grades on the MVC and CIMM composites show very little variation between the two drill campaigns. The four twin holes completed in Cauquenes in 2012 have confirmed that the results are consistent with the CIMM values determined in 1983.

The average copper grade of all the Cauquenes drill samples is 0.265% Cu which is lower than the historical recorded grade of 0.309% Cu. This indicates that the drill grades may be a conservative estimate of the Cauquenes deposit, particularly as MVC’s experience with the Colihues deposit has shown that actual grades have been 9% higher than historical recorded grades.

In the QP’s opinion, sufficient work has been done to verify the copper and molybdenum grades of the Fresh Tailings, Colihues tailings and Cauquenes tailings and the data is appropriate for resource reporting and mine planning purposes.


13.0 MINERAL PROCESSING AND METALLURGICAL TESTING

13.1 Fresh Tailings

MVC has been processing El Teniente’s mill Fresh Tailings since 1992. The current processing plant at MVC employs primary cyclone classification to separate coarse and fine fractions. The fine fraction is processed in unconventional scavenger cascade flotation cells to produce a concentrate that is pumped to the rougher flotation circuit. The coarse fraction is ground in ball mills to a particle size of 80% passing 120 microns and then processed in conventional rougher and cleaner flotation circuits. This plant produces a sulphide concentrate containing approximately 30% Cu and 1% Mo.

From 2003 when Amerigo purchased MVC up to 2016, the tonnage weighted average feed grade of Fresh Tailings was 0.118% Cu and the tonnage weighted average plant copper recovery was 24%.

MVC commenced molybdenum production in 2005 and produced 0.5 million pounds of molybdenum in 2016. Plant feed grades are approximately 0.009% Mo and molybdenum recovery to the bulk copper concentrate is variable but typically approximately 5-15%. The selective molybdenum separation plant recovers the molybdenum into a concentrate with a grade of 40% Mo. In 2016, the average molybdenum recovery from Fresh Tailings after cleaning was estimated to be 7%. The molybdenum plant was shut down in 2015 due to low prices and restarted in late 2016.

Testwork has shown that copper and molybdenum recovery increases with decreasing particle size. Maximum flotation recovery occurs around 100 microns. The particle size distribution of the Fresh Tailings is approximately 80% passing 250 to 300 microns and the Bond Ball Mill Work Index of the coarse fraction processed in the MVC mills varies between 19.5 to 24.3 (metric). Figure 13-1 below shows that without regrinding, metal recovery from the + 105 micron fraction of the Fresh Tailings is low.

Figure 13-1 Coarse Fresh Tailings Grind Size versus Recovery

MVC is not aware of any plans of El Teniente to radically change ore type or processing methods. MVC expects average copper recovery from future El Teniente Fresh Tailings to remain at 24%. Average molybdenum recovery after cleaning is anticipated to be 6%.


13.2 Colihues

MVC processed the historic Colihues deposit tailings over the period 2003 to 2015. MVC is currently processing the historic Cauquenes deposit tailings. The processing plant at MVC employs primary cyclone classification to separate coarse and fine fractions. The fine fraction is combined with the Fresh Tailings fine material and processed in unconventional scavenger cascade flotation cells which recover approximately 10% of the copper into a concentrate that is pumped to the rougher flotation circuit. The coarse fraction is ground in ball mills to a particle size of 80% passing 100 microns and then the Cauquenes material is combined with the Fresh tailings material and processed in conventional rougher and cleaner flotation circuits. This plant produces a sulphide concentrate containing approximately 30% Cu and 1% Mo.

From 2003 when Amerigo purchased MVC up to 2016, the tonnage weighted average feed grade of Colihues Tailings was 0.268% Cu and the tonnage weighted average plant copper recovery was 29%, with annual highs of 40% and lows of 21.9%. Copper recovery from Colihues is dependent on the relative quantities of clays and fine material present in the tailings. Recoveries in the MVC plant are low when the fines content is high. MVC’s Phase Two expansion project is projected to remove fines, increase flotation residence time and improve copper recoveries for Colihues.

Mineralogical test work on the Colihues deposit shows that most of the copper is contained in secondary copper minerals (chalcocite and digenite) and chalcopyrite. Very little copper is in oxide form.

Table 13-1 Colihues Mineralogy

Colihues Composite DHC Pit June 2012Mineral Species mineral mass copper

% % %Primary Copper Sulphide 38

CuFeS2 Chalcopyrite 26.08 0.348 38Secondary Copper Sulphides 61

Cu2S Chalcocite 6.01 0.08 20Cu9S5 Digenite 11.53 0.154 37CuS Covelite 0.21 0.003 1

Cu8As2S7 TennantiteCu5FeS4 Bornite 1.35 0.018 3

Mixed 0.71 0.009 1Copper Oxides 1

CuOx Oxide 0.32 0.004 1Other FeS2 Pyrite 52.76 0.704MoS2 Molybdenite 1.04 0.014

Gangue 98.666

The Colihues deposit has an average particle size distribution of approximately 80% passing 200 microns which is finer than the Fresh Tailings. The Bond Ball Mill Work Index of the coarse fraction fed to the MVC mills varies between 20.5 to 26.5 (metric) which is slightly harder than the Fresh Tailings. Table 13-2 below presents details of the Colihues particle size distribution.


Table 13-2 Colihues Particle Size Distribution (P80 200 um)

Screen Mesh um %

Retained % Retained Cumulative

% Passing Cumulative

50 297 5.5 5.5 94.5 70 210 11.5 17.0 83.0 100 149 20.2 37.2 62.8 140 105 16.7 53.9 46.1 200 74 10.4 64.3 35.7 270 53 7.4 71.7 28.3 325 44 2.1 73.9 26.1 -325 26.1 100.0 0.0

Metallurgical testwork on Colihues has shown that copper and molybdenum recovery is dependent on particle size, and optimal laboratory recovery of 50% Cu occurs at a grind size of approximately 100 microns. Without grinding, copper recovery from the +105 micron fraction of the Colihues material is approximately 35%.

Figure 13-2 Colihues Coarse Tailings Grind Size versus Recovery

Molybdenum recovery improved in 2012 due to plant optimisation successes and average molybdenum recovery from Colihues was estimated to be 15%. Copper and molybdenum recovery decreased in 2013 due to a slide in Colihues during April 2013 that resulted in low grade fine material being fed to the plant. MVC’s Phase Two expansion project will improve molybdenum recoveries for Colihues.

The average annual recovery estimates from future processing the Colihues deposit in the new plant are 37% for copper and 21% for molybdenum.


13.3 Cauquenes

Substantial metallurgical testwork has been conducted on the Cauquenes deposit. The early work using drill hole samples focussed on grinding, flotation and on leaching. The more recent work in 2016 was conducted on large tonnage production plant trials to optimise flotation performance.

Codelco’s preliminary metallurgical test work in 2008 reported that copper recovery for the Cauquenes coarse fraction reground to 70% passing 200 mesh would be approximately 70%. Copper recovery for the fine fraction was estimated to be 20%. It was recommended that a factor of 75% be applied to these values to account for the cleaner circuit and industrial scale up. Global molybdenum recovery was estimated to be 15 to 20% and concentrate copper grades were expected to be 28% Cu.

Metallurgical work on Cauquenes was completed in 2012 by Oscar Sobarzo, Carlos Henríquez and Ernesto Beas of Synthetic Covelite. Mineralogy results presented in Table 13-4, show that over two thirds of the copper is contained in secondary copper minerals, mainly chalcocite and digenite. The quantity of chalcopyrite increases slightly with depth and approximately 25% of the copper in the deeper zone 15-30m is contained in chalcopyrite. The quantity of oxide copper is still relatively low given the age of the deposit and approximately 12% of the copper in the upper zone 1.5-15m is contained in true oxide minerals.

The mineralogy testwork confirmed the fact that ore processed by the El Teniente mine over the period from 1935 to 1977 was mainly high grade secondary sulphide copper mineralisation, consisting of chalcocite and covellite. As most oxide and secondary copper minerals are acid soluble, the Cauquenes tailings therefore have a substantial copper component (75% to 80%) potentially amenable to acid leaching and recovery. A possible metallurgical process for Cauquenes may be to leach the tailings with sulphuric acid and recover the copper via SXEW or sulphide precipitation. MVC conducted pilot plant testwork demonstrating that although copper recovery was technically feasible via leaching, the high operating and capital costs made the process uneconomic.

Synthetic Covelite’s work is based on composites from the six drill holes (MVC E, F, G, H, I and J) completed in 2012 and detailed in Section 10. The holes were split into two composites based on depth, one composite from 1.5 to 15 m deep and the second from 15 to 30m deep. Each composite was then screen separated into two size fractions: +140 mesh and -140 mesh, coarse and fine fractions respectively. Table 13-3 presents the average particle size distribution of the six holes.

Table 13-3 Cauquenes Particle Size Distribution (P80 115 um)

Screen Mesh um %

Retained % Retained Cumulative

% Passing Cumulative

50 297 1.2 1.2 98.8 70 210 3.2 4.4 95.6 100 149 8.1 12.5 87.5 140 105 10.7 23.2 76.8 200 74 11.0 34.2 65.8 270 53 8.7 42.9 57.1 325 44 3.1 46.1 53.9 -325 53.9 100.0 0.0


Table 13-4 Cauquenes Mineralogy

Cauquenes Composite #1 May 2012 (1.5 to 15m deep)Mineral Species mineral mass copper

% % %

Primary Copper Sulphide 17CuFeS2 Chalcopyrite 9.28 0.132 17

Secondary Copper Sulphides 71Cu2S Chalcocite 3.81 0.054 16Cu9S5 Digenite 12.06 0.172 49CuS Covelite 0.88 0.013 3

Cu8As2S7 Tennantite 0.34 0.005 1Cu5FeS4 Bornite 0.57 0.008 2

Mixed 0.9 0.013Copper Oxides 12

CuOx Oxide 5.11 0.073 12Other

FeS2 Pyrite 65.82 0.938MoS2 Molybdenite 1.23 0.018

Gangue 98.574

Cauquenes Composite #1 May 2012 (15 to 30m deep)Mineral Species mineral mass copper

% % %Primary Copper Sulphide 25

CuFeS2 Chalcopyrite 15.33 0.181 25Secondary Copper Sulphides 68

Cu2S Chalcocite 4.49 0.053 17Cu9S5 Digenite 8.78 0.104 33CuS Covelite 5.58 0.066 18

Cu8As2S7 Tennantite 0.33 0.004Cu5FeS4 Bornite 0.18 0.002

Mixed 0.58 0.007Copper Oxides 7

CuOx Oxide 2.85 0.034 7Other

FeS2 Pyrite 59.15 0.697MoS2 Molybdenite 2.71 0.032

Gangue 98.820

MINERA VALLE CENTRAL March 30, 2017 TECHNICAL REPORT of 121 The coarse fraction was subjected to conventional laboratory scale batch grinding and rougher flotation tests with varying times, percentage solids, pH and dosage of reagents. The best recoveries achieved were 78% Cu and 64% Mo with a grind size of 80% passing 90 to 100 microns, under alkaline conditions with the addition of NaSH and with a flotation reagent suite similar to that used by MVC. Table 13-5 presents the average results of the eight coarse fraction rougher flotation tests under alkaline conditions.

Table 13-5 Cauquenes Coarse Fraction, pH 9.5, Rougher Flotation Average Results

The fine fraction (minus 105 micron) was subjected to conventional laboratory batch flotation tests and unconventional LPFI flotation tests. The LPFI process involves leaching the pulp with sulphuric acid for 25 minutes, adjusting the pH to 4.0 via lime addition, adding NaSH to precipitate soluble copper and then flotation to recover a copper concentrate. The best recoveries achieved with the LPFI process were 72% Cu and 63% Mo. With conventional alkaline flotation on the fine fraction, the best recoveries achieved were 69% Cu and 65% Mo. Tables 13-6 and 13-7 present the average results for the twenty one conventional rougher flotation tests and the four LPFI process tests on the Cauquenes -105 micron fine fraction.

Table 13-6 Cauquenes Fine Fraction, pH 9.5, Rougher Flotation Average Results

Feed Concentrate Tails RecoveryWeight grams 1,508 727 781 48.2%

CuT % 0.231 0.334 0.146 64.5%

MoT % 0.020 0.026 0.016 62.7%

Table 13-7 Cauquenes Fine Fraction, LPFI Process, Rougher Flotation Average Results

The cleaner flotation testwork completed on the Cauquenes samples demonstrated that acceptable copper concentrate grades and recoveries could potentially be achieved following removal of the ultra-fine slimes fraction. Figure 13.3 presents a typical grade recovery relationship for a single stage batch cleaner flotation test on deslimed rougher concentrate (plus 37 micron) that has been attritioned for five minutes.

Feed Concentrate Tails RecoveryWeight grams 1,494 297 1,197 19.9%CuT % 0.271 1.079 0.089 73.4%MoT % 0.013 0.035 0.008 50.5%

Feed Concentrate Tails RecoveryWeight grams 1,495 642 852 43.0%CuT % 0.224 0.354 0.128 61.1%MoT % 0.021 0.028 0.015 59.0%


Figure 13-3 Cauquenes Copper Cleaner Flotation

2.0

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0.5 1 3 5 10 15 20

Grade % CuTRecovery % CuT

minutes

Cauquenes Cleaner Flotation ( with attrition)

RecoveryGrade

For the full year of 2016, Cauquenes material was processed in the plant at an average rate of 60,000 tonnes per day. For the year the average grade was 0.23% copper and average recovery was 31%. Final concentrate grades of 28% to 30% copper were obtained. The material processed was extracted from the lower grade, oxidised near surface zones in Cauquenes.

MVC’s plant testwork conducted on the Cauquenes material in 2016 showed that about 30% of the copper in the feed is present as very fine sub 11 micron particles. This material cannot be recovered effectively in conventional flotation cells. The tests also showed that the existing flotation plant residence time was low at 18 minutes and approximately 27% of the feed copper was not being recovered due to insufficient flotation cell capacity. Mineralogical testwork confirmed that the flotation tails contained liberated secondary copper minerals. Tests showed that a further 10% of the coarse feed copper was lost in the desliming cyclone overflow due to cyclone inefficiencies.

The report issued in September 2016 demonstrated that Cauquenes copper recovery can be increased from 33% to 49% with the incorporation of additional cyclones, additional flotation cells and the expected increase of the feed grade to 0.27% Cu.

Figure 13-4 MVC’s Plant Testwork Summary 2016)

PLANT STREAM COPPER DISTRIBUTION %

MAY 2016 TONNAGE TPD

GRADE %Cu

COPPER TPD

TOTAL COARSE +75 MICRON

FINE -75 + 11

ULTRA FINE -11 MICRON

CAUQUENES FEED 60,000 0.213% 128 100 50 18 32FLOTATION FEED 34,573 0.252% 87 68 27 28 13CONCENTRATE 150,000 28.000% 42 33 13 15 4DESLIME TAILS 25,427 0.161% 41 32 6 4 21FLOTATION TAILS 34,423 0.131% 45 35 13 14 9LOSSES TOTAL 59,850 0.144% 86 67 19 18 30

MINERA VALLE CENTRAL March 30, 2017 TECHNICAL REPORT of 121 Molybdenum recovery values from the Cauquenes laboratory rougher tests are approximately 50% higher than the molybdenum recovery values from the Colihues laboratory rougher tests. In addition, the Cauquenes tailings contain some material deposited prior to the installation of the molybdenum plant at El Teniente. Therefore, the deeper zones of Cauquenes may contain higher quantities of molybdenum amenable to recovery by MVC. However, insufficient test work has been completed on this material to confirm higher molybdenum recoveries for Cauquenes. Therefore, a conservative average molybdenum recovery estimate value of 20% has been utilised.

The metallurgical test work on representative Cauquenes samples has demonstrated that a process consisting of grinding and flotation is appropriate. The coarse fraction and the fine fraction should be processed separately in order to maximise recovery. Removal of the slimes fraction is necessary to produce a high grade copper concentrate. After a recovery loss factor has been applied to the laboratory recovery values to account for the cleaner circuit and industrial scale up, the annual average recovery estimates for Cauquenes copper and molybdenum are 49% and 20% respectively.

In the QP’s opinion, the metallurgical recovery estimates and processing requirements for the Fresh, Colihues and Cauquenes tailings are well supported by appropriate test work and actual production data. The processing factors and deleterious elements that could have a significant effect on potential economic extraction have been assessed and evaluated.


14.0 MINERAL RESOURCE ESTIMATES

14.1 Summary

Codelco’s historical records of El Teniente’s mill tailings represent a detailed account of the tonnage and grade of material stored in the Cauquenes and Colihues impoundments. These records have been verified by independent checks on tonnage and grade of the historical tailings deposits. A limited amount of drilling has been conducted on both deposits and independent mineral resource estimates have been completed on Colihues and Cauquenes. MVC has been processing El Teniente’s Fresh Tailings for twenty-four years and MVC has a contract to process Fresh Tailings until 2037. The annual tonnes and grade of the Fresh Tailings are specified in the contract.

The Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards on Mineral Resources and Mineral Reserves states that “A Mineral Resource is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.” El Teniente has been in operation since 1904 and has demonstrated geological knowledge of their deposit through reliable projections of tailings tonnage and grade. MVC has a twenty-four-year record of economic extraction of copper and molybdenum from Fresh Tailings, Colihues and Cauquenes. MVC’s Phase Two Cauquenes Expansion project development plan demonstrates that the MVC plant production can be profitably expanded. The mineral resource estimates could be materially affected by changes in environmental, permitting, legal, title, taxation, socio-economic, marketing, political or other relevant factors.

There is sufficient geological and economic evidence to conclude that MVC’s contract with El Teniente for the Fresh Tailings plus the Cauquenes and Colihues historic tailings deposits constitute an inferred mineral resource. A summary of MVC’s mineral resources estimated after application of mining and mill recovery losses, are presented in Table 14-1 and Table 14-2. Inferred mineral resources are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized.

Table 14-1 MVC Copper Inferred Mineral Resource Estimate – December 31, 2016

Tailings Deposit Tonnes Grade Mill RecoverableRecovery Copper

(t) (% Cu) (% ) (M lbs)

Colihues 77,280,000 0.229 37 145Cauquenes 305,000,000 0.267 47 847Fresh 796,267,000 0.111 24 469Total 1,178,547,000 0.159 35 1,461

Table 14-2 MVC Molybdenum Inferred Mineral Resource Estimate – December 31, 2016

Tailings Deposit Tonnes Grade Mill RecoverableRecovery Molybdenum

(t) (% Mo) (% ) (M lbs)

Colihues 77,280,000 0.010 21 4Cauquenes 305,000,000 0.021 20 28Fresh 796,267,000 0.005 7 6Total 1,178,547,000 0.010 15 38


14.2 Cauquenes Deposit

The mineral resource estimate for the Cauquenes deposit is based on work done in 2008 by Marco Antonio Alfaro Sironvalle, PhD, with SRK Consulting. The section below is extracted and translated from his report: Evaluación de Recursos Mineros en Embalses Barahona y Cauquenes, Preparado para Codelco Chile, Superintendencia Desarrollo, División El Teniente, February 2008.

Codelco’s historical records of El Teniente’s mill tailings show that from 1936 to 1977 approximately 364 million tonnes of tailings at a grade 0.31% Cu were deposited in the Colihues tailings impoundment.

Resource database

Locations of the drill holes from the Cauquenes drilling campaigns conducted in 1984 and 1988 are presented in Figure 14-1 below. The numbers represent the depth of the holes and the black line represents the edge of the deposit. Details of the drill hole samples are presented in Section 10.

Figure 14-1 Cauquenes Drilling 1984 and 1998

The 1984 drilling campaign is defined on a support of 5.0 meters while the campaign of 1998 is defined on a support of 1.5 meters. In order to use as much data as possible in the resource assessment, composites were created on all drilling to an average size of 5.0 meters. Composite total copper grades were then compared for both campaigns. This analysis provided the following results:

• The grades of total copper, for the initial surface level composite (from 0.0 to 5.0 meters) were incompatible for each campaign (the average grades are significantly different)

• The grades of total copper for all composites below 5.0 meters are statistically similar for both campaigns.

MINERA VALLE CENTRAL March 30, 2017 TECHNICAL REPORT of 121 Therefore, the final resource database comprised of the full 1998 season and the full 1994 season was restricted to composites at a depth greater than 5.0 meters. Figures 14-2, 14-3 and 14-4 show the statistics of the 5.0 meter composites for the variables of CuT, CuS and Mo, respectively, with the following notation:

m = average grade s = standard deviation CV = coefficient of variation min = minimum value observed max = maximum value observed n = number of observations.

Figure 14-2 Histogram CuT

Figure 14-3 Histogram CuS


Figure 14-4 Histogram Mo

To study the correlations between variables, dimensional scatterplots were built, where ρ is the coefficient of correlation between variables (Figures 14-5, 14-6 and 14-7).

Figure 14-5 Correlation CuT-CuS


Figure 14-6 Correlation CuT-Mo

Figure 14-7 Correlation CuS-Mo

The following conclusions can be determined from the statistical analysis;

• The variables of CuT, CuS and Mo are very consistent, with low coefficients of variation. • The grades of CuT and CuS are close to normal or Gaussian distribution which is favorable for

the resource estimate. • For all the variables, it was important to note the absence of high or low outliers. • The grades of CuT are practically independent of CuS, the same goes for CuT with Mo and CuS

with Mo.


The variograms for CuT are summarized in Figures 14-8 and 14-9:

Figure 14-8 Variogram CuT vertical

Figure 14-9 Variogram CuT horizontal

Although there are a limited number of drill holes, the variograms for CuT are acceptable. There is a weak nugget effect, a horizontal range of around 700 meters and a vertical range of 15 meters.


Figures 14-10 and 14-11 show the variograms for molybdenum:

Figure 14-10 Variogram Mo vertical

Figure 14-11 Variogram Mo horizontal

The variograms for molybdenum show that there is zero nugget effect, a horizontal range in the order of 800 meters and the presence of a bias or drift in the vertical direction.

Block model

A block model with block dimensions of 25mx25mx5m was created, with 5m in the vertical direction. The surface of the deposit corresponds to the average elevation of 721.5m and the floor or footwall of the deposit was obtained by interpolation of the coordinates of the bottom of the holes. The grades of the blocks in the Cauquenes deposit were estimated using the geostatistical method of kriging. Figures 14-12, 14-13 and 14-14 present the results for the benches representing elevations of 704 m, 699 m and 694 m respectively. Figures 14-15, 14-16 and 14-17 show the results for molybdenum for the same bench elevations.


Figure 14-12 Grades of Copper (%CuT) for Bench 704




Figure 14-15 Grades of molybdenum (%Mo) for Bench 704




It is noted that molybdenum grades tend to increase at depth.

The following parameters were used in the kriging of the variables in the Cauquenes deposit: • Minimum number of samples for a block: 2 composites


• Maximum number samples for a block: 64 composites

• Search Radius: ranges of the variograms

• Octants: without use of octants

• Restriction of Outliers: without restriction of outliers

The resource estimation results (using a density of 1.372 t/m3) expressed as a grade-tonnage curve are presented in Table 14-3.

Table 14-3 Cauquenes resource estimate grade tonnage table

Cutoff Tonnes % CuT % CuS % Mo %CuT 0.00 360,480,132 0.265 0.099 0.021 0.05 360,480,132 0.265 0.099 0.021 0.10 360,480,132 0.265 0.099 0.021 0.15 360,480,132 0.265 0.099 0.021 0.20 346,181,320 0.268 0.100 0.021 0.25 231,726,509 0.285 0.103 0.021 0.30 54,721,362 0.320 0.107 0.023 0.35 3,931,637 0.384 0.059 0.027 0.40 930,387 0.423 0.042 0.027

The model values obtained agree very well with the statistical averages of the holes, as shown in Table 14-4:

Table 14-4 Comparison of model vs. drill hole average grades

Variable Drill holes Model %CuT 0.27 0.27 %CuS 0.10 0.10 %Mo 0.02 0.02

The comparisons per bench (model versus average grades per bench) also provide good validation results, as shown in Table 14-5, for total copper:

Table 14-5 Comparison of model vs. drill hole bench grades

Bench level Model %CuT Drill holes %CuT 719 0.26 0.25 714 0.27 0.28 709 0.28 0.28 704 0.26 0.26 699 0.25 0.25 694 0.26 0.27 689 0.26 0.25


To categorize the mineral resource, the relative error criterion for copper grade in each block was used. The relative error is given by the equation:

Where σK is the standard deviation of kriging error and ZK is the estimated block grade.

For Cauquenes (very consistent grades) the following criteria were defined: measured + indicated mineral resources: error <30% and inferred mineral resources: error ≥ 30%. Using this criteria, measured + indicated resources could represent 65% of the total mineral resource in the Cauquenes deposit.

Classification of Resource

The Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards on Mineral Resources and Mineral Reserves states that an inferred mineral resource is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. An inferred mineral resource has a lower level of confidence than that applying to an indicated mineral resource and must not be converted to a mineral reserve. An inferred mineral resource is based on limited information and sampling gathered through appropriate sampling techniques from locations such as outcrops, trenches, pits, workings and drill holes.

The proposed mining method for the Cauquenes deposit is to hydraulically extract all the material apart from some areas with physical limitations. No cut-off grade will be applied. For purposes of reporting the mineral resource estimate for Cauquenes, the QP has conservatively elected to categorize all of the resource at the lowest confidence classification category of inferred.

Extraction depletion

MVC’s production records up to 31 December 2016 (Table 6.6) show that a total of 25,196,846 tonnes of Cauquenes material with a grade of 0.231% Cu has been extracted and processed from the original 360,480,132 tonnes. Therefore the remaining in-situ tonnage is 335,283,286 tonnes at 0.268% Cu.

Extraction (or mining) recovery

Tailings in the Cauquenes deposit is planned to be extracted at a rate of 62,500 tonnes per day via a hydraulic monitoring system using high pressure water guns. Tailings will not be extracted at the margins of the deposit, at the interface of the tailings with the original ground surface level and the tailings left in-situ for safety barriers. Details on extraction methods are provided in Section 16.0. The quantity of tailings remaining in-situ is estimated to be 30 million tonnes at a grade of 0.27% Cu and 0.021% Mo. Therefore, 305 million tonnes is planned to be extracted from Cauquenes and delivered to the plant.

Mill (or metallurgical) recovery

The mill recovery for copper and molybdenum in the Cauquenes deposit has been estimated at 49% and 20% respectively. Details on metallurgy are provided in Section 13.0.

Mineral resource estimate The Cauquenes deposit, estimated after application of mining and mill recovery losses, has an inferred mineral resource estimate of 305 million tonnes at 0.267% Cu and 0.021% Mo with 847 million pounds of recoverable copper and 28 million pounds of recoverable molybdenum.


14.3 Colihues Deposit

The mineral resource estimate for the Colihues deposit is based on work done in 2006 by Roger Moss PhD and P.Geo., a consulting geologist. This work was presented in the technical report prepared for Amerigo Resources Ltd, March 11, 2006.

Codelco’s historical records of El Teniente’s mill tailings show that from 1977 to 1986 approximately 216 million tonnes of tailings at a grade 0.263% Cu were deposited in the Colihues tailings impoundment.

Grade Estimate for the Colihues Deposit

Independent checks on the grades of MVC’s sampling programs and production have shown consistently higher values than the average grade calculated from the historical records of Codelco. MVC’s production records from the Colihues deposit since 2003 were examined as an independent check of the variability of grade in the tailings. Annual grades have varied between a low of 0.249 % Cu to a high of 0.305% Cu. The average grade processed from Colihues since start-up in 2003 is 0.287% Cu. Therefore it is considered that the Colihues historical grades of 0.263% Cu and 0.010% Mo are conservative estimates of the actual grade and are suitable as a basis of an estimate of the resource grade.

Bathymetric Study

Golder Associates and Rahco International undertook a detailed study of the Colihues tailings deposit during 2005 (Medina, 2005). The topography of the top of the tailings deposit was determined using differential global positioning system to accuracy of approximately 0.5 metres. The topography of the base of the tailings was determined by digitizing the 1:25,000 scale IGM topographic map Rancagua Y Laguna Cauquenes. Digital terrain models were developed for both the basal topography and the Golder Associates determined topography of the top of the tailings deposit. The depth of the tailings was determined by subtraction of these two models, and a map produced showing the depths to the base of the tailings.

The depths are considered to be minimum depths especially in the area of wall A, since the basal topographic map was created from aerial photography completed in 1978, the second year of tailings disposal in the Colihues deposit. The calculated depth of the tailings varies from one metre in the southeastern most portion to 33 metres in the central portion of the deposit close to wall B.

Following the determination of the depth of tailings, the volume of tailings present in the deposit was calculated by Golder Associates. The calculated volume ranged between 100 and 150 million M3, over a surficial area of 650 ha (Medina, 2005). The large range in the calculated volume is due to uncertainty in the bottom topography caused by the 25 metre contour spacing of the IGM topographic map (Claudio Medina, Pers. Comm. 2006).

Density Measurement

MVC recently sampled the Colihues tailings material and determined the density. A 4-metre deep pit was dug with a backhoe, and the sample was taken at the base of the pit. The sample was taken using a 1.5 metre long plastic pipe with a diameter of 2 inches inserted vertically into the tailings at the base of the pit. The pipe was extracted with the contained sample which was placed into a plastic bag and taken to the laboratory for density determination. The density of the Colihues tailings was determined to be 1.864 tonnes/m3. This value corresponds to the value quoted by AMEC in the 2002 report (Hodgson et al., 2002).

MINERA VALLE CENTRAL March 30, 2017 TECHNICAL REPORT of 121 Tonnage confirmation for the Colihues Deposit

A tonnage estimate of the Colihues tailings deposit is used to determine whether or not the historical records of the amount of Codelco’s tailings production as given in Table 6-2 can be independently verified.

The volume of material in the Colihues deposit has been calculated by independent consultant Golder Associates. The results of the determination indicate a volume ranging from 100 million m3 to 150 million m3. Using the measured density of 1.864 tonnes/m3 results in a tonnage ranging from 186,400,000 tonnes to 279,600,000 tonnes of tailings. The 216,488,910 tonnes of tailings delivered to Colihues according to the historical records of Codelco clearly fall within these limits.


The historical records of Codelco’s disposal of tailings into the tailings deposit represent a detailed account of the tonnage and grade that was sent to the Colihues deposit. These records have been furnished by a major producing mining company and are believed to be reliable. However, independent checks on the reliability of the tonnage and grade of the historical records have been compiled. Several sampling programs, as well as MVC production from the Colihues tailings deposit, indicate average grades within 10% of that indicated by the historical records. An independent study of the volume of tailings contained in the Colihues deposit resulted in a range of volumes, the corresponding tonnage of which envelopes the tonnage calculated from the historical records. The historical records are therefore considered to have been verified in terms of both grade and tonnage.

The CIM Definition Standards on Mineral Resources and Mineral Reserves state that a mineral resource is a concentration or occurrence of solid material of economic interest in or on the earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. MVC has been producing copper economically from the Colihues tailings since 2003.

There is sufficient geological evidence to conclude that the Colihues tailings deposit originally contained an inferred mineral resource of 216,488,910 tonnes at an average grade of 0.262% Cu and 0.01% Mo, prior to the commencement of production by MVC. This resource is equivalent to the grade and tonnage outlined in the historical records and represents an in-situ resource based on dry density estimates.

The proposed mining method for the Colihues deposit is to hydraulically extract all the material apart from some areas with physical limitations. No cut-off grade will be applied.

The material in the Colihues tailings deposit is classified as an inferred mineral resource taking the following uncertainties into account:

• The density of 1.864 t/m3 used to convert the volume estimated by Golder Associates into a tonnage is based on limited determinations.

• The measured volume of the tailings is imprecise due to uncertainty in the bottom topography caused by the 25 metre contour spacing of the IGM topographic map.

• The sampling and production data used to verify the grade of the historical records is from a limited volume of the total tailings deposit.

Extraction depletion

MVC’s production records up to 31 December 2016 (Table 6.5) show that a total of 72,742,245 tonnes of Colihues material with a grade of 0.268% Cu has been extracted and processed from the original 216,488,910 tonnes. Therefore the remaining in-situ tonnage is 143,746,665 tonnes at 0.260% Cu.



Tailings in the Colihues deposit will be extracted at a rate of 32,000 tonnes per day via a hydraulic monitoring system using high pressure water. Tailings will not be extracted at the margins of the deposit, at the interface of the tailings with the original ground surface level, safety barriers at the dam walls and the tailings left in-situ for internal water barriers. Details on extraction methods are provided in Section 16.0. A total of 66 million tonnes at a grade of 0.295 %Cu and 0.010% Mo is not currently in MVC’s mine plans. This tonnage has been removed from the Colihues in-situ resource and a total of 77 million tonnes is planned to be delivered to MVC’s processing facility.


The mill recovery for copper and molybdenum in the Colihues deposit has been estimated at 37% and 21% respectively. Details on metallurgy are provided in Section 13.0.

Mineral resource estimate

The Colihues deposit, estimated after application of depletion, mining and mill recovery losses, has an inferred mineral resource estimate of 77 million tonnes at 0.229% Cu and 0.010% Mo with 145 million pounds of recoverable copper and 4 million pounds of recoverable molybdenum.


14.4 Fresh Tailings

Tonnes and Grade Estimate for Fresh Tailings

MVC has been processing El Teniente’s Fresh Tailings since 1992 and MVC has a contract with El Teniente to process Fresh Tailings until 2037. The annual tonnes and grade of the Fresh Tailings are specified in the contract with El Teniente (see Section 19.1). The total quantity of Fresh Tailings to be delivered to MVC from January 2017 to December 2037 is expected to be 959 million tonnes at 0.112% Cu and 0.006% Mo.


Historically there have been minor differences in the tonnages and grades of tailings delivered to MVC as planned by El Teniente and as measured by MVC. Over the period 2004 to 2012, the contained copper delivered to MVC was 457,170 tonnes versus El Teniente’s contract plan for 479,257 tonnes. There is a minor difference of +5% in planned cumulative contained copper delivered to MVC since 2004 compared to actual. El Teniente’s annual production plan is submitted to MVC every year and the actual plan varies slightly from the Contract plan. This low variation over a long period of time demonstrates that El Teniente have a proven, reliable and dependable production planning process and their future plans can be safely assumed to be accurate.

The CIM Definition Standards on Mineral Resources and Mineral Reserves state that a mineral resource is a concentration or occurrence of solid material of economic interest in or on the earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. El Teniente’s future inventory of underground mill feed is expected to exceed fifty years and MVC has been producing copper economically from El Teniente’s mill tailings for twenty-four years.


Due to volumetric transport constraints in the tailings channel launder to the Caren impoundment, MVC does not expect to be able to simultaneously process the Fresh Tailings and Cauquenes tailings at their maximum rates. Therefore, surplus Fresh Tailings are planned to be discarded and deposited into the voids created in the Colihues and Cauquenes impoundments.

A total of 75 million tonnes of Fresh Tailings at a grade of 0.118% Cu and 0.006% Mo is planned to be discarded and is not currently in MVC’s mine plans. This tonnage has been removed from El Teniente’s Fresh Tailings production schedule and a total of 796 million tonnes is planned to be delivered to MVC’s processing facility from 2017 to the end of 2037.


The mill recovery for copper and molybdenum in the Fresh Tailings has been estimated at 24% and 6% respectively. Details on metallurgy are provided in Section 13.0.

Mineral resource estimate

The Fresh tailings from January 2014 to December 2037, estimated after application of mill recovery losses, have an inferred mineral resource estimate of 796 million tonnes at 0.111% Cu and 0.005% Mo with 469 million pounds of recoverable copper and 6 million pounds of recoverable molybdenum.


15.0 MINERAL RESERVE ESTIMATES

There are no mineral reserves reported for MVC.


16.0 MINING METHODS

16.1 El Teniente Tailings

MVC currently receives approximately 130,000 tonnes per day of Fresh Tailings from El Teniente’s Colon concentrator. The Fresh Tailings are transported via gravity to MVC via a 36 km long concrete open channel launder.

MVC’s contract with El Teniente provides for the supply of Fresh Tailings up to the year 2037. Details are provided in Section 19.0. Every year, MVC receives an updated life of mine plan from DET and uses this plan to estimate the quantity and quality of Fresh Tailings available to be processed at MVC. Due to volumetric transport constraints in the tailings channel launder to the Caren impoundment, there is insufficient capacity to simultaneously process both Fresh Tailings and Cauquenes tailings at their maximum rates. Surplus Fresh Tailings material is planned to bypass MVC’s mill and be deposited into the voids created in the Colihues and Cauquenes impoundments. Details are presented in Section 16.3.

Figure 16-1 El Teniente Fresh Tailings Launder

A total of 796 million tonnes of Fresh Tailings at a grade of 0.111% Cu and 0.005% Mo is planned to be delivered to MVC’s processing facility. The annual schedule of expected tonnes and grades of Fresh Tailings processed by MVC from January 2017 to December 2037 is presented in Table 16-1 below.


Table 16-1 Fresh Tailings Processing Schedule

Year Tonnes Processed

Copper Grade


Copper Grade

t % Cu t % Cu

2017 44,927,690 0.113% 2028 36,877,955 0.102%2018 43,200,000 0.118% 2029 40,075,200 0.105%2019 43,200,000 0.112% 2030 43,200,000 0.109%2020 43,320,000 0.112% 2031 43,200,000 0.113%2021 43,200,000 0.113% 2032 43,320,000 0.116%2022 43,200,000 0.118% 2033 43,200,000 0.115%2023 43,200,000 0.116% 2034 43,200,000 0.113%2024 43,320,000 0.113% 2035 43,200,000 0.111%2025 39,310,920 0.111% 2036 43,320,000 0.109%2026 39,304,800 0.110% 2037 43,200,000 0.106%2027 35,418,240 0.107%

16.2 Colihues Tailings

Mining Method

Extraction of material from the Colihues deposit ceased in 2015 and is planned to recommence in 2031 when the Cauquenes deposit is depleted. Tailings in the Colihues deposit were extracted at a nominal rate of 35,000 tonnes per day via a hydraulic monitoring system using high pressure water guns operating at 30 bar. The flow of water at high pressure water is directed onto the surface of the tailings in a sweeping motion in such a way as to create a ditch on the surface. The monitors work horizontally and vertically, operated by remote control using a hydraulic system of electronic valves that allow them to rotate and advance. A single monitoring unit is capable of sustaining a production rate of 8,000 to 10,000 tonnes per day. Mining bench heights are 10m high and access ramps are created to relocate the hydraulic monitors. The depth of the Colihues tailings deposit is approximately 50 m requiring four mining benches. The slurry drains to the center of the sump by gravity and is channelled by the ditches made by the monitor. The slurry has a density of approximately 45% solids and is pumped to the processing plant. by means of vertical 150 kW sump pumps and 350 kW horizontal booster pumps, via 10” high density polyethylene (HDPE) pipelines. The operation of four hydraulic monitors and two sumps is necessary In order to sustain a production rate of 35,000 tonnes per day.


Figure 16-2 Colihues Hydraulic Monitor

A portion of the Colihues tailings deposit is submerged under water. To enable extraction to commence, zones have to be isolated with impermeable barriers and dewatered prior to extraction. A spillway facility has to be maintained to allow for excess rainfall to be released. Colihues is planned to be separated into four zones: I, II, III and IV (see figure 16-6). In 2016, Colihues zones I and III were depleted and zones IV and II are available for future extraction. Tailings will not be extracted at the margins of the deposit, at the interface of the tailings with the original ground surface level, safety barriers at the dam walls and the tailings left in-situ for internal water barriers. A total of 66 million tonnes at a grade of 0.295% Cu is not currently in MVC’s mine plans. This tonnage has been removed from the Colihues in-situ resource and a total of 77 million tonnes at a grade of 0.229% Cu and 0.010% Mo is planned to be delivered to MVC’s processing facility.

Geotechnical

SRK was requested to determine the geotechnical requirements for safe mining of tailings adjacent to the Colihues tailings wall. The information received from monitoring activities and field observations showed that slopes of greater than 30° and up to 70° were possible in wet material without reporting any flow or slumping after hydraulic mining. These conditions provide favorable characteristics of stability during the operation stage. SRK’s recommendations were not to exceed single slope angles greater than 45° where there is no undermining of tailings adjacent to the extraction point. SRK also recommended a minimum offset of 20m with respect to the wall and recommended a shallow wall slope with an overall angle of 24 °. Figure 16.3 presents a summary of the geotechnical recommendations.


Figure 16.3 Colihues Geotechnical recommendations

MINERA VALLE CENTRAL March 30, 2017 TECHNICAL REPORT of 121 Production Schedule

Extraction from Colihues was phased out in 2015 before Cauquenes ramped up to full production. Colihues extraction is expected to recommence in 2031 after Cauquenes is depleted. The annual schedule of expected tonnes and grades of future tailings extracted from the Colihues deposit from January 2017 to December 2037 is presented in Table 16-2 below.

Table 16-2 Colihues Production Schedule


Copper Grade

t % Cu

2017 - -

2031 14,040,000 0.230%2032 14,080,000 0.230%2033 14,040,000 0.230%2034 14,040,000 0.230%2035 7,020,000 0.230%2036 7,040,000 0.230%2037 7,020,000 0.230%

16.3 Cauquenes Tailings

The first phase of the Cauquenes expansion project was completed in 2015 enabling extraction of material from the Cauquenes deposit into the existing MVC process facility. The processing rate from 2017 onward is planned to be 62,500 tpd and extraction of the Cauquenes deposit is anticipated to be complete at the end of 2030. Tailings are extracted from the Cauquenes deposit via a hydraulic monitoring system similar to Colihues. The general method of operation is as follows:

• Construct a sump in the tailings deposit and install vertical slurry pumps • Commence extraction down to 10m using hydraulic monitors and allow slurry to drain to sump • Pump tailings to the plant at a density of 43% solids • Reposition the monitors sequentially away from the sump to advance the extraction

This procedure is repeated until the bottom of the tailings deposit is reached, approximately 50m deep. Safety zones are maintained near the walls to ensure the integrity of the walls. A schematic of the extraction method is presented below.


Figure 16-4 Hydraulic Extraction Schematic

Due to volumetric transport constraints in the tailings channel launder to the Carén impoundment, MVC is not expected to be able to simultaneously process the Fresh Tailings and Cauquenes tailings at their maximum rates. The sum of the feed streams will exceed the capacity of the Carén tailings channel, which is limited to 185,000 tonnes per day (equivalent to approximately 65 million tonnes per year). Therefore the surplus fresh tailings are planned to be discarded and deposited into the voids created in the Colihues and Cauquenes impoundments.

Figure 16.5 presents the annual schedule of tonnes per year for Fresh Tailings bypass discard.


Figure 16-5 Fresh Tailings Bypass Discard Schedule (tpa)

-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

Bypass

Colihues

Cauquenes

Fresh

Extraction of Cauquenes Zone A is anticipated to be complete in 2021 and then production is planned to commence in Zone B1. Production in Zone B2 is planned to commence in 2027 and end in 2030. Two linear zones of tailings are designed to remain in-situ in order to provide barrier walls between the A, B1 and B2 zones. This will enable Fresh Tailings discard material to be placed in Cauquenes whilst extraction is still in progress.

There is a necessity to leave tailings in-situ for the barrier walls, plus the wall areas safety zones, plus the material left behind at the interface of the original topography. For this reason, not all of the tailings are planned to be extracted and approximately 22 million tonnes of tailings are expected to remain in-situ. A total of 30 million tonnes at a grade of 0.27% Cu is not currently in MVC’s mine plans. This tonnage has been removed from the Cauquenes in-situ resource and a total of 305 million tonnes at a grade of 0.267% Cu and 0.021% Mo is planned to be delivered to MVC’s processing facility.

The summary sequence of events required to enable maximum extraction of Cauquenes is presented in Figures 16-6 to 16-11 below.


Figure 16-6 Cauquenes Construction 2014

I

IV

II

B1

A CauquenesConstruction

ColihuesExtraction

III

B2

MVCPlant

FreshTailings

Figure 16-7 Cauquenes Initial Production 2015

III

I

III

II

III

CauquenesExtraction

A

Fresh TailingsCyclone Diversion

FreshTailingsFines

IV

B1 B2

ColihuesExtraction

FreshTailingsCoarse

MVCPlant


Figure 16-8 Cauquenes Full Production 2016

III

I

III

II

III

A

IV

B1 B2

Fresh TailingsCyclone Diversion

MVCPlant

Figure 16-9 Cauquenes Zone B1 2022

II

A

IVIII

II

III

B1 B2

MVCPlant


Figure 16-10 Cauquenes extraction complete 2030

FreshTailingsFines

A

B1

B2

Figure 16-11 Cauquenes 2037

III

II

III

A

II

IVIV

B1 B2

MVCPlant

FreshTailings

MINERA VALLE CENTRAL March 30, 2017 TECHNICAL REPORT of 121 The annual schedule of expected tonnes and grades of future tailings extracted from the Cauquenes deposit is presented in Table 16-3 below.

Table 16-3 Cauquenes Production Schedule


Copper Grade

t % Cu

2017 21,937,500 0.246%2018 21,937,500 0.255%2019 21,937,500 0.270%2020 22,000,000 0.270%2021 21,937,500 0.270%2022 21,937,500 0.270%2023 21,937,500 0.270%2024 22,000,000 0.270%2025 21,937,500 0.270%2026 21,937,500 0.270%2027 21,937,500 0.270%2028 22,000,000 0.270%2029 21,937,500 0.270%2030 19,625,000 0.270%


17.0 RECOVERY METHODS

17.1 Current Process Description

The existing process plant at MVC recovers copper and molybdenum from Fresh Tailings and from tailings extracted from the Cauquenes deposit. The tailings slurry is processed in ball mills and flotation cells to produce a bulk copper concentrate. The copper concentrate is treated in the molybdenum separation facility to produce a molybdenum concentrate. The final copper and molybdenum concentrates are filtered, dried and bagged for shipment to smelters.

Processing of Fresh Tailings at a rate of 130,000 tonnes per day commences with a primary classification stage. Four cyclone clusters each containing five 500 mm diameter cyclones are used and the cyclone underflow reports to ball mills. The Fresh Tailings slurry has a particle size distribution of 80% passing 250-300 microns and approximately 25% of the Fresh Tailings cyclone feed material reports to the ball mills. The underflow from the primary classification stage reports to the primary mill feed box where flotation collector reagent is added and the pH is controlled at 9.5 via the addition of lime. There are four ball mills (14´ x 28´, 2,500 HP) using 1.5” steel grinding media. The discharge from each mill is pumped to four 500 mm diameter cyclones and the cyclone underflow is returned to grinding. The cyclone overflow from each mill (P80=120μ) reports to rougher flotation.

The primary cyclone overflow slurry contains lower grade fine material and oxide copper and this stream is processed in a scavenger cascade flotation circuit. This static, self-aerating, gravity assisted process consists of five lines of concrete cascade flotation cells each 1.80 m x 0.70 m providing 185 cascades in total. Low grade flotation concentrate from the cascade cells at approximately 0.4% Cu is recovered and pumped to the conventional flotation circuit. Feed to the cascade flotation circuit consists of Fresh Tailings primary cyclone overflow, Cauquenes tailings primary cyclone overflow and rougher tailings.

A separate grinding circuit is used to process the Cauquenes tailings, currently being processed at a rate of approximately 60,000 tonnes per day. The slurry with a particle size of 80% passing 210 microns is pumped to four cyclone clusters each containing five 500 mm diameter cyclones and the cyclone underflow reports to three ball mills. Approximately 65% of the Cauquenes tailings cyclone feed material reports to the ball mills for further attrition and particle size reduction. The primary cyclone overflow slurry reports to the secondary cyclones where the fine material is removed and sent to the cascade flotation circuit. The underflow from the secondary cyclones reports to a single ball mill for further attrition. The Cauquenes grinding circuit consists of four ball mills (two 16.5 x 18’, 3,250 HP, one 17’ x 28’ 3,500 HP and one 16.5’ x 22’ 3,500 HP) using 1.5” steel grinding media. In the grinding circuit, flotation collector reagent is added and the pH is controlled at 9.5 via the addition of lime. The discharge from each mill is pumped to four 400 mm diameter cyclones and the cyclone underflow is returned to grinding. The cyclone overflow from each ball mill (P80=100μ) reports to rougher flotation.

The product from the Fresh tailings grinding circuit is combined with the tailings from the first cleaner flotation and the concentrate from the cascade circuit and fed to rougher flotation. The Fresh tailings rougher flotation circuit consists of two rows of 4 x 127m3 conventional cells. The product from the Cauquenes tailings grinding circuit is fed to the Cauquenes rougher flotation circuit, consisting of two rows of 4 x 127m3 conventional cells. The combined rougher tailings are fed to the cascade scavenger flotation circuit. The combined rougher concentrate is fed to the regrind ball mill pump box where it is mixed with the second cleaner tailings and the mill circulating load. The concentrate is pumped to the closed regrind circuit consisting of a 12’ x 16’ mill with a 1,250 HP motor and a cyclone cluster with seven 400 mm polyurethane cyclones. The overflow (P80= 98μ) feeds the first cleaner circuit, composed of 26 x 41m3 conventional cells. The first cleaner concentrate reports to three stages of cleaner column cells to produce a final concentrate. A scavenger flotation circuit of 6 x 27m3 conventional cells processes the column tails and the scavenger tailings are fed back to the first cleaner circuit.

The final concentrates, containing 30% Cu and 1% Mo, are pumped to the molybdenum separation plant. The pulp pH is conditioned to an approximate value of 8.5 with sulphuric acid and a copper depressant


reagent (primarily a phosphorous compound). Molybdenum concentrate is extracted from the bulk concentrate via a countercurrent selective flotation process. The molybdenum concentrate is leached with sulphuric acid to lower the phosphorus content remaining from the use of the copper depressant, in order to obtain a product of commercial quality. The final molybdenum concentrate containing 40% Mo is filtered, dried and packaged for dispatch in bulk bags. The final copper concentrate containing 28 to 30% Cu is filtered to a moisture content of 9% and stored in a warehouse before being sent to the Las Ventanas smelter via truck.

Final tailings from the cascade flotation circuit are delivered to three 100m diameter thickeners. The tailings are thickened to a density of 53% solids and are returned to the El Teniente tailings channel for delivery to the Carén impoundment. MVC is authorized to discharge up to 185,000 tonnes per day of tailings to the Carén tailings channel.

Figure 17-1 Current Process Plant

Fresh Tailing

ColihuesTailings

Fresh Rougher Flotation

Cleaner Flotation

Tails 1° CleanersBall Mills (N° 1-2-3-4)

Selective Flotation

ProductionCopper concentrate

C11

CauquenesTailings

Ball Mills (N° 6-7-8)

Ball Mill-Atritor (N° 5) to Carén

Cascade Scavenger Flotation

Pre Concentrate

to Coarse Rougher Flotation

Water Reclaim

Water

TailsConcentrate

Regrind N°1

Cauquenes CoarseRougher Flotation

ProductionMoly concentrate


17.2 Cauquenes Plant Expansion

The existing plant at MVC requires additional equipment in order to improve copper recovery. The Cauquenes Phase Two Expansion Project is planned to augment MVC’s existing plant facilities to improve flotation recovery efficiency. Confirmatory metallurgical studies on Cauquenes in 2016 concluded that copper recovery can be increased from 34% to 49%. Equipment required includes rougher and cleaner flotation cells, desliming cyclones, a concentrate regrind mill and a concentrate thickener.

A separate grinding circuit is used to process the Cauquenes tailings at a rate of approximately 62,500 tonnes per day. The slurry with a particle size of 80% passing 210 microns is pumped to four cyclone clusters each containing five 500 mm diameter cyclones and the coarse cyclone underflow reports to three ball mills. Approximately 65% of the Cauquenes tailings cyclone feed material reports to the ball mills for further attrition and particle size reduction. The fine primary cyclone overflow slurry reports to the secondary cyclones where the ultra-fine material is removed and sent to the cascade flotation circuit. In order to improve classification efficiency, a new secondary cyclone circuit will be installed containing 22 x 400mm classification cyclones. The underflow from the secondary cyclones will report to a single ball mill (16.5 x 18’, 3,250 HP) for further attrition and then on to a new fine rougher flotation circuit.

The Cauquenes coarse grinding circuit consists of three ball mills (one 16.5 x 18’, 3,250 HP, one 17’ x 28’ 3,500 HP and one 16.5’ x 22’ 3,500 HP) using 1.5” steel grinding media. In the grinding circuit, flotation collector reagent is added and the pH is controlled at 9.5 via the addition of lime. The discharge from each mill is pumped to four 400 mm diameter cyclones and the cyclone underflow is returned to grinding. The cyclone overflow from each ball mill (P80=97μ) will report to the coarse fraction rougher flotation at a density of approximately 42% solids. The Cauquenes coarse fraction rougher flotation circuit will consist of the existing two rows of 4 x 127 m3 conventional flotation cells. Rougher concentrate will be reground to a P80 of 50μ in a new 2,300 HP regrind mill.

The fine material from the Cauquenes secondary cyclone overflow stream will be combined with the tailings from the first cleaner flotation and the concentrate from the cascade circuit and fed to a new fine fraction rougher flotation circuit. The new Cauquenes fine fraction rougher flotation circuit will consist of two rows of 6 x 127 m3 conventional flotation cells.

The Cauquenes coarse and fine rougher flotation concentrates will be combined and will report to a new cleaner flotation circuit. The first cleaning stage will consist of 16 x 41m3 conventional cells and the second cleaning stage will consist of 8 x 38m3 conventional cells. The third stage will consist of one column cell with an area of 10.5 m2 and the fourth stage will consist of a column cell with an area of 6 m2. The final scavenger flotation stage will be 5 x 28m3 conventional cells.

Processing of Fresh Tailings will be at a rate of 115,000 tonnes per day and will commence with a primary classification stage. Four cyclone clusters each containing five 500 mm diameter cyclones will be used and the cyclone underflow will report to four ball mills. The four ball mills (existing 14´ x 28´, 2,500 HP) will use 1.5” steel grinding media. The discharge from each mill will be pumped to four 500 mm diameter cyclones and the cyclone underflow returned to grinding. The cyclone overflow from each mill (P80=120μ) will report to Fresh Tailings rougher flotation.

The Fresh Tailings rougher flotation circuit will consist of two rows of 4 x 127m3 existing conventional cells. The concentrate will be pumped to the existing regrind circuit consisting of a 12’ x 16’ mill with a 1,250 HP motor and a cyclone cluster with seven 400 mm polyurethane cyclones. The existing cleaning circuit will be reconfigured and dedicated to Fresh Tailings.

The final concentrates from Fresh Tailings and Cauquenes will be combined and will report to the existing molybdenum plant for selective flotation to produce separate concentrates for copper and molybdenum. An additional concentrate thickener will be required.


The tailings from the Fresh and Cauquenes rougher flotation circuit will be combined with the Fresh fines cyclone overflow and will report to the existing cascade scavenger flotation circuit. The concentrate from the cascades will be pumped to the new fine rougher flotation circuit.

Final tailings from the cascade flotation circuit will be delivered to three existing 100m diameter thickeners. The tailings will be thickened to a density of 53% solids and will be returned to the El Teniente tailings channel for delivery to the Caren impoundment. Thickener overflow water will be recirculated back to the plant.

Figure 17-2 Cauquenes Expansion Process Plant

Fresh Tailing

ColihuesTailings

Fresh Rougher Flotation

FreshCleaner Flotation

Tails 1° CleanerBall Mills (N° 1-2-3-4)

Selective Flotation

ProductionCopper concentrate

C11

CauquenesTailings

Ball Mills (N° 6-7-8)

Cauquenes Fine Rougher Flotation

to Cascade Scavenger

Ball Mill-Atritor (N° 5)

CauquenesCleaner Flotation

Tails 1° Cleaner

Regrind N°2 (new)

to Carén

Cascade Scavenger Flotation

Pre Concentrate

to Fine Rougher Flotation

Water Reclaim

Water

TailsConcentrate

Regrind N°1

Cauquenes CoarseRougher Flotation

ProductionMoly concentrate


18.0 PROJECT INFRASTRUCTURE

18.1 Power Supply

MVC is connected to the Chilean National SIC electrical power supply grid. MVC has an existing 154 kV power line with a capacity of 60MVA. The existing MVC 154 kV substation consists of two transformers with a total capacity of 60MVA, equivalent to 54 MW. In 2016, the average power consumption at MVC was 35 MW. The power for MVC is currently supplied by Endesa at a fixed price. See Section 19.6 for details.

In 2006, MVC installed a 20MW power generation plant on site. The installation consists of two used 10MW MAN generators powered by heavy fuel oil. These generators are used when the marginal power price from the grid is higher than the cost of operating the generators. MVC has the ability to supply excess power into the grid and receive revenue for the power.

The Cauquenes expansion project is expected to increase the power consumption by 14 MW, bringing the total power demand to 44 MW. This is within the capacity of the existing 154kV supply, therefore a new power supply line will not be required. Local distribution of power within the MVC site will require new 23 kV power transmission lines and local substations.

18.2 Water Supply

Process water consists of the slurry water that transports the Fresh Tailings to the site, additional water that is decanted from the Colihues tailings impoundment and, if needed, water from irrigation channels. Water is recovered from the MVC tailings via three 100m diameter thickeners and returned to the process.

Drinking water is purchased and transported to site in bottles.

The site water balance indicates that in a normal rainfall year there is sufficient runoff captured in the Colihues impoundment to supply all of MVC’s process water needs. The water holding capacity of the impoundment is 40 million cubic metres since the Colihues Zones I and III were flooded in 2015. The Cauquenes/Colihues watershed consists of six sub-basins, which can generate a maximum flow of 15.76 m3/s, measured over a rainfall record return period of 10 years. Water from Cauquenes is drained into Colihues.

MVC also has water rights to extract up 200 l/s of surface water from the irrigation canal.

The Cauquenes extraction water supply is sourced from the Colihues impoundment. Barge pumps at an elevation of 650m deliver 3,060 m3/hr to two booster stations which deliver the water to the high pressure water pumps located at an elevation of 763m asl. The high pressure water pumps provide 450 psi water to the Cauquenes hydraulic monitors.

18.3 Security

The site is fenced and MVC employs contract security to restrict personnel access to site via manned security stations. The MVC gate access control stations monitor and limit vehicle access to preapproved personnel, contractors and visitors.


18.4 Assay Laboratory

The assay laboratory on site is currently operated by MVC and is ISO 9001 certified. The facility is run 24 hours per day, 7 days per week to provide chemical analyses primarily for total copper, sulphide copper, iron, molybdenum, silver, arsenic and free lime. Plant samples are composited every three hours and analyses are reported to provide metallurgical balances. Metal analysis is via acid digestion and AA in a Perkins Elmer 400 machine. Copper concentrate and molybdenum concentrate samples are taken from truck shipments for moisture analysis and multi element chemical analysis. Concentrate metal analysis is via ICP and gravimetric methods. Assay laboratory quality control management is via a LIMS sample ID system and use of standards, blanks and duplicate samples.

18.5 Offices

Management and senior operations staff are based in the offices at the MVC site and report to the General Manager. Telephone and data transmission at the site are provided by land lines. MVC has a labour union with a contract agreement in place until 2019. Personnel live in the local area and commute to the site each day by transportation provided by the company. Operations work an 8-hour shift and MVC has low personnel turnover.


19.0 MARKET STUDIES AND CONTRACTS

19.1 Tailings Supply Contracts

By agreement dated April 8, 2014 (the “Signing Date”) MVC entered into a contract (the “Cauquenes Agreement”) with DET:

• amending the Fresh Tailings contract originally entered into in 1991 (the “Fresh Tailings Agreement”);

• amending the contract for the processing of tailings from Colihues, the historic tailings impoundment located adjacent to MVC’s facilities, entered into in 2009 (the “Colihues Agreement”); and

• for the processing of tailings from Cauquenes, the historic tailings impoundment located adjacent to Colihues.

All three agreements provide for production royalties to DET as described below, and the Cauquenes Agreement has common provisions for all three contracts, including:

• early exit of the contracts at certain predetermined times that may be exercised by DET in the face of changes unforeseen as of the Signing Date;

• the review by the parties of the cost and royalty structure of each contract in the event the applicable metal price is outside of the royalty range for specific time periods, with the lower threshold of the copper royalty ranges set at $1.95 per pound and for the molybdenum royalty at $7.31 per pound, and varying upper royalty price thresholds;

• possible extension of all three agreements on the consent of both parties; and • a global royalty for molybdenum produced from all three sources.

The term of the Fresh Tailings Agreement was extended from December 31, 2021 to December 31, 2037, the royalty calculation was modified to remove certain exchange rate provisions(which increased the Fresh Tailings royalty paid by MVC and the lower royalty threshold was increased from $0.80 per pound to $1.95 per pound, the same minimum level as that for the Cauquenes royalty.

The term of the Colihues Agreement was extended from the earlier of December 31, 2019 or depletion of the Colihues deposit, to the earlier of December 31, 2037 or depletion of the Colihues deposit. MVC has the right to treat up to 45,000 tpd of ore from Colihues. The Colihues royalty provisions remain unchanged.

The term of the Cauquenes Agreement is to the earlier of December 31, 2033 or depletion of the Cauquenes deposit. MVC has the right to treat up to 85,000 tpd of ore from Cauquenes.

19.2 El Teniente Royalties

Until December 31, 2014, royalties were payable to DET in respect of copper concentrates produced by MVC. DET royalties were calculated using the average London Metal Exchange (“LME”) copper price for the month of production of the concentrates, and were recorded as components of production costs.

In 2015, MVC and DET entered into a second modification to the Master Agreement which changed the legal relationship between the parties for the period from January 1, 2015 to December 31, 2022. During this period, production of copper concentrates by MVC has and will be conducted under a tolling agreement with DET. Title to the copper concentrates produced by MVC is retained by DET and MVC earns tolling revenue, calculated as gross revenue for copper produced at applicable market prices, net of


notional items (treatment and refining charges, DET copper royalties and transportation costs). The notional DET copper royalties precisely mimic the former royalty arrangements between MVC and DET.

Notional royalties for copper concentrates produced from fresh tailings are determined through a sliding scale formula tied to copper prices ranging from $1.95/lb (13.5%) to $4.80/lb (28.4%).

Notional royalties for copper concentrates produced from Colihues historic tailings are determined through a sliding scale for copper prices ranging from $0.80/lb (3%) to $4.27lb (30%). The parties are required to review costs and potentially adjust notional royalty structures for copper production from Colihues tailings if the copper price remains below $1.95/lb or over $4.27/lb for three consecutive months.

Notional royalties for copper concentrates produced from Cauquenes historic tailings are determined through a sliding scale for copper prices ranging from $1.95/lb (16%) to $5.50/lb (39%).

MVC pays a sliding scale global molybdenum royalty for molybdenum prices between $7.31/lb (9%) and $40.0/lb (19.7%).

The Master Agreement contains provisions requiring the parties to meet and review cost and notional royalty/royalty structures in the event monthly average prices fall below certain ranges and projections indicate the permanence of such prices over time. The review of all notional royalty/royalty structures is to be carried out in a manner that gives priority to the viability of the Master Agreement and maintains the equilibrium of the benefits between the Parties.

The Master Agreement also sets out the following schedule in Table 19.1 containing a projection (as of January 2014) for the supply of El Teniente Fresh Tailings:


Table 19-1 Fresh Tailings Supply

Cu Grade CuS Grade Mo Grade Year Mt/a tpd % % % 2014 48,9 135.711 0,120 0,078 0,008 2015 49,6 137.804 0,120 0,078 0,007 2016 50,3 139.316 0,120 0,078 0,007 2017 51,1 141.902 0,115 0,073 0,007 2018 52,1 144.636 0,115 0,071 0,008 2019 52,4 145.417 0,115 0,076 0,009 2020 48,0 132.920 0,114 0,080 0,010 2021 47,9 133.176 0,115 0,080 0,009 2022 47,9 133.088 0,116 0,083 0,009 2023 47,9 133.036 0,116 0,085 0,009 2024 55,0 152.459 0,115 0,084 0,008 2025 63,6 176.793 0,113 0,081 0,008 2026 63,6 176.746 0,114 0,083 0,008 2027 63,6 176.698 0,114 0,083 0,009 2028 63,8 176.668 0,114 0,084 0,009 2029 63,6 176.720 0,116 0,082 0,009 2030 63,7 176.894 0,116 0,079 0,009 2031 63,7 177.004 0,115 0,077 0,010 2032 64,0 177.150 0,114 0,074 0,009 2033 63,8 177.193 0,113 0,073 0,009 2034 63,8 177.179 0,113 0,074 0,009 2035 63,8 177.167 0,113 0,074 0,009 2036 64,0 177.158 0,114 0,075 0,010 2037 63,8 177.199 0,114 0,074 0,009 2038 63,8 177.294 0,113 0,072 0,009

Tailings


19.3 Other Royalties

Pursuant to an agreement completed in March 2003 (the “Assignment Agreement”) and approved by the Company's shareholders in 2003 and amended in 2005, Steven G. Dean and Klaus M. Zeitler assigned to the Company an option to acquire MVC (the “Option”). The Assignment Agreement provided that, as consideration for the assignment of the Option to the Company, Messrs. Dean and Zeitler could choose to receive 7,500,000 common shares of the Company or a royalty (the "MVC Royalty") on MVC's copper equivalent production. Messrs. Dean and Zeitler chose to receive the MVC Royalty.

The MVC Royalty was set up as part of a tax-efficient structure whereby it is paid by way of a royalty dividend on Class A shares of Amerigo International Holdings Corp. ("AIHC"), a subsidiary of Amerigo. The Class A shares of AIHC are owned indirectly by Messrs. Zeitler and Dean and their associates. In accordance with the articles of AIHC, the holders of the Class A shares are not entitled to any dividend or to other participation in the profits of AIHC, except for a total royalty dividend, if declared by the directors of AIHC, in an amount equal to the amount of the MVC Royalty.

The MVC Royalty is calculated as follows:

• $0.01 for each pound of copper equivalent produced by MVC or any successor entity to MVC if the price of copper is under $0.80, or

• $0.015 for each pound of copper equivalent produced by MVC or any successor entity to MVC if the price of copper is $0.80 or more.


19.4 Copper Concentrate Smelting and Refining Contract

The copper concentrate produced by the MVC operation is currently processed under a tolling or “maquila” arrangement whereby all copper concentrates produced by MVC are delivered to DET during the period from January 1, 2015 to December 31, 2022. Concentrates are trucked by DET to the Las Ventanas smelter located north of Valparaiso approximately 240 km from MVC. The MVC copper concentrate is high quality with no penalty elements. A typical analysis is presented below.

Table 19-2 MVC Typical Copper Concentrate Analysis

Cu Ag S Fe As Sb Zn Hg Cd MgO F

30.26% 54g/t 25.49% 18.71% 0.12% 0.01% 0.07% <5ppm <0.002% 0.85% 124ppm

For 2016, MVC and DET agreed to a treatment charge of $123.60 per tonne of concentrate and a refining charge of $0.09735 per pound of contained copper. In 2016, MVC’s concentrate treatment charges, refinery charges, mineral content charges and moisture penalties less the credits from silver were 0.36/lb Cu.

Future concentrate treatment charges, refinery charges, mineral content charges and moisture penalties less the credits from silver are anticipated to be $0.39/lb Cu. Transport cost, based on current trucking prices, is anticipated to be $0.05/lb Cu.

19.5 Molybdenum Concentrate Smelting and Refining Contract

The molybdenum concentrate produced by the MVC operation is processed under smelting contracts with Molibdenos y Metales S.A. (“Molymet”). Molybdenum concentrates are trucked to the Molymet smelter at the site called Nos, 70 km north of MVC. The MVC molybdenum concentrate is high quality with no penalty elements. A typical analysis is presented below.

Table 19-3 MVC Typical Molybdenum Concentrate Analysis

Mo % Cu % Fe % Insol % Oils %

40% Con 40.65 3.60 2.47 15.14 3.85

48% Con 48.28 3.20 1.76 9.92 2.23 MVC and Molymet entered into a sales agreement dated January 1, 2005 pursuant to which MVC sells its molybdenum concentrate to Molymet. The term of this contract expires in 2019 and it is anticipated that MVC molybdenum concentrates will continue to be sold to Molymet.


19.6 Power Supply Contract

Power is MVC’s largest single operating cost and the shortage of power supply in Chile has been a strategic issue for the Chilean mining industry in recent years. In February 2016, MVC entered into a contract with Empresa Electrica Pehuenche S.A. (“Pehuenche”), a subsidiary of Endesa, S.A., one of the largest electric power companies in the world, for a fixed price power supply. The term of the contract extends to 2027 at a base rate of $91.1/MwH (at February 2016 indexed rates) for 100% of the power supplied to MVC. This contract provides for a fixed price for power purchased subject to price adjustments based on changes to a basket of factors including the Consumer Price Index (USA) published by the US Bureau of Labor, the GNL Henry Hub index, and changes to published coal prices. MVC’s average cost of power was $0.09/kWh in 2014, $0.10/kWh in 2015 and $0.10/kWh in 2016.

19.7 Minera Maricunga Tolling Contract

MVC entered into a tolling agreement dated October 1, 2013 with Compania Minera Maricunga for the processing of their by-product copper concentrates. The agreement has been extended through 2017, however production of the by-product is expected to end in 2017. During 2016, MVC processed and sold 3.0 million pounds of copper from Maricunga and MVC expects this contract to result in the addition of approximately 1.0 million pounds of copper to MVC’s 2017 production. The Company believes that for all MVC contracts currently in place, as described above, the terms, rates or charges are within industry norms.


20.0 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT

20.1 MVC Operations Environmental Management

MVC is certified under IS0 14001: “Environmental Management Systems, Specifications and Guidelines” and complies with required environmental management policies and procedures. The identification of environmental issues at MVC takes into account current or past processes, products and services under normal, abnormal and emergency conditions of operation.

Management of environmental issues at MVC is via a committee comprised of the Engineering Manager, the Operations Manager and environmental advisors who evaluate their frequency, magnitude, severity, risk and cost in relation to lessening their impact. The degree of significance of any issue is then determined by reference to legal requirements and assessment of potential environmental impact.

20.2 Cauquenes Environmental Impact Management

The Cauquenes Expansion Project Environmental Impact Assessment study was filed with the Chilean authorities on January 7, 2013, requesting an increase in historic tailings processing rate via an expansion to the MVC plant.

The Environmental Impact Assessment (EIA) for the Cauquenes expansion prepared by Ambientologia S.A. assessed the potential sources of environmental impact associated with the Project at various stages and then related them to the environmental components most likely to be affected.

The three main environmental impacts, as identified in the EIA, are the impact of dust on the endangered plant species Avellanita Bustillosii, the loss of 5.47 ha of native Andean forest and the loss and alteration of habitat for low mobility wildlife. The impacts associated with the project are presented in Table 20-1. Potentially significant negative impacts resulting from project activities are planned to be controlled through appropriate environmental procedures in order to reduce any harm. Tables 20-2 through to 20-8 present the specific details for environmental mitigation measures, compensation and monitoring plans for each phase of the Cauquenes project.


Table 20-1 Environmental impacts Evaluated in the EIA

Environmental Impact

Item Effect, Characteristic and/or Circumstance

Project Phase

Impact on flora Article 6 RSEIA, Literal m,

Section 9, Letter b

Possible disturbance to the endangered plant species Avellanita Bustillosii due to particulate matter emissions from vehicular traffic on the roads around Cauquenes.

Construction and Operation

Loss of native forest areas

Article 6 RSEIA, Literal k

Cut and logging of 5.47 ha (27% of the total project impact area) of native Andean sclerophytic forest, due to activities related to road building and construction works.

Construction

Impact on low mobility wildlife

Article 6 RSEIA, Literal l, m

Loss and alteration of habitat (27% of the total project impact area) of low mobility fauna, due to activities related to road building and construction works.

Construction


Table 20-2 Environmental Mitigation Measures – Construction Stage

Detail Objective / Phase of Application

Proposed Action

Component: Flora Aspect: Emission of Particulate Matter Impact: Impact on flora conservation status

Objective: To reduce emissions of particulate matter generated by vehicular traffic that will circulate along the roads around Cauquenes during the construction phase, to avoid damage or disturbance to the endangered species "Avellanita bustillosii". Phase of Application: The plan will be implemented on the roads surrounding Cauquenes throughout the construction phase of the project that is for two years.

i. The internal roads affecting traffic will be wetted daily under ambient conditions and according to the work progress, as stated in the Operational Control Procedure particulate emissions in internal roads P-MA-OP-007. ii. To stabilize and compact the tracks for vehicles, machinery and the working fronts, under the Road Maintenance Instructions and Access I-GMS-OP-031. iii. Speed will be controlled through proper signage for vehicles traveling through internal roads. iv. Installation of signage information about the presence of "avellanita bustillosii" so to warn workers not to do work in that sector. v. To fence off the areas where there are animals, so as to protect them. vi. Technical training will be provided to workers on biologically important plant species (in the project area and nearby) given conservation status, fragility and vulnerability of habitat.

Component: Fauna Aspect: intervention areas Impact: Impact on low mobility wildlife

Objective: Avoid affecting low mobility animal species, in any condition, due to the construction of project works and implementation of activities prior to earthworks, so as to allow the movement of individuals out of the project intervention area. Phase of Application: The plan will be implemented during the construction phase of the project, specifically for the stages consisting of vegetation clearance activities at the sites and areas of the construction works (process plant, electrical wiring, piping) in the areas surrounding Cauquenes.

i. Prohibition of hunting and extraction of wildlife species in the project area. ii. Prohibition of domestic animals entering the working areas and general working fronts. iii. Proper management of household waste to avoid attraction and feeding of wild and domestic animals. iv. Technical training will be provided for workers on biologically important wildlife species (in the project area and nearby) given conservation status, fragility and vulnerability of habitat. Also be trained on the prohibition of hunting activities, not to collect and / or move eggs and young present in the area (if found), not to scare birds, prohibition on the introduction of domestic animals and not to feed wildlife. v. No access permitted outside the sectors authorized for construction or on the project roads. vi. Low speed enforced on the project access roads and internal roads and travelling with extreme caution so as not to affect the wildlife that will inevitably be encountered. vii. To implement a rescue and relocation plan for the following lizard and snake species in areas surrounding Cauquenes: Liolaemus lemniscatus, Philodryas chamissonis, Liolaemus tenuis.


Table 20-3 Environmental Mitigation Measures – Operations Stage

Detail Objective / Phase of

Application Proposed Action


Objective: To reduce emissions of particulate matter generated by vehicular traffic that will circulate along the roads around Cauquenes during operations, to avoid damage or disturbance to the endangered species "Avellanita bustillosii". Phase of Application: The plan will be implemented on the roads surrounding Cauquenes throughout the operation of the project (twenty-three years).



Table 20-4 Environmental Mitigation Measures – Operations Stage

Detail Objective / Phase of Application

Proposed Action


Objective: To reduce emissions of particulate matter generated by vehicular traffic that will circulate along the roads around Cauquenes during closure, to avoid damage or disturbance to the endangered species "Avellanita bustillosii". Phase of Application: The plan will be implemented on the roads surrounding Cauquenes throughout the closure phase of the project.


Table 20-5 Environmental Compensation Measures – Construction Stage

Detail Objective / Phase of Application Proposed Action

Component: Native Vegetation Aspect: Cutting and pruning of native forest Impact: Depletion of natural resources

Objective: To generate a positive alternative and equivalent to the loss of native forest in the areas affected by the construction of the Project. The area affected is estimated at 5.47 hectares, including sclerophytic forest dominated by Quillaja saponaria, Pemus caven and Acacia boldus among others. Phase of Application: The plan will be implemented during the construction phase of the project.

The clearing of native forest area will be done through a forest management plan approved by the competent authority (National Forest Service). Such Plan will consider a total afforested area equal to the surface of native forest actually impacted. Reforestation will be made on the property called Fundo San Luis de Pelequén Lot E, belonging to S. Colhue A., comprising a total of 5.7 hectares to be reforested. An alternative location is CONAF land near the Cyprus Reserve. The details of the plan are presented in Annex 28 of the EIA.


Table 20-6 Air Quality Monitoring Plan

Control

Control of particulate material in tailings: To maintain the current condition of the tailings surface during construction and operation stages of the project, plans will be implemented to control particulate emissions, which will involve the application of water and / or suppressants. The effectiveness of these controls will be assessed by comparing air quality with annual concentrations of PM10 background levels presented in the EIA Annex 20: Baseline Air Quality. Two monitoring points will be installed to measure air quality and meteorology in the area surrounding Cauquenes. The monitoring results will be sent to the competent authority in March of each year.

Control of particulate material in internal roads: MVC will continue with the implementation of current operational procedures for control of particulate emissions in internal roads, presented in EIA Annex 13. These procedures and control measures will be annually reviewed for improvement

Justification

Currently, Cauquenes has no major particulate emissions due to the 2012 implementation of a suppressant product that stabilizes the surface of tailings. The operational phase of the project will involve hydraulic monitoring of the tailings. The tailings surface area and level will diminish with time. To maintain the current conditions, MVC will establish an ongoing annual implementation plan to stabilize the entire surface of the tailings and maintain current levels of PM10 in the area. MVC will also expand the areas for application of operational control procedures for particulate emissions in internal roads (Annex 13). This procedure establishes the responsibilities and actions necessary to mitigate emissions of particulate matter generated by vehicular traffic within the premises of Minera Valle Central.

Scope The scope includes the entire 750 ha surface of the Cauquenes tailings impoundment.

Execution Period The period of implementation of this measure includes all stages of the project.

Compliance The monitoring results will be sent monthly to the competent authority, beginning in the second year after the start of project construction.

Informing Authority SEREMI Health


Table 20-7 Vegetation Monitoring Plan

Forest Management Plan

Conservation of Avellanita Bustillosii

Control

Monitoring of the Forest Management Plan progress will commence from the start of the plantation, to meet the standards required by CONAF for delivery of this reforestation. Progress records of the entire plantation will be made every two months on the third month.

There will be a continuous monitoring plan for safeguarding and conservation of the endangered species Avellanita bustillosii throughout the project. Photographic and documentary records will be submitted once a month to monitor the condition of the species where it is found.

Justification

During the construction phase of the project, there will be earthmoving activities and civil works. To carry out these activities, it will be necessary to remove 5.47 ha of native forest. By law, MVC is required to present a Forest Management Plan (EIA Annex 28), to compensate for the cleared area by replanting vegetation elsewhere.

Experts have indicated that traffic on roads may affect nearby specimens of the endangered species Avellanita bustillosii. Particulate matter may be deposited on their foliage.

Scope This measure applies to all areas covered and detailed in the Forest Management Plan

This measure applies to the specific areas where the species is encountered.

Execution Period

This plan commences 3 months after having replanted the entire area affected.

From the start of the construction phase of the project.

Compliance The plantation growth records will be available for review by the competent authority.

The species status records will be available for review by the competent authority.

Informing Authority CONAF CONAF


20.3 Permitting Requirements

Chile's General Environmental Law 19.300 (Bases Generales del Medio Ambiente), enacted in March 1994 and modified in 2007 by Law 20.173, establishes the Environmental Impact Evaluation System (Sistema de Evaluación de Impacto Ambiental, SEIA) as an environmental management instrument, which applies to public and private sector projects and activities. Supreme Decree (Decreto Supremo, DS) 30/97, fully enforces this law and its regulations. The law assigns SEIA implementation and management to the National Environmental Commission (Comisión Nacional de Medio Ambiente, Conama) and the Regional Environmental Commissions (Comisión Regional de Medio Ambiente, Corema).

For an EIA, the legal deadline for processing in the SEIA and for the issue of the environmental qualifications, the Regional or National Environmental Commission has one hundred and twenty (120) working days to pronounce on the matter. This period of time may be extended only once, and in specific situations duly justified, for up to 60 days, thus totalling 180 working days. Once a project is approved under the SEIA, an RCA permit is granted (Resolución de Calificación Ambiental) and the proponent may apply to individual agencies to obtain the necessary sectorial permits (PS), which cannot be denied on environmental grounds.

MVC operates within the specifications and guidelines established by the Ministry of Mining, other local environmental authorities and relevant international conventions. From 2012 to date the following permits have been obtained:

SUMMARY OF RESOLUTIONS MVC - S.A

Ord. n° Permit Title Date Emanating Office

197 Environmental approval RCA for Increased treatment capacity at Colihues

29-12-2011 CONAMA

967 PTAS N° 4 project approval 24-02-2012 Health Authority (SEREMI Salud)

1523 PTAS N° 4 Exploitation approval 28-03-2012 Health Authority (SEREMI Salud)

3013

Limited telecommunication service permit for a period of 10 years

05-06-2012 Undersecretary of Telecommunications

2669 Mine Closure Plan 30-07-2012 SERNAGEOMIN

189

Authorization for compensatory forestry National Reserve of Río de los Cipreses (5.47ha), Profitability Increase Project

11-07-2013 CONAF

4792 PTAS N°5 project approval 03-10-2013 Health Authority (SEREMI Salud)

154 PTAS N° 5 Exploitation approval 07-01-2014 Health Authority (SEREMI Salud)




4772

Calibration certificate to the 4 nuclear densimeters

15-01-2014 Chilean Nuclear Energy Commission

869

Minera Valle Central’s dismantling and stabilization report (Recovery project of oxidized copper from tailings at Colihues Reservoir)

17-03-2014 SERNAGEOMIN

132

Resolution of Environmental Qualification Project "Profitability Increase”

10-07-2014 Environmental Assessment Service (SEA)

4623 Approval of the drinking water and sewerage private project, CAS area

27-08-2014 Health Authority (SEREMI Salud)

4624 Approval of the drinking water and sewerage private project, Generation


4686 Approval of the drinking water and sewerage private project, Maintenance Area 11-09-2014 Health Authority (SEREMI

Salud))

1686 Sectoral Environmental Permit No. 99 15-09-2014 SAG

1278

Authorization to use fiscal belt Route H-35 to carry out the Gate Nº 2 Access Project at MVC

09-10-2014 Highway System Department (Dirección Regional Vialidad)

434 Sectoral Environmental Permit No. 106 10-10-2014 DGA

06/CA-08

Cutting and reforestation of native forest management plan to execute civil works, ART.21º Law 20,283 (5,47ha). "Profitability Increase Project"

17-10-2014 CONAF

34751 Authorization for importation of 4 nuclear densimeters from the USA

07-11-2014 Health Authority (SEREMI de Salud Región Metropolitana)

2461 Sectoral Environmental Permit No. 85 19-11-2014

Provincial Government

446 Approval of Emissions Compensation Program

01-12-2014 Environmental Authority (SEREMI de Medio Ambiente)

2792

Approval of the “Profitability Increase” project to be applied to the MVC central valley plant (Approval of Technical Memory)





10 Request for clarification, rectification and/or extension of the MVC Closure Plan


363

Transport authorization of 4 nuclear densimeters

12-01-2015 Health Authority (SEREMI de Salud Región Metropolitana)

77 Sectoral Environmental Permit Nº 99 20-01-2015 SAG

212

Authorization to use fiscal belt Route H-35 to carry out the Access Improvement Project to Población Yungay

20-01-2015 Highway System Department (DRV Dirección Regional Vialidad)

610 Modification of Mining Project 10-03-2015 SERNAGEOMIN

53

Suitability "Extension of Polygons Subject to Release of Areas Approved by RCA No. 132/2014"

13-03-2015 Environmental Assessment Service (SEA)

68 Suitability "Extension of Forest Management Plan approved by RCA No. 132/2014" 07-04-2015 Environmental Assessment

Service (SEA)

958 Observations on the sewage and drinking water project (on site installation Cauquenes)


06/CA-27 Cutting and reforestation management plan (1,02 ha). "Profitability Increase Project"

02-09-2015 CONAF

644 Extraction and deposit plan Cauquenes and Colihues Reservoir


1 Change of reforestation site RCA No. 132/2014

05-01-2016 CONAF

2280 Approval of Mining Closure Plan 26-10-2016 SERNAGEOMIN


20.4 Community Requirements

The potential stakeholders in the MVC operation are the local authorities, civil society organizations and the general community. MVC has established relationships with all the stakeholders and keeps them informed and addresses their concerns.

The nearest neighbour to MVC is a farm on Route H-35, located less than 1km away. The nearest towns are Gultro and Siete Puentes, which are 7 km and 6 km away respectively. The most densely populated center is Rancagua approximately 13 km from MVC. Project implementation will not affect local access to housing, transportation, energy, health, education or sanitation.

The project area has no ethnic peoples, communities or groups protected by special laws and no resettlement of homes or communities will be necessary.

20.5 Mine Closure Requirements and Costs

As a result of entering into the Cauquenes Agreement in 2014, the Company reassessed its asset retirement obligations. The Cauquenes Agreement provides that MVC will transfer its property, plant and equipment to DET on December 31, 2037. Notwithstanding the above, MVC, as a company operating in the mining sector in Chile, is required to submit a closure plan in accordance with Chilean Law 20.551. MVC’s closure plan received approval from Sernageomin in October 2016.

The plan establishes that mine closure will require dismantling and removal of all the main equipment and steel structures. The cascade plant will be demolished and subsequently reforested. The remaining concrete and civil works in the grinding and flotation plant, the thickeners and the molybdenum plant will be safely contained and secured. Roads will be profiled, ditches and excavations deeper than 1 metre will be filled, slopes will be stabilized and demarcated, contaminated soils will be removed and proper site drainage will be implemented.

Monitoring of air, water, soil, flora and fauna, and infrastructure will continue after closure.

At December 31, 2016, the estimate of site restoration costs at MVC in 2038 (under Chilean Law 20.551) are approximately $12.1 million. In compliance with the applicable legislation, MVC has posted a financial guarantee in accordance with the approved plan cost schedule.


21.0 CAPITAL AND OPERATING COSTS

21.1 Capital costs

The Cauquenes Phase Two Expansion Project is planned to augment MVC’s existing plant facilities to improve flotation recovery efficiency. Confirmatory metallurgical studies on Cauquenes in 2016 concluded that copper recovery can be increased from 34% to 49%. Equipment required includes rougher and cleaner flotation cells, desliming cyclones, a concentrate regrind mill and a concentrate thickener. The project will take 18 months to build. The initial capital cost for the Cauquenes Phase Two Expansion Project has been estimated at $30.5 million using fourth-quarter 2016 US dollars and a currency exchange rate of Chilean Peso $685 = US$1. The total life of mine sustaining capital cost to 2037 is an additional $108 million. The accuracy of the capital cost estimate for the project, taking into account the current state of design and procurement, is within ±15% of final project costs at the summary level. Capital estimating used detail quantity take-offs and budgetary quotations for equipment and services based on the feasibility-level design. Price proposals selected for the capital cost estimate were principally from Chilean-based suppliers. Where design was not sufficient in detail to prepare material take-offs (MTOs) and obtain pricing for equipment and services, the estimate was completed using factors or allowances. Approximately 40% of the initial capital cost is expected to be incurred in Chilean pesos. The capital cost estimate includes a management reserve contingency amount of $1.7 million. The total initial capital cost for the project is summarized in Table 21-1. The annual expenditure schedule for initial and sustaining capital cost is shown in Table 21-2.

Table 21-1 Cauquenes Expansion Project Capital Costs

Cost Category Capital Cost US$

Direct costs by categoryConcrete 2,889,224 Structural 2,677,109 Earthworks 890,509 Piping 2,286,627 Electrical Equipment 5,035,322 Mechanical Equipment 12,372,489 Instrumentation and Control 802,375

Sub Total Direct Costs 26,953,654 Indirect Costs

Misc indirects 545,994 Owners Team Engineering and CM 1,078,146 Environmental 280,000

Sub Total Indirect Costs 1,904,140 Subtotal excluding allowances 28,857,794

Management Reserve 1,676,638 Total Cost 30,534,432


Table 21-2 MVC Initial and Sustaining Capital Cost Schedule Year Project

CapitalSustaining

CapitalTotal

CapitalYear Project

CapitalSustaining

CapitalTotal

CapitalUS$ US$ US$ US$ US$ US$

2017 12,250,000 4,200,000 16,450,000 2027 - 5,000,000 5,000,000 2018 18,284,432 5,000,000 23,284,432 2028 - 5,000,000 5,000,000 2019 - 12,500,000 12,500,000 2029 - 5,000,000 5,000,000 2020 - 5,000,000 5,000,000 2030 - 5,000,000 5,000,000 2021 - 5,000,000 5,000,000 2031 - 5,000,000 5,000,000 2022 - 5,000,000 5,000,000 2032 - 5,000,000 5,000,000 2023 - 5,000,000 5,000,000 2033 - 5,000,000 5,000,000 2024 - 5,000,000 5,000,000 2034 - 5,000,000 5,000,000 2025 - 5,000,000 5,000,000 2035 - 5,000,000 5,000,000 2026 - 5,000,000 5,000,000 2036 - 3,000,000 3,000,000

2037 - 3,000,000 3,000,000

Total 30,534,432 107,700,000 138,234,432


21.2 Operating Costs

MVC’s future operating costs have been estimated based on twenty-four years of experience with processing El Teniente’s tailings. Power, labour, consumables, maintenance, administration and transport requirements and unit costs are based on MVC’s budgets. The major cost items are power and grinding media. Power cost is based on current pricing of $0.10/kWh increasing to $0.11/kWh by 2018 and remaining constant thereafter. Smelting and refining rates are based on current contract terms with DET and by-products credits from molybdenum assume a constant molybdenum price of $7.77/lb Mo. Royalties will be paid to El Teniente based on metal production and metal price. Royalty details are provided in Section 19.2. The operating costs presented below do not include inflation or escalation.

Table 21-3 Average Annual Operating Costs

CASH COST (US$) 2017-2018 2019 -2028 2029 -2037Power 34,306,892 40,856,682 29,737,566 Grinding media 7,607,397 10,851,244 10,286,777 Labour 6,500,391 9,157,708 9,174,801 Other Direct Costs 36,891,085 43,190,901 30,370,043 By-product credits 10,436,750- 15,356,992- 7,569,998- Smelting and refining 23,635,558 34,364,026 21,337,886 Administration 4,614,520 5,939,399 5,975,618 Transportation 2,448,913 4,138,906 2,579,296 Subtotal 105,568,006 133,141,874 101,891,988 Royalty * 32,011,196 77,577,257 43,261,753 Total 137,579,202 210,719,130 145,153,741

CASH COST (US$/lb Cu) 2017-2018 2019 -2028 2029 -2037Power 0.53 0.46 0.54Grinding media 0.12 0.12 0.19Labour 0.10 0.10 0.17Other Direct Costs 0.56 0.49 0.55By-product credits -0.16 -0.17 -0.14 Smelting and refining 0.36 0.39 0.39Administration 0.07 0.07 0.11Transportation 0.04 0.05 0.05Subtotal 1.62 1.51 1.86Royalty * 0.49 0.88 0.79Total 2.11 2.39 2.65

* Royalties are estimated at the following Cu prices (US$/lb): 2017-2018 $2.48, 2019-2027 $3.43, 2028-2037 $3.30


21.3 Project Schedule

The estimated major milestone dates for the Cauquenes Phase Two Expansion Project schedule are:

• April 2017: Signed debt financing agreement which will allow MVC to commence procurement of long delivery items.

• July 2017: Commence civil construction work for the new process plant equipment.

• July 2018: Complete installation of mechanical, electrical and instrumentation equipment.

• August 2018: Commence commissioning of the new plant, which will allow MVC to operate at full expansion capacity in Q4-2018.

A summary project construction schedule is presented below.

Figure 21-6 Expansion Project Schedule

Cauquenes Phase II Project Schedule2017 2018

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Financing Agreement

Detailed Engineering

Purchase major equipment

Receive major equipment

Tender and Award New Plant Construction Contract

Modify Existing Plant

New Plant Civils construction

New Plant Mechanical, Piping, E&I

Start-up of New Plant

Operation at Full Capacity


22.0 ECONOMIC ANALYSIS

22.1 Summary

The results of the preliminary economic assessment represent forward-looking information that are subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those presented here. The preliminary economic assessment is preliminary in nature and it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the preliminary economic assessment will be realized. Please refer to section 2.5.

MVC’s contract with El Teniente has extended the mine life to 2037 and construction of the $30 million Phase Two Cauquenes Expansion project is expected to be completed in Q4-2018. Equipment required includes rougher and cleaner flotation cells, desliming cyclones, a concentrate regrind mill and a concentrate thickener. MVC’s December 2016 development plan presents an economic assessment of producing 1,461 million pounds of copper and 38 million pounds of molybdenum contained in sulphide concentrates with metal production based on the inferred mineral resource estimates for Fresh, Cauquenes and Colihues tailings.

Annual production over the initial ten-year period (2019-2028) is estimated to be 85 to 90 million pounds of copper per year at a cash cost of production of approximately $1.51/lb Cu, excluding royalties. El Teniente royalties are estimated to be $0.88/lb Cu at the base case metal prices used in the economic analysis. MVC’s total sustaining capital cost to 2037 is estimated to be $138 million.

Discounted cash flow techniques using a rate of 7% were used in the economic evaluation. For NPV or discounted cash flow purposes, the model is based from January 1, 2017. The following key economic assumptions were made:

• Results from various copper prices are presented below. The Base Case copper price scenario is based on Wood Mackenzie’s Q4-2016 forecast. Molybdenum price used was $7.77/lb;

• The currency exchange rate of the Chilean Peso is expected to vary with copper price. An exchange rate range of $685 = US$1 was used for 2017 and $490 = US1 was used for 2023;

• The effective tax rate used in the analysis included Chilean corporate tax on earnings at 27%. Depreciation was calculated using Chilean Internal Revenue Service-approved depreciation rates and defined depreciation classes. These results are used as a basis for the project tax calculation;

• Royalties to El Teniente are included. The royalty prices are dependent on copper price and the source of tailings processed (as presented in Section 19.0);

• Debt financing was not included in the financial analysis;

• Escalation/inflation has not been included in the financial analysis.

Using these parameters, the financial analysis summary in Table 22-1 indicates that MVC has a positive net cash flow and an acceptable internal rate of return and supports progression to construction and development of the Cauquenes deposit.

Table 22-1 Summary MVC Economic Analysis

Copper Price (US$/lb) Base Case 2.50 3.00 3.50 4.00

NPV7% after tax (US$ millions) $480 $217 $389 $543 $679


22.2 Taxes

Mining activity in Chile is subjected to a standard tax regime applicable to all midsize and large businesses and to a specific taxation on profits from mine operations.

a) Corporate Income Tax.

Corporate Income Tax applies to all business undertaking commercial activities. On September 2014, Chile enacted a tax reform (Law No. 20.780), which is becoming effective in stages starting in October 2014 until it is fully in force by 2018. On February 2016, Chile published a revised tax bill (Law No. 20.899) containing various simplification procedures and clarifications to Law No. 20.780.

According to the revised bill, Chile changed to a dual tax system on January 1, 2017:

• Attributed Income System: Shareholders are taxed on an accrual basis, with a first category income tax rate of 25% imposed at the level of the operating entity, plus a global complementary tax at progressive rates for resident individuals or an additional withholding income tax of 35% for nonresident shareholders (the first category income tax being 100% creditable), resulting in an overall income tax charge of 35% for nonresidents. Under this system, profits are attributed to the owners or shareholders, irrespective of whether a distribution actually is made. In general terms, small or closely-held corporations in Chile operate under the attributed income tax system.

• Semi-Integrated System: Shareholders are taxed on a cash basis (when profits are distributed) at a first category income tax rate of 25.5% for 2017 and 27% from 2018. This corporate tax is creditable against the 35% additional withholding income tax, and shareholders that are domiciled in countries which have a Tax Treaty in force with Chile (as is the case with Canada) may use 100% of the first category tax as a credit. Most mid-size and large corporations in Chile operate under the semi-integrated tax system.

The tax base in Chile allows for deduction of accelerated depreciation and cumulative losses as well as interest payments from a corporation’s total tax bill. The accelerated depreciation deduction allows corporations to claim large depreciation deductions in the early years of the expected life of the equipment. Allowing deductions for interest payments gives firms the incentive to finance projects with debt rather than equity. These regulations are particularly significant for the capital-intensive mining industry.

b) Mining Tax

The mining tax, locally referred as the “mining royalty” tax, was enacted in 2006 and modified in 2010. It applies to commercialization of metallic and non-metallic resources, and it is a progressive tax instrument paid on operating income. The tax is between 0 and 14% depending on the firm’s profit. Small mining firms do not pay this tax. The size of firms is defined as follows: Small mining firms have sales equivalent to 12,000 tons of refined metal per year or less, Medium sized firms have sales equivalent to between 12 000 and 50,000 tons per year and Large firms have sales equivalent to 50,000 tons of refined copper per year. The minimum threshold for imposition of the mining tax is a yearly output of 12,000 tons. It is progressive, ranging from 0.5 to 4.5%, up to an output level of 50,000 tons. For firms producing 50,000 tons of refined metal equivalent or more, i.e. large firms, the tax rate is 5% if their operating margin is less than or equal to 35% according to the mining tax law passed in 2010. The tax is applied in a progressive fashion with a maximum tax rate of 14% for firms where the operating margins are higher than 85%.

Under the tolling contract with Codelco’s Division El Teniente, MVC is not subject to Chile’s mining royalty tax.


22.3 Royalties

Royalties are based on the quantity of copper and molybdenum produced from MVC and the LME copper and molybdenum prices. Details of the royalties are presented in Section 19.0 of this report. Average El Teniente royalties at the base case prices used in the economic analysis are estimated to be $0.48/lb (2017-2018), $0.88/lb (2019-2028) and $0.79/lb (2029-2037).

Over the life of the contract, assuming the base case long term copper price of $3.30/lb, total EBITDA for MVC is estimated to be $2.5 billion, of which $1.2 billion is the estimated El Teniente royalty.

22.4 Annual Production Schedule

The MVC December 2016 development plan presents an expansion of the existing facilities from 60 to 90 million pounds of copper per year. The contract with El Teniente extends MVC’s mine life to 2037. Construction of the second phase of the Cauquenes expansion project is anticipated to commence in Q2-2017 and the plant expansion is expected to be complete in Q4-2018. Processing of the Colihues deposit is planned to be restarted in 2031 when the Cauquenes deposit is depleted. The Caren tailings channel is limited to 185,000 tonnes per day, therefore excess fine Fresh Tailings tonnage is planned to be diverted into the Colihues and Cauquenes voids.

The schedule of expected inferred mineral resources tonnes, grades, plant recovery and metal production for the future tailings processed at MVC from January 2017 to December 2037 is presented below in Table 22-2.


Table 22-2 MVC Plant Production Schedule


Copper Grade

Copper Recovery

Copper Produced

Molybdenum Produced

t % Cu % lbs lbs

2017 66,865,190 0.157% 27% 63,232,760 1,524,361 2018 65,137,500 0.164% 29% 67,447,279 1,845,926 2019 65,137,500 0.165% 38% 89,501,650 2,449,519 2020 65,320,000 0.165% 38% 89,848,147 2,459,002 2021 65,137,500 0.166% 38% 89,777,151 2,457,059 2022 65,137,500 0.169% 37% 90,975,902 2,489,867 2023 65,137,500 0.168% 38% 90,571,869 2,478,809 2024 65,320,000 0.166% 38% 90,052,771 2,464,602 2025 61,248,420 0.168% 38% 87,070,268 2,382,976 2026 61,242,300 0.167% 38% 86,872,542 2,377,564 2027 57,355,740 0.169% 39% 83,962,804 2,297,929 2028 58,877,955 0.165% 39% 84,012,019 2,299,276 2029 62,012,700 0.163% 39% 86,227,725 2,359,917 2030 62,825,000 0.159% 37% 82,132,462 2,247,836 2031 57,240,000 0.142% 29% 52,201,569 978,779 2032 57,400,000 0.144% 29% 53,083,862 995,322 2033 57,240,000 0.144% 29% 52,725,307 988,600 2034 57,240,000 0.142% 29% 52,148,088 977,777 2035 50,220,000 0.128% 27% 38,633,823 724,384 2036 50,360,000 0.126% 27% 38,281,047 717,770 2037 50,220,000 0.124% 27% 37,477,851 702,710


22.5 Annual Cash Flow Forecast

MVC’s annual cash flow forecast estimate is presented below in Table 22-3. Metal production is based on the inferred mineral resource estimates for Fresh, Cauquenes and Colihues tailings. The annual cash flow forecast is preliminary in nature and it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the preliminary economic assessment will be realized.

Table 22-3 MVC Annual Cash Flow Forecast Year Copper

Price ($/lb)

Copper Production

(Mlbs)

Revenue Cash Costs (direct + smelter-

moly credit)

Total EBITDA

DET Royalty

MVC EBITDA

Capex Tax Unlevered Free Cash

Flow

2017 $2.40 63 $152 $102 $50 $29 $21 $22 -$4 $22018 $2.55 67 $172 $109 $63 $35 $28 $17 -$1 $122019 $2.75 90 $246 $126 $120 $53 $67 $13 $1 $532020 $2.95 90 $265 $126 $139 $60 $79 $5 $13 $612021 $3.55 90 $319 $136 $183 $84 $100 $5 $18 $762022 $3.75 91 $341 $139 $202 $93 $109 $5 $24 $802023 $3.95 91 $358 $139 $219 $102 $117 $5 $27 $852024 $3.75 90 $338 $137 $200 $93 $108 $5 $29 $742025 $3.55 87 $309 $136 $173 $81 $92 $5 $27 $602026 $3.30 87 $287 $131 $156 $71 $84 $5 $23 $562027 $3.30 84 $277 $129 $148 $69 $79 $5 $22 $522028 $3.30 84 $277 $132 $146 $69 $76 $5 $20 $512029 $3.30 86 $285 $131 $154 $71 $83 $5 $20 $582030 $3.30 82 $271 $129 $142 $67 $75 $5 $22 $482031 $3.30 52 $172 $103 $70 $41 $29 $5 $19 $52032 $3.30 53 $175 $101 $74 $41 $33 $5 $8 $202033 $3.30 53 $174 $101 $73 $41 $32 $5 $8 $192034 $3.30 52 $172 $103 $70 $41 $29 $5 $8 $162035 $3.30 39 $127 $82 $45 $30 $15 $5 $7 $32036 $3.30 38 $126 $82 $45 $30 $15 $3 $4 $82037 $3.30 37 $124 $86 $38 $29 $9 $3 $4 $2

Total 1,506 4,967 2,460 2,507 1,229 1,278 138 297 843


22.6 Sensitivity Analysis

Sensitivity analyses were performed on unlevered net cash flow after tax, copper price, operating costs, capital costs, Cauquenes copper recovery and Cauquenes copper grade. The Project is most sensitive to changes in metal price followed in turn by operating costs and copper recovery. Amerigo notes that a modest increase in metal prices has a significant impact on the Project’s projected financial results. The long-term view of metal prices will drive the Project’s projected financial results and thus the overall view of the Project’s value.

Figure 22-1 MVC Sensitivity to Copper Price

Table 22-4 Economic Sensitivity Analysis


23.0 ADJACENT PROPERTIES

Other than as described in this report, there are no material adjacent mineral properties to MVC.


24.0 OTHER RELEVANT DATA AND INFORMATION

24.1 Risk and Opportunity Analysis

MVC has developed a project development risk database to facilitate easier risk/opportunity tracking, action planning, follow-up, and faster reporting and analysis. Each significant risk has mitigation action plans and the management of risks and opportunities is an ongoing process of review and development through the various stages of the Project.

24.2 Risks

Potential risk areas that will require ongoing management include:

• Low copper price: MVC will not be able to generate positive operating cash flow at copper prices lower than $1.50/lb.

• Delayed completion: The Project construction may be delayed due to a number of factors, including longer than anticipated financing delays, bad weather, contractor skill and availability.

• High capital cost: Project execution may be affected by factors such as price increases of equipment, labour and materials due to increases in market activity; low availability of engineering and construction resources in Chile.

• Low copper recovery: Metallurgical testwork on Cauquenes is limited to laboratory tests and actual plant copper recovery may be higher or lower than estimated.

• Insufficient water: Hydraulic monitoring of the Cauquenes tailings will require surface runoff water stored in the Colihues impoundment. Periods of excessively low rainfall may result in limited extraction rates.

• Financing: Construction of the Project is contingent on financing being in place.

• El Teniente disruption: Supply of Fresh Tailings to MVC is contingent on the El Teniente mine operating at the anticipated capacity. An unanticipated disruption at El Teniente will decrease throughput.

24.3 Opportunities

There are a number of opportunities to improve Project economics. These opportunities were not reflected in the Cauquenes expansion study because they have not been developed to the appropriate level of engineering detail.

• Higher grades: Cauquenes grades could be higher than estimated because the Cauquenes resource grade estimate of 0.267% Cu is lower than the historical recorded grade of 0.31% Cu. MVC’s experience with the Colihues deposit has shown that actual grades have been 8% higher than historical recorded grades. Cauquenes grade could be as high as 0.32% Cu.

• Higher copper recovery: Metallurgical testwork on Cauquenes is limited to laboratory tests and actual plant copper recovery may be higher or lower than estimated.


25.0 INTERPRETATION AND CONCLUSIONS

In the Opinion of the QP:

• MVC has valid contracts with El Teniente to process Fresh Tailings, the Colihues deposit and the Cauquenes deposit and all royalty obligations to El Teniente have been sufficiently identified. The contracts extend MVC’s mine life to 2037.

• MVC is not aware of any significant environmental, social or permitting issues that would prevent exploitation of the Cauquenes deposit. MVC has been in operation since 1993 and operates within the specifications and guidelines established by the Ministry of Mining, other local environmental authorities and relevant international conventions.

• Total water supplies are expected to be sufficient for current and planned development needs.

• The Project has obtained sectorial permits from the various agencies that have authority over environmental resources, construction, operation and closure of Project. The Cauquenes Project Environmental Impact Assessment study was filed with the Chilean authorities on January 7, 2013, requesting an increase in historic tailings processing rate via an expansion to the MVC plant.

• Exploration work conducted on the Project is appropriate to the style of mineralization. Results support the interpretations of tonnes and grade from historical records. A limited amount of drilling has been conducted on the Cauquenes and Colihues deposits and independent mineral resource estimates have been completed.

• Sampling methods are acceptable, meet industry-standard practice, and are adequate for mineral resource estimation and mine planning purposes.

• The quality of the copper and molybdenum analytical data is reliable and sample preparation and analysis were generally performed in accordance with exploration best practices and industry standards.

• Data verification programs undertaken on the data collected from the Project adequately support the geological interpretations and the database quality, and therefore support the use of the data in mineral resource estimation.

• The geological understanding of the deposits is sufficient to support estimation of inferred mineral resources. Codelco’s historical records of El Teniente’s mill tailings represent a detailed account of the tonnage and grade of material deposited in the Cauquenes and Colihues deposits. These records have been verified by independent checks on tonnage and grade of the historical tailings deposits.

• Mineral resources have been estimated to industry best practices, and conform to the requirements of CIM (2005).

• The metallurgical testwork completed on the Project has been appropriate to establish the optimal processing routes. Metallurgical tests on Fresh, Colihues and Cauquenes tailings were performed on samples that were representative of the mineralization. Metal recovery factors have been estimated for copper and molybdenum that appear appropriate to the mineralization styles and the planned extraction facilities.


• The major components of the flowsheet and process plant design of the MVC plant expansion are based on current technologies supported by operating data and laboratory testwork. New equipment is expected to include rougher flotation cells, cleaner flotation cells, concentrate regrind mill and reagent handling facilities.

• Tailings grinding requirements, reagent consumptions and process conditions have been appropriately determined to establish process operating costs.

• Capital costs have been estimated to an adequate level of precision and include appropriate allowances and contingencies.

• Operating costs have been estimated to an adequate level of precision (based on benchmarking current unit operating costs) and are considered to be representative of the proposed development plan.

• The preliminary economic assessment indicates that the Project has a positive net cash flow and supports progression to construction and development.

• Risks and uncertainties to the project's potential economic viability are in order of priority; metal price, operating cost, metal recovery and metal grade.

In the opinion of the QP, the Project that is outlined in this Technical Report has met its objectives. Mineral resources have been estimated for the Project, and a feasible development plan has been presented. The data supporting the inferred mineral resource estimates were appropriately collected, evaluated and estimated, and the Project objective of identifying tailings mineralization that could potentially support future processing operations has been achieved.


26.0 RECOMMENDATIONS

MVC has a twenty-four year operating history of processing El Teniente’s tailings and the contract with El Teniente is expected to provide a stable supply of tailings material until 2037. Sources of mill feed include Fresh Tailings, the Colihues deposit and the Cauquenes deposit. MVC commenced with extraction of material from the Cauquenes deposit in 2015. The second phase of the project is planned to improve flotation recovery efficiency and expand the existing facilities to an output of 85 to 90 million pounds of copper per year. The details of this project are presented in MVC’s Cauquenes Phase Two Expansion study.

The recommendation of the QP is to proceed with construction of the MVC plant expansion. This work program is estimated to cost approximately $30 million and is planned to be complete in Q4-2018.


27.0 REFERENCES

• Synthetic Covellite, 2016: Situacion Actual y Futura Tratamiento de Relaves Cauquenes. September 21, 2016

• Caceres C., 2013: Ingeniera Proyecto “Aumento de Capacidad de Beneficio”. Prepared by Minera Valle Central, June 2013.

• Correa F., 2012: SRK Estudio para la Definición de Zona de Seguridad Muro B – Embalse Colihues; Rev. 0. 12 July 2012.

• Oscar Landerretche Codelco Chaiman: Codelco Recent Developments and Perspectives, Presentation to BMO Capital Markets, Feb 28 to March 2, 2017

• Codelco, 2015: website www.codelco.cl, Annual Report 2015.

• Codelco, 2014: website www.codelco.cl, Codelco Investor Presentation April 2014.

• Poblete R., 2012: Estudio de Impacto Ambiental “Aumento de Capacidad de Benefico”: The environmental impact assessment study prepared by Ambientologia for MVC and available on the website www.sea.gob.cl; January 7, 2013.

• Ambientologica 2011: Plan de Cierre de Faenas - MVC – Sernageomin; December 2011

• Codelco, 2008: Proyecto Tratamiento Relaves Embalses Barahona y Cauquenes, Estudio de Perfil, Superintendencia Desarrollo Gerencia Recursos Mineros y Desarrollo; May 2008.

• Alfaro M.A, 2008: SRK Evaluación de Recursos Mineros en Embalses Barahona y Cauquenes, Preparado para Codelco Chile, Superintendencia Desarrollo, División El Teniente; February 2008.

• Moss R. and Poblete R., 2006: Technical Review of Operations at Minera Valle Central, Rancagua Region VI: unpublished technical report prepared for Amerigo Resources Ltd, March 11, 2006.

• Maycock A., 2003: Technical Review of Operations at Minera Valle Central, Rancagua Region VI: unpublished Technical Report prepared for Amerigo Resources Ltd, May 2003.

• Budinich B., N., 2002, Informacion Solicitada para “Due Diligence” Letter to Sr. Juan Manuel Torres Lopez, Gerente General, Minera Valle Central. 26 February, 2002.

• Dold, B. and Fontboté L., 2001: Element cycling and secondary mineralogy in porphyry copper tailings as a function of climate, primary mineralogy, and mineral processing. Journal of Geochemical Exploration Volume 74 (2001), pages 3 to 55.

• Fuerza Aérea de Chile Servicio Aerofotogrametrico, 1997: Photograph 103/239 Geotec 1:50,000 S31 El Palomo L02 SAF 97 No. 004787 taken on February 25, 1997.


• Gutiérrez C., G., 1983: Informe Anual Departamento Concentrador, Internal Memorandum of the General Superintendent of the Concentrator Department, Division El Teniente, Corporacion Nacional del Cobre de Chile, January 31, 1983, 71 pages.

• Gutiérrez C., G., 1992: 20.3.8 Case Studies, 20.3.8.1 El Teniente Mine, CODELCO, Rancagua, Chile. SME Mining Engineering Handbook, 2nd Edition, Howard L. Hartman, Senior Editor, Pages 1826-1830.

• Hodgson, S., Lacombe, P., Maycock, A., Reddy, D., 2002, Technical Review of Operations at Minera Valle Central Rancagua, Region VI, Chile. Unpublished internal technical report, April 2002, 81p.

• Henriquez U., L., 2002: Deposito Embalse Colihues; unpublished email from Luis Henriquez Urzúa, El Teniente to Raul Poblete, Minera Valle Central, 2 pages.

• Medina, C., 2005, Batimetria laguna de clarificacion y levantamiento contorno y playa de relaves tranque de relaves Colihues Division El Teniente CODELCO Chile. Rep-059-2032-C-001 Rev.B., Golder Associates and Rahco International, Sepiembre de 2005.

• Minera Valle Central, 2002: Website www.mvc-sa.cl with 7 pages of html format content regarding the company and operation.

• Project Description, 1995. Antecedentes Proyecto Tratamiento de Gruesos submitted to CONAMA VI Region dated 26 October,1995.

• Skewes, M.A., Arevalo, A., Floody, R., Zuniga, P.H., Stern, C.R., 2005, The El Teniente Megabreccia Deposits, the world’s largest copper deposit. In. Porter, T.M. (ed) 2005 Super Porphyry copper and Gold deposits – A global Perspective. PGC Publishing, Adelaide, v. 1., p. 83-113.

• Internal memo to Raul Poblete from Christian Caceres, Sistema de Evaluacion de Impacto Ambiental, dated 13 February, 2002.

• Autoriza cambio de uso de suelos de parte del predio denominadao hacienda Laguna de Cauquenes de la comuna de Requinoa, rol de avaluo No. 38-7, de propiedad de CODELCO, Division El Teniente, dated 21 December, 1994. Change of land use for MVC plant area.


CERTIFICATE

Robert Duncan Henderson

I, Robert Duncan Henderson, P. Eng., of Vancouver, British Columbia, do hereby certify that:

1. I am responsible for the overall preparation of the Minera Valle Central Operation Rancagua Region VI Chile, 43-101 Technical Report (the “Technical Report”) effective date: 31 December 2016.

2. I am employed by, and carried out these assignments for Amerigo Resources Ltd., whose address is at Suite 1950, 400 Burrard Street, Vancouver, BC, Canada, V6C 3A6, in the capacity as President and Chief Executive Officer.

3. I am a graduate of the University of Cape Town (1984) with a B.Sc. Chemical Engineering degree and have practiced my profession continuously since 1984.

4. I am a member in good standing of the Association of Professional Engineers of Ontario, licence number 100107661.

5. I have read the definition of “qualified person” set out in National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

6. I visited the property which is the subject of the Technical Report most recently on January 18, 2017.

7. I am not independent of the parties involved in the transaction for which this report is required, as defined in Section 1.5 of NI 43-101.

8. I am the author of the prior Technical Report on the property. 9. I have read NI 43-101 and the Technical Report has been prepared in compliance with NI

43-101. 10. As of the date of this certificate, to the best of my knowledge, information and belief, the

Technical Report contains all scientific and technical information that is required to be disclosed to make this certificate not misleading.

11.

DATED this 30th day of March, 2017 “Original document signed by Robert Henderson”

Robert D. Henderson

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