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Estimation Methodology

The Josemaria Mineral Resource was estimated using geological and assay data from a total of 54 diamond drill holes (25,827 metres) and 34 reverse circulation holes (13,164 metres). Of this total, 47 diamond drill holes (21,721 metres) are new since the initial resource estimate in 2007. There are 6 reverse circulation holes (2,247 metres) which were used in the initial resource estimate but not in the update as they were twinned and replaced by diamond drill holes.

Copper and gold grade data is comprised of assays on sawn drill core samples. All assays were completed at ACME's lab in Santiago, Chile. Gold analyses were by fire assay fusion with AAS finish on a 30g sample. Copper was analyzed by AAS using a 4 acid digestion and samples were also analyzed for a suite of 36 elements with ICP-ES. Quality control and quality assurance protocols for the assays include the use of standard reference material, blanks, and duplicate samples (see Assay Protocols below for further details).

Domains were created based on mineral zones, alteration and lithology. Mineral zones were defined by the relative abundance of chalcopyrite and pyrite and five main zones were modeled: oxide; pyrite only; pyrite greater than chalcopyrite; pyrite less than chalcopyrite and chalcopyrite only. The Josemaria deposit consists predominantly of sulphide mineralization overlain by a thin (average 60m) oxide zone. The lithology domains were used to control the interpolation in the sulphide zone as they exhibited the most control on copper and gold grades, and the oxide zone was modelled as a separate domain.

Drill hole assays were composited to 2 m intervals for grade interpolation. Specific gravity data was measured for all samples in 10 of the diamond drill holes (5,204 m) and the average value of the SG for the sulphide and oxide zones from these holes was used in the estimate (2.69 and 2.65 respectively). Blocks were estimated by ordinary kriging in a single pass. Grades were estimated in the 20m x 20m x 20m block model using ordinary kriging for Au g/t and Cu%. To assign a grade to a block, composites were sourced within a search ellipsoid of dimensions similar to the anisotropies from the ranges of the directional variograms calculated for each domain.

The minimum number of composites used to estimate a block was set at 2 and the maximum was 25, with a block discretization of 2x2x2. Classification of blocks into Indicated and Inferred categories was based on a distance model adjusted through creation of wireframe volumes in order to avoid having isolated blocks of one category surrounded by the other. Indicated and Inferred blocks are generally within 75 and 150 metres of a drill hole respectively.

As the Josemaria project is an early-stage project, no engineering or infrastructure data or studies are available to evaluate economic development parameters for the Mineral Resource. The base-case cut-off grade of 0.3% CuEq was chosen based on comparison with other similar deposits. The Josemaria project is located in an area which currently has several copper-gold porphyry deposits in similar geologic and geographic settings which are currently in advanced exploration or development. These other projects provide useful benchmarks and have been used to select the base-case cut-off grade for Josemaria, and to provide reasonable prospects for economic extraction.

It should be noted that the Mineral Resource estimate presented here is not a Mineral Reserve, and does not have demonstrated economic viability. While the Company strongly believes that the Mineral Resource warrants additional study to determine the development potential, there can be no guarantee that any or all of the Mineral Resource will ultimately be determined to be economically viable.