TECHNICAL REPORT ON THE SAN JOSÉ SILVER-GOLD ...TECHNICAL REPORT ON THE SAN JOSÉ SILVER-GOLD MINE SANTA CRUZ, ARGENTINA LATITUDE 46 41’S, LONGITUDE 70 17’W For McEwen Mining

TECHNICAL REPORT ON THE

SAN JOSÉ SILVER-GOLD MINE SANTA CRUZ, ARGENTINA

LATITUDE 46°41’S, LONGITUDE 70°17’W

For

McEwen Mining Inc.

By

P&E Mining Consultants Inc. P&E Technical Report No 289 Mr. Eugene Puritch, P.Eng. Mr. David Burga, P.Geo. Mr. Alfred Hayden, P.Eng. Mr. James L. Pearson, P.Eng. Mr. Fred H. Brown, P.Geo. Mr. James K. Duff, P.Geo. Effective Date: December 31, 2013 Report Date: August 15, 2014

Cautionary Note to U.S. Investors The standards used to calculated mineral resources and reserves under NI 43-101 are different from the standards generally permitted in reports filed with the US Securities and Exchange Commission (“SEC”) under SEC Guide 7 “Description of property by issuers engaged or to be engaged in significant mining operations” (“Guide 7”). McEwen Mining reports Measured, Indicated and Inferred resources, measurements which are generally not permitted in filings made with the SEC. The estimation of Measured and Indicated resources involve greater uncertainty as to their existence and economic feasibility than the estimation of Proven and Probable reserves. U.S. investors are cautioned not to assume that any part of Measured or Indicated resources will ever be converted into economically mineable reserves. The estimation of Inferred resources involves far greater uncertainty as to their existence and economic viability than the estimation of other categories of resources.

Please Note All tables and quantities in this Report represent 100% of the San José silver-gold mine Property. McEwen Mining Inc. has a 49% attributable interest in the San José Property.

TABLE OF CONTENTS 1.0 SUMMARY ........................................................................................................................................ 1

1.1 TECHNICAL SUMMARY .................................................................................................... 1 1.2 HISTORY ............................................................................................................................... 1 1.3 GEOLOGY, MINERALIZATION AND EXPLORATION .................................................. 2 1.4 MINERAL RESOURCES AND MINERAL RESERVES .................................................... 2 1.5 MINING OPERATION ......................................................................................................... 4 1.6 MINERAL PROCESSING .................................................................................................... 4 1.7 CAPITAL, OPERATING AND SELLING EXPENSE COST ESTIMATES ...................... 5 1.8 ECONOMIC ANALYSIS ...................................................................................................... 6 1.9 INTERPRETATIONS AND CONCLUSIONS ..................................................................... 7 1.10 RECOMMENDATIONS ..................................................................................................... 8

2.0 INTRODUCTION ............................................................................................................................... 9 2.1 TERMS OF REFERENCE ..................................................................................................... 9 2.2 SITE VISITS ........................................................................................................................ 10 2.3 UNITS OF MEASUREMENT ............................................................................................. 10 2.4 SOURCES OF INFORMATION ......................................................................................... 10 2.5 GLOSSARY OF TERMS .................................................................................................... 11

3.0 RELIANCE ON OTHER EXPERTS ................................................................................................ 13 4.0 PROPERTY DESCRIPTION AND LOCATION ............................................................................ 14

4.1 LOCATION .......................................................................................................................... 14 4.2 PROPERTY DESCRIPTION AND TENURE .................................................................... 14 4.3 SURFACE RIGHTS ............................................................................................................. 17 4.4 ARGENTINA’S MINING TITLE LAWS ........................................................................... 19 4.5 ARGENTINA’S MINING ROYALTIES ............................................................................ 20 4.6 OTHER PERMITTING REQUIREMENTS ........................................................................ 20

5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ......................................................................................................................... 23 5.1 ACCESS ............................................................................................................................... 23 5.2 CLIMATE ............................................................................................................................ 23 5.3 RESOURCES AND INFRASTRUCTURE ......................................................................... 23 5.4 PHYSIOGRAPHY ............................................................................................................... 24

6.0 HISTORY .......................................................................................................................................... 25 6.1 HISTORICAL EXPLORATION ......................................................................................... 25 6.2 HISTORIC DRILL PROGRAMS ........................................................................................ 26 6.3 PREVIOUS MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES ........... 26 6.4 P&E MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES, 2012 ............ 26

7.0 GEOLOGICAL SETTING AND MINERALIZATION ................................................................... 29 7.1 REGIONAL GEOLOGY ..................................................................................................... 29 7.2 PROPERTY GEOLOGY ..................................................................................................... 30 7.3 STRUCTURAL GEOLOGY ............................................................................................... 32 7.4 VEINS AND VEIN SYSTEMS ........................................................................................... 33 7.5 HUEVOS VERDES ............................................................................................................. 34 7.6 STRUCTURAL CONTROLS ON MINERALIZATION ................................................... 35

8.0 DEPOSIT TYPES ............................................................................................................................. 39 8.1 EPITHERMAL AU-AG DEPOSIT CLASSIFICATION SYSTEMS ................................. 39 8.2 SOUTH AMERICAN EPITHERMAL AG-AU DEPOSITS .............................................. 40

9.0 EXPLORATION ............................................................................................................................... 42 9.1 2013 EXPLORATION PROGRAM .................................................................................... 42

10.0 DRILLING ...................................................................................................................................... 44 10.1 MSC DRILLING ............................................................................................................... 44

11.0 SAMPLE PREPARATION, ANALYSES AND SECURITY ....................................................... 46 11.1 UNDERGROUND CHANNEL SAMPLES ...................................................................... 46

11.2 DRILLHOLE SAMPLING ................................................................................................ 47 11.3 SAN JOSE IN-HOUSE LABORATORY ......................................................................... 48

12.0 DATA VERIFICATION ................................................................................................................. 49 12.1 P&E 2014 SITE VISIT AND INDEPENDENT SAMPLING .......................................... 49 12.2 QUALITY ASSURANCE/QUALITY CONTROL PROGRAM ...................................... 50 12.3 PERFORMANCE OF BLANK MATERIAL .................................................................... 51

13.0 MINERAL PROCESSING AND METALLURGICAL TESTING ............................................... 52 13.1 METALLURGICAL TESTING AND PROCESS SELECTION ..................................... 52 13.2 SAN JOSÉ PROCESSING FACILITY ............................................................................. 53 13.3 PLANT METALLURGY .................................................................................................. 58 13.4 TAILINGS MANAGEMENT ........................................................................................... 60 13.5 SAMPLING, ANALYSES, METALLURGICAL TESTING AND ACCOUNTING ...... 60 13.6 CYANIDE MANAGEMENT ............................................................................................ 62 13.7 CONCENTRATE VS DORÉ PRODUCTION .................................................................. 64

14.0 MINERAL RESOURCE ESTIMATES .......................................................................................... 64 14.1 INTRODUCTION .............................................................................................................. 64 14.2 DATA SUPPLIED ............................................................................................................. 67 14.3 BULK DENSITY ............................................................................................................... 67 14.4 DEPOSIT MODELING ..................................................................................................... 68 14.5 COMPOSITING ................................................................................................................ 68 14.6 TREATMENT OF EXTREME VALUES ......................................................................... 68 14.7 ESTIMATION ................................................................................................................... 68 14.8 CLASSIFICATION ........................................................................................................... 70 14.9 VALIDATION ................................................................................................................... 70 14.10 CONCLUSION ................................................................................................................. 71

15.0 MINERAL RESERVES ESTIMATES ........................................................................................... 72 15.1 CUT-OFF VALUE ............................................................................................................. 73 15.2 MINERAL RESERVES ..................................................................................................... 74 15.3 REMAINING RESOURCES ............................................................................................. 89

16.0 MINING METHODS ...................................................................................................................... 90 16.1 MINE DESIGN .................................................................................................................. 90 16.2 ORE STOCKPILE ............................................................................................................. 94

17.0 RECOVERY METHODS ............................................................................................................... 95 18.0 PROJECT INFRASTRUCTURE .................................................................................................... 96 19.0 MARKET STUDIES AND CONTRACTS .................................................................................... 97 20.0 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL IMPACT ................................. 98 21.0 CAPITAL AND OPERATING COSTS ......................................................................................... 99 21.1 CAPITAL COST ESTIMATE ......................................................................................... 99 21.2 OPERATING COST ESTIMATE ................................................................................. 101 21.3 SELLING EXPLENSES ................................................................................................ 104 22.0 ECONOMIC ANALYSIS ............................................................................................................. 105 22.1 ECONOMIC CRITERIA ............................................................................................... 105 23.0 ADJACENT PROPERTIES .......................................................................................................... 107 24.0 OTHER RELEVANT DATA AND INFORMATION ................................................................. 109 25.0 INTERPRETATIONS AND CONCLUSIONS ............................................................................ 110 26.0 RECOMMENDATIONS .............................................................................................................. 111 27.0 REFERENCES .............................................................................................................................. 112 28.0 CERTIFICATES ........................................................................................................................... 114

LIST OF TABLES Table 1.1 Total San José Mineral Resources Declared As Of December 31, 2013(1-5) ................................. 3 Table 1.2 Mineral Reserves as of December 31, 2013(1-3) ............................................................................ 3 Table 1.3 Measured and Indicated Resources Not Converted To Reserves as of December 31, 2013(1-3) .. 3 Table 1.4 Capital Cost Summary In US$000's .............................................................................................. 5 Table 1.5 Operating Cost Summary .............................................................................................................. 5 Table 1.6 Life of Mine Selling Expenses ...................................................................................................... 6 Table 1.7 Cash Flow Summary in US$ 000,000’s ........................................................................................ 7 Table 4.1 Concession Locations Of The San José Property ....................................................................... 15 Table 4.2 Concession Locations of the New Properties ............................................................................. 16 Table 4.3 Permits for Property Operations at San José Mine, Argentina .................................................. 21 Table 6.1 Summary of Exploration on the San José Property, 1997-September 2011 ............................... 25 Table 6.2 Drilling Program on the San José Property, 1998-December 2012 ............................................ 26 Table 6.3 San José Mineral Resources as of December 31, 2012 ............................................................... 27 Table 6.4 San José Proven and Probable Reserves as at December 31, 2012 ........................................... 27 Table 10.1 Summary of 2013 San Jose Drilling ......................................................................................... 44 Table 10.2 2013 Results for "Potential" Drill Holes ................................................................................ 44 Table 13.1 San José Plant Metallurgical Performance .............................................................................. 53 Table 13.2 San José Process Plant Statistics .............................................................................................. 58 Table 13.3 Merrill Crowe Production, San José 2013 .............................................................................. 59 Table 13.4 Power and Reagent Consumptions, San José Plant 2013 ....................................................... 59 Table 13.5 Leach Circuit Recovery Profile ................................................................................................ 61 Table 13.6 Detox Circuit, July 9-14, 2014 ................................................................................................. 63 Table 14.1 Total San José Mineral Resources Declared as of December 31, 2013(1-4) ............................... 65 Table 14.2 Bulk Density Values for Selected Deposits .............................................................................. 67 Table 14.3 Composite Capping Thresholds for Audited Deposits .............................................................. 68 Table 14.4 Estimation Parameters for Audited Deposits ............................................................................ 69 Table 14.5 Average Number of Samples per Classification Category ....................................................... 70 Table 14.6 Correlation Coefficient between Nearest Neighbour Grade and Block Estimate ..................... 70 Table 14.7 Volume Comparison of Audited Deposits ................................................................................ 71 Table 15.1 Proven and Probable Mineral Reserves as of December 31, 2013(1-3) ...................................... 72 Table 15.2 Variable and Fixed Operating Costs For 2013 .......................................................................... 73 Table 15.3 Summary of Marginal & Economic Cut-offs (US$/tonne) ....................................................... 73 Table 15.4 San José Economic Parameters ................................................................................................. 73 Table 15.5 Measured and Indicated Resources Initially Used in Reserve Estimation ................................ 74 Table 15.6 Measured and Indicated Resources Total Internal Dilution Estimation ................................... 76 Table 15.7 Undeveloped Measured and Indicated Resources Not Used in Reserve Estimation ................ 77 Table 15.8 M&I Inaccessible Resources Not Recovered ............................................................................ 79 Table 15.9 M&I Uneconomic Resources Not Recovered ........................................................................... 80 Table 15.10 M&I Resources in Development Pillars Not Recovered ........................................................ 80 Table 15.11 Measured &Indicated Operationally Lost Resources Not Recovered .................................... 81 Table 15.12 M&I Internally Diluted Resources Recovered ........................................................................ 82 Table 15.13 Measured and Indicated Resources Reserve Internal Dilution Estimation ............................. 83 Table 15.14 External Dilution Included in Reserves .................................................................................. 84 Table 15.15 San José Reserves at December 31, 2013 ............................................................................... 85 Table 15.16 San José Proven and Probable Reserves at December 31, 2013 ............................................. 86 Table 15.17 Economic and Marginal Reserves at December 31, 2013 ...................................................... 87 Table 15.18 Resources Not Converted To Reserves at December 31, 2013 .............................................. 89 Table 16.1 Underground Mine Equipment Fleet ........................................................................................ 91 Table 16.2 Operating Development Summary ............................................................................................ 91 Table 16.3 Capital Infrastructure Summary ................................................................................................ 93 Table 16.4 Capital Raisebore Summary ..................................................................................................... 93 Table 16.5 Mine Process Schedule ............................................................................................................ 94

Table 21.1 Project Capital Costs In US$000's ............................................................................................ 99 Table 21.2 Mine Development Capital Costs in US$000's ........................................................................ 99 Table 21.3 Support and Infrastructre Capital Costs in US$000's .............................................................. 99 Table 21.4 Sustaining Capital Costs in US$000's ................................................................................... 100 Table 21.5 Closure Capital Costs in US$000's ....................................................................................... 100 Table 21.6 Capital Cost Summary in US$000's ....................................................................................... 101 Table 21.7 Geology Operating Cost - Totals in US$000's ....................................................................... 101 Table 21.8 Mine Operating Cost - Totals in US$000's ........................................................................... 102 Table 21.9 Royalty Cost - Totals in US$000's ........................................................................................ 102 Table 21.10 Plant Operating Costs - Totals in US$000's ........................................................................ 102 Table 21.11 General Services Operating Cost - Totals in US$000's ...................................................... 103 Table 21.12 Mine Administration Operating Cost - Totals in US$000's ................................................ 103 Table 21.13 Operating Cost Summary .................................................................................................... 103 Table 21.14 Life of Mine Selling Expenses ............................................................................................ 104 Table 22.1 Cash Flow Summary In US$000,000's ................................................................................... 106 Table 23.1 Cerro Negro Reserves ............................................................................................................. 107 Table 23.2 Cerro Negro Resources(1,2) ...................................................................................................... 108

LIST OF FIGURES Figure 4.1 Location Map of the San José Property, Argentina .............................................................. 14 Figure 4.2 Mining Concessions and Surface Rights of the San José Mine ............................................ 18 Figure 7.1 Geology of the Deseado Massif, Argentina .......................................................................... 29 Figure 7.2 Geology of the San José Property ......................................................................................... 31 Figure 7.3 Structural Lineaments on the San José Property ................................................................... 37 Figure 7.4 Cross-Section Showing the Horst and Graben Structure at San José ................................... 38 Figure 8.1 LS and HS Epithermal Deposit Model ................................................................................. 40 Figure 8.2 Epithermal Gold-Silver Deposits of the Deseado Massif, Argentina ................................... 41 Figure 9.1 Exploration Targets Evaluated During 2013 ........................................................................ 43 Figure 12.1 San José Verification Sampling – Au ................................................................................... 49 Figure 12.2 San José Verification Sampling – Ag ................................................................................... 50 Figure 13.1 San José Process Plant .......................................................................................................... 54 Figure 13.2 Metal and Plastic “Tramp Material” ..................................................................................... 55 Figure 13.3 Intensive Leaching Reactor (ILR 5000) (one of 4 reactors) ................................................. 55 Figure 13.4 New Crusher Baghouse; Collected Dust Deposited on Crushed Ore ................................... 56 Figure 13.5 San Jose Plant Circuit 2013 (Merrill Crowe Circuit Excluded) ............................................ 56 Figure 13.6 Pilot Scale Gekko Reactor .................................................................................................... 62 Figure 13.7 Effective and Theorectical % Recoveries, San José 2013 .................................................... 62 Figure 14.1 Plan View of the San José Deposits with Topography Removed ......................................... 66

_____________________________________________________________________________________________ P&E Mining Consultants Inc. Page 1 McEwen Mining Inc., San José Property - Report No. 289

1.0 SUMMARY The following is a technical report prepared by P&E Mining Consultants Inc. (“P&E”) in accordance with the standards required by Canadian National Instrument 43-101 – “Standards of Disclosure for Mineral Projects” (“NI 43-101”), and the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) Definition Standards on Mineral Resources and Mineral Reserves (“CIM Standards”), with respect to the San José Mine located in Santa Cruz Province in Argentina. (the “Property”). P&E believes that the reporting of mineral reserves and resources under NI 43-101 is in all material respects identical; with the only notable difference being the requirement to report Inferred mineral resources separate from the totalled Measured and Indicated mineral resources under NI 43-101. The San José Mine is an operating underground mine exploiting epithermal Ag-Au and Au-Ag vein deposits. Title to the Mine is held by Minera Santa Cruz, S.A. (“MSC”), the holding and operating company set up under the terms of an option and joint venture agreement between certain subsidiaries of McEwen Mining Inc. (“McEwen” or “McEwen Mining”) (49%) and Hochschild Mining PLC (“Hochschild”) (51%). Hochschild is the operator. This Report has an effective date of December 31, 2013. COMPLIANCE WITH SEC GUIDE 7 AND CAUTIONARY NOTE TO US READERS The standards used to calculate mineral resources and reserves under NI 43-101 are different from the standards generally permitted in reports filed with the US Securities and Exchange Commission (“SEC”) under SEC Guide 7 “Description of property by issuers engaged or to be engaged in significant mining operations” (“Guide 7”). McEwen Mining reports Measured, Indicated and Inferred resources, measurements which are generally not permitted in filings made with the SEC. The estimation of Measured and Indicated resources involve greater uncertainty as to their existence and economic feasibility than the estimation of Proven and Probable reserves. U.S. investors are cautioned not to assume that any part of Measured or Indicated resources will ever be converted into economically mineable reserves. The estimation of Inferred resources involves far greater uncertainty as to their existence and economic viability than the estimation of other categories of resources. Mineral reserves and other technical information contained herein are considered compliant with the reporting and disclosure requirements of Guide 7. 1.1 TECHNICAL SUMMARY The Property consists of 50 contiguous mining concessions totalling 50,491 ha. Surface rights totalling 2,875 ha cover the San José operations. All concessions as of the effective date of this Report are materially in good standing. Additionally, 11 exploration rights and 46 mining concessions were transferred in December 2013 by MH Argentina Corporation S.A., Las Yaretas S.A. and Minera Andes S.A. to MSC (“New Properties”). As of the date of this report, these rights were converted into 10 exploration rights and 48 mining concessions, totalling 139,313 ha. These New Properties are located adjacent to or nearby the Property. MSC is continuing to conduct due diligence on these New Properties to confirm their legal status. 1.2 HISTORY Minera Andes Inc. (“Minera Andes”) (later acquired by McEwen) staked the Property in 1997 and the initial work conducted by them in the late 1990s was the first formally recorded exploration on the Property. Minera Andes carried out an intensive exploration program from 1997 to 2001, leading to the


discovery of the Huevos Verdes and Saavedra West Zones. In March 2001, Minera Andes signed a JV agreement with Hochschild Mining plc. A Feasibility Study was completed in October 2005 and the decision to proceed to production was made on March 28, 2006. Ongoing plant, infrastructure construction and mine development continued from July 2006 to September 2007. The official mine opening was on June 26, 2007 and commercial production commenced on January 1, 2008. On January 24, 2012 McEwen (then known as US Gold Corporation) announced that it had completed the acquisition of Minera Andes Inc. 1.3 GEOLOGY, MINERALIZATION AND EXPLORATION The San José Property is located in the northwest corner of the Deseado Massif in the Santa Cruz Province in Argentina. Jurassic bimodal volcanics host numerous gold- and silver-bearing quartz veins such as Cerro Vanguardia, Martha, Manantial Espejo and the veins of San José. Low sulphidation (“LS”) silver-gold and polymetallic mineralization accompanied Jurassic magmatism and deformation in the Deseado Massif. The Jurassic rocks are divided into the Bajo Pobre Formation, predominantly of intermediate composition, and the felsic Bahia Laura Group. The Jurassic units are overlain by Cretaceous sedimentary rocks and Tertiary flood basalts. The Bajo Pobre Formation is the main host for gold and silver mineralization, where veins are typically developed in competent andesite flows at the Huevos Verdes, Frea and Kospi deposits on the San José Property and to a lesser extent in volcaniclastic units. The San José deposits are considered to be typical LS Ag-Au epithermal vein deposits. The main structural trend of fault and vein systems on the Property is north-west to north-northwest. Less prominent are east-striking faults and veins and those north to northeast striking. 1.4 MINERAL RESOURCES AND MINERAL RESERVES Measured and Indicated Resources as at December 31, 2013, at the San José Mine, are 4.4 million tonnes grading 515 g/t Ag and 7.45 g/t Au containing 72.8 million silver ounces and 1,053,300 ounces of gold at a cut-off grade of 215 g/t AgEq. Please refer to Table 1.1. Inferred Resources as at December 31, 2013, at the San José Mine, are 1.9 million tonnes grading 455 g/t Ag and 7.23 g/t Au containing 27.1 million silver ounces and 430,600 ounces of gold at a cut-off grade of 215 g/t AgEq. Please refer to Table 1.1. Mineral resource audit modeling and estimation were carried out using the commercially available Gemcom GEMS and Snowden Supervisor software programs. Mineral resources are reported in terms of three separate systems as defined by MSC. These systems are:

• The 2013 resources; • New resources from existing veins; and • Resources from new veins and extensions of existing veins.

Mineral reserves were estimated from selected diluted and extracted measured and indicated mineral resources. As at December 31, 2013 mineral reserves totalled 1,813,300 tonnes, grading 515 grams Ag/tonne and 7.03 grams Au/tonne containing 54.6 million silver equivalent ounces. A summary of these reserves is presented in Table 1.2.


TABLE 1.1 TOTAL SAN JOSÉ MINERAL RESOURCES DECLARED AS OF DECEMBER 31, 2013(1-5)

Tonnes Ag g/t Au g/t Ag Moz Au koz Measured 1,523,936 640 8.85 31.4 433.6 Indicated 2,873,987 448 6.71 41.4 619.7 Measured + Indicated 4,397,923 515 7.45 72.8 1,053.3 Inferred 1,851,710 455 7.23 27.1 430.6 (1) Mineral resources, which are not mineral reserves, do not have demonstrated economic viability. The estimate of mineral

resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.

(2) The quantity and grade of reported Inferred Resources are uncertain in nature and there has been insufficient exploration to define these Inferred Resources as an Indicated or Measured Resource and it is uncertain if further exploration will result in upgrading them to an Indicated or Measured Resource category.

(3) P&E believes the reported mineral resources are in compliance with the CIM Standards, as required by NI 43-101. (4) The cut-off of 213 g/t AgEq. is based on a gold price of US$1,200/oz and a silver price of US$20.00/oz. (5) Resources are inclusive of reserves.

TABLE 1.2

MINERAL RESERVES AS OF DECEMBER 31, 2013(1-3) Reserve Category Tonnes (000’s) Ag (g/t) Au (g/t) AgEq (g/t) Ag M oz Au k oz

Proven 950 597 7.82 1,066 18.24 238.91 Probable 863 426 6.15 795 11.81 170.72 Proven & Probable 1,813 515 7.03 937 30.05 409.63

(1) Based on P&E’s knowledge there are no environmental, permitting, legal, title, taxation, socio-economic political issues at would materially affect these mineral reserves.

(2) P&E used a gold price cut-off of US$1,200 per ounce (oz) and US$20.00 per oz for silver for mineral reserves. These metal prices are more conservative than the three year trailing average prices required by SEC Guide 7.

(3) The cut-off value used to estimate mineral reserves is based on historical January to October 2013 geologic, mining, plant and mine administration variable and fixed costs. P&E considers these costs to be reasonable as a basis for estimating mineral reserves.

An average 7% internal dilution was used when converting resources to reserves. Of the internally diluted resources, 63% are extractable, and a 26% external dilution was added to these resources, at zero grade. A total of 610,000 tonnes of Measured and Indicated resources grading 329 g Ag/t and 4.47 g Au/t remain to be considered for conversion to reserves. A summary of these resources, not converted to Reserves, is presented in Table 1.3.

TABLE 1.3 MEASURED AND INDICATED RESOURCES NOT CONVERTED TO RESERVES

AS OF DECEMBER 31, 2013(1-3) Vein Tonnes Ag (g/t) Au (g/t)

R425 1,965 700 8.67 R483 10,047 325 3.26 R720 580 379 5.63 R861A 8,419 428 6.51 R861B 6,968 257 10.78 R861B1 12 340 11.00 R861C 828 227 6.86 R861D 3,155 225 3.92 R861E 6,602 432 3.97 R861I 3,328 463 3.78 R861Q1 452 543 5.46 R861W 1,998 440 3.68 R861X 2,839 96 14.77 RAyelen 11,651 235 1.82 RFrea 12,414 270 3.68 RHVS 655 -342 0.46 RHVNC 6,587 275 2.97


RKospi 17,023 158 4.62 RN1 2,351 100 4.38 RN3 65 522 7.44 RNoel 234 120 3.89 SAyelen 109 220 2.93 SFrea 4,442 253 5.72 SLuli 3,648 972 10.95 SMarisa 1,814 72 4.03 290 11,626 399 12.07 Abril 2,953 211 3.99 Antonella 4,543 245 11.57 Ayelen 22,237 300 3.73 Benita 6,985 245 2.87 Cecila 694 256 2.55 Frea 27,147 232 6.79 Hera 5,360 215 5.19 HVC 6,374 522 6.01 HVN 19,320 236 3.50 HVS 7,116 343 5.15 Ivon 1,757 625 4.30 Julieta 790 351 3.47 Kospi 56,173 396 5.46 Lola 756 468 6.42 Luli 10,640 475 3.83 Mara 6,745 264 3.75 Marcia 234 629 12.56 Marisa 670 284 2.50 Micaela 24,128 276 5.47 Noel 11,735 218 3.73 Odin 47,454 215 5.12 Pacha 3,133 365 3.09 Piedad 341 163 1.97 Pilar 24,586 412 7.06 Sanson 2,845 345 2.20 Shala 1,204 378 3.74 R480E 3,984 284 1.70 R350 5,285 198 4.71 Total/Average 610,007 329 4.47

(1) Mineral resources, which are not mineral reserves, do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.

(2) P&E believes the reported mineral resources are in compliance with the CIM Standards, as required by NI 43-101

(3) These resources are exclusive of reserves. 1.5 MINING OPERATION The San José Mine is a ramp access underground mining operation employing Mechanized Cut and Fill mining methods using scooptrams, and jacklegs (pneumatic rock drills) or single-boom jumbos. 1.6 MINERAL PROCESSING The San José plant is a conventional crushing-grinding-flotation mill plus leaching and foundry facilities. About 50% of the flotation concentrate is cyanide leached and silver and gold is recovered as doré on site. The current cyanidation circuit however has insufficient capacity to process all of the concentrate so the balance is shipped to a smelter. Gold and silver recoveries in the flotation concentrate average 88.72% and 85.94% respectively over 3 years. The on-site flotation concentrate process steps include


intensive cyanide leaching followed by electrowinning (EW) to produce a precipitate product. The precipitate is smelted in furnaces to produce a doré bullion that goes to a refinery. 1.7 CAPITAL, OPERATING AND SELLING EXPENSE COST ESTIMATES San José’s capital cost items include: projects; mine development required to access reserves; support and infrastructure; sustaining capital and mine closure. A summary of San José’s total estimated LOM capital costs is presented in Table 1.4.

TABLE 1.4 CAPITAL COST SUMMARY IN US$000'S

San José Mining Operation

Item Year

LOM Total

2014 2015 2016 2017 2018 2019 Projects 7,135 7,135 Mine Development 18,732 12,490 11,739 42,961 Support & Infrastructure 3,020 3,126 3,126 979 10,251 Sustaining Capex 11,370 11,770 11,770 3,688 38,597 Mine Closure 12,679 9,502 845 23,027 Total Capex 40,256 27,386 26,634 17,347 9,502 845 121,970

A summary of San José’s life of mine operating costs, in US$000’s, is presented in Table 1.5.

TABLE 1.5 OPERATING COST SUMMARY San José Mining Operation

Item 2014 2015 2016 2017 LOM $/t $000’s $/t $000’s $/t $000’s $/t $000’s $/t $000’s

Geology 11.59 6,522 11.59 6,751 11.59 6,751 11.59 2,115 11.59 22,140 Mine 43.59 24,527 45.12 26,278 45.08 26,256 40.48 7,387 44.21 84,448 Royalties 8.65 4,870 11.94 9,952 11.94 6,953 12.02 2,193 10.98 20,967 Plant 39.44 22,194 39.44 22,975 39.44 22,975 39.44 7,199 39.44 75,342 Admin 60.09 33,808 60.09 34,998 60.09 34,998 60.09 10,966 60.09 114,769 Gen. Services

42.56 23,947 42.56 24,790 42.56 24,790 42.56 7,768 42.56 81,294

Totals 205.93 115,867 210.74 122,744 210.70 122,722 206.18 37,628 208.87 398,961

A summary of San José’s life of mine selling expense costs, in US$000’s, is presented in Table 1.6.


TABLE 1.6 LIFE OF MINE SELLING EXPENSES


Item Units Rate Year LOM

Total 2014 2015 2016 2017 Third Party Services/ Total Conc. dmt US$ k 110 3,868 4,004 4,004 1,255 13,132 Warehouses/Concentrate dmt US$ k 200 3,856 4,104 4,104 1,255 13,349 Commission/ AgEq Oz in Dore US$ k 4.5% 4,314 5,558 5,558 1,286 17,173 Commission/ AgEq Oz in Concentrate

US$ k 10.0% 12,723 17,444 17,444 1,742 53,076

Refining - Basis charge US$ k 489.28 489 489 489 489 1,957 - Per kg Dore Payable US$ k 17.86 1,630 2,095 2,095 656 6,476 - Per Oz Au fines US$ k 0.75 29 37 37 12 115 - Per Oz Dore Payable US$ k 0.26 763 981 981 307 3,031 Total Refining US$ k 2,911 3,602 3,602 1,465 11,580

Total Selling Expenses US$ k 27,673 34,712 34,712 11,213 108,310

1.8 ECONOMIC ANALYSIS The economic analysis contained in this Report is based on Proven and Probable Mineral Reserves. The mineral reserves in this Report although initially estimated using the standards set out in the JORC Code, also meet the CIM Standards and US SEC Guide 7 requirements. The following information represents 100% of the Property. McEwen has a 49% attributable interest in the San José Mine. 1.8.1 Economic Criteria Physicals Mine life: Jan 2014 to 2nd quarter 2017: decommissioning – 2017 to 2019. Mill process capacity: 1,650 tonnes per day Total mine production: 1,813,300 tonnes ore at 7.03 g/t Au and 515 g/t Ag Total mill production (includes all reserves &stockpile): 1,910,100 tonnes ore at 6.88 g/t Au and 515 g/t Ag Flotation recovery: 90.0% Au, 89.7% Ag Leaching CCD recovery: 91.9% Au, 91.4% Ag Precipitate production capacity: 45 mt/day Total payable metal: 358,000 oz Au, 26.1 million oz Ag Assumptions LOM revenue metal prices: US$1,200/oz Au, US$20.00/oz Ag (Please note that the assumed metal prices are the same as those

used to estimate Resources and Reserves.) Costs Average LOM operating costs: US$208.87 per tonne milled Life-of-mine operating costs: US$399.0 million Life-of-mine selling expenses: US$108.3 million Life-of-mine capital costs: US$122.0 million


Analysis P&E’s estimate of the cumulative undiscounted life-of-mine cash flow is presented in Table 1.7 below. Based on this analysis P&E concludes the estimated cumulative undiscounted life-of-mine cash flow at San José will be US$288.2 million.

TABLE 1.7 CASH FLOW SUMMARY IN US$ 000,000’S


Description Units Year

LOM Total 2014 2015 2016 2017 2018 2019 Treated Tonnage t k 563.7 582.5 582.5 182.5 1,910.1 Ag Eq Production AgEq koz 11,949 15,894 15,894 4,980 48,718 Au Grades g/t 5.74 7.35 7.35 7.35 6.88 Ag Grades g/t 419.09 538.74 538.74 538.74 503 Ag Eq Grades AgEq g/t 763.47 979.71 979.71 979.71 916

Revenues M$ 223.1 298.0 298.0 93.4 912.4 Production Cost M$ (115.9) (122.7) (122.7) (32.6) (393.9) SG&A Expenses M$ (27.7) (34.7) (34.7) (11.2) (108.3) EBITDA (excl. Exploration Exp.)

M$ 79.6 140.5 140.5 49.6 410.1

Capex M$ (40.3) (27.4) (26.6) (4.7) (98.9) Mine Closure M$ 0.0 0.0 0.0 (12.7) (9.5) (0.8) (23.0)

Cash Flow M$ 39.3 113.9 113.9 32.2 (9.5) (0.8) 288.2 NPV @ 5% M$ 256.8 San José’s NPV is most sensitive to OPEX followed by Ag price, Au price and CAPEX. 1.9 INTERPRETATIONS AND CONCLUSIONS P&E offers the following conclusions: Mineral Resources P&E considers the estimation criteria and classification scheme implemented by MSC to be suitable for mineral resource estimation, but notes that MSC uses a single pass for estimating Measured and Indicated resources and a separate pass for estimating Inferred resources. The strategy as implemented may lead to the occasional misclassification of resource blocks. Mineral Reserves P&E considers the mine dilution and extraction quantities are reasonable based on historical geomechanical data and the types of mining methods used. Economic Analysis P&E considers the operating costs to be reasonable based on historical information. The economic analysis is based only on the ore reserves and stockpiles, as at December 31, 2013. No attempt has been made to capture the value of remaining resources. P&E concludes the estimated cumulative undiscounted life-of-mine cash flow at San José will be US$288.2 million and the estimated NPV @ 5% is US$256.8 million. San José’s NPV is most sensitive to OPEX followed by Ag price, Au price and CAPEX.


1.10 RECOMMENDATIONS P&E offers the following recommendations: Mineral Resources Independent sampling by P&E suggests that the bulk density factor may be slightly understated. P&E collected a total of 25 drill hole core samples from mineralized vein material, returning a median of 2.77 t/m3 and a mean of 2.68 t/m3. P&E recommends that MSC re-examine the bulk density factors in current use. Mineral Reserves P&E recommends that additional attributes be added to the block model to introduce geomechanical, dilution, mineability and extraction components which will facilitate the introduction of a more automated mineral reserve determination process from predefined polygons. Mining and Mineral Processing In recent years, the proportion of flotation concentrate subjected to leaching has been less than 50% and this proportion has been declining. P&E has estimated that a significant economic margin exists favouring concentrate leaching versus concentrate sales. Optimising the operation of the leaching, EW and foundry operations to consistently process 50% of available flotation concentrate would provide economic benefits. A consistent 50/50 split of concentrate leaching/sales would also offer the potential for operating two parallel, separate grinding and flotation circuits and eliminate the imprecise slurry flow splitting at 3 locations in the present plant circuit. The procedure for slurry sample handling in the laboratory should be improved with the volume of sample wash water measured and assayed, rather than calculation using imprecise slurry densities. Cyanide solution handling should be improved with clearly identified stainless steel lines and valves. Emergency equipment (e.g. showers) must be operational at all times. Measures to coincidentally reduce the very high peroxide consumption in the “detox” circuit as well as total cyanide and WAD levels in the leached tailings facility need to be investigated. This includes optimisation of the CCD and related circuits in the leaching facility. The identification of cyanide species in barren solution as well as a technical and economic valuation of best technology(s) for recovering and recycling cyanide could be considered. A new flotation tailings facility (#3) was built in 2013 to replace the existing facility which may be full at the end of 2014 or in early 2015. Opportunities may exist to extend the use of the existing facility by increasing slurry discharge density and changing the pipe discharge locations which could assist in achieving an optimum profile for closure.


2.0 INTRODUCTION 2.1 TERMS OF REFERENCE The following is a technical report prepared by P&E Mining Consultants Inc. (“P&E”) in accordance with the standards required by the standards set out by Canadian National Instrument 43-101 – “Standards of Disclosure for Mineral Projects” (“NI 43-101”), and the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) Definition Standards on Mineral Resources and Mineral Reserves (“CIM Standards”), with respect to the San José Mine located in Santa Cruz Province in Argentina. (the “Property”). P&E believes that the reporting of mineral reserves and resources under the JORC Code and NI 43-101 is in all material respects identical; with the only notable difference being the requirement to report Inferred mineral resources separate from the totalled Measured and Indicated mineral resources under NI 43-101. These standards used to calculated mineral resources and reserves under NI 43-101 and the JORC Code are different from the standards generally permitted in reports filed with the US Securities and Exchange Commission (“SEC”) under SEC Guide 7 “Description of property by issuers engaged or to be engaged in significant mining operations” (“Guide 7”). McEwen reports measured, indicated and inferred resources, measurements which are generally not permitted in filings made with the SEC. The estimation of measured resources and indicated resources involve greater uncertainty as to their existence and economic feasibility than the estimation of proven and probable reserves. U.S. investors are cautioned not to assume that any part of measured or indicated resources will ever be converted into economically mineable reserves. The estimation of inferred resources involves far greater uncertainty as to their existence and economic viability than the estimation of other categories of resources. Mineral Reserves and other technical information contained herein are considered compliant with the reporting and disclosure requirements of Guide 7. This report was prepared at the request of McEwen Mining Inc. (“McEwen”). McEwen is a Colorado Corporation listed and traded on the Toronto Stock Exchange under the symbol of “MUX” and on the New York Stock Exchange (NYSE) under the symbol of “MUX”, with its corporate office at: 150 King Street West, Suite 2800, P.O. Box 24 Toronto, Ontario, Canada M5H 1J9 Tel: (647) 258-0395 Fax: (647) 258-0408 This report has an effective date of December 31, 2013. The San José silver-gold Property is located in the Province of Santa Cruz, Argentina, lying approximately between latitudes 46°41’S and 46°47’S and longitudes 70°17’W and 70°00’W. Title to the San José Property is held by Minera Santa Cruz, S.A. (“MSC”), the holding and operating company set up under the terms of an option and joint venture agreement between Minera Andes, S.A. (“MASA”) (49%) and Hochschild Mining (Argentina) Corporation (“HMC”) (51%). MASA is an indirect wholly owned subsidiary of McEwen. HMC is a wholly owned subsidiary of Hochschild Mining Plc (“Hochschild”). The San José property covers a total area of approximately 50,491 ha and consists of 50 contiguous mining concessions and the New Properties cover a total area of approximately 139,313 ha and consist of 10 exploration rights and 48 mining concessions. The San José Mine is an operating underground mine exploiting epithermal silver-gold and gold-silver vein deposits. Vein mineralization was discovered and the mining rights covering the mineralization were


acquired by Minera Andes Inc. (acquired by McEwen in 2012) in 1997. There is no formally recorded exploration on the Property prior to work carried out by Minera Andes in the late 1990s. As at December 31, 2013, 1,834 drill holes have been drilled on the Property, totalling 395,555.64 m. 2.2 SITE VISITS Eugene Puritch and James L. Pearson have visited the San José Mine in Argentina numerous times since February 2009 and most recently on February 20 to 21, 2014. Eugene Puritch, P.Eng. and James L. Pearson. P.Eng. are Qualified Persons, as defined by NI 43-101. 2.3 UNITS OF MEASUREMENT Metric units of measure have been used throughout this Report, unless noted otherwise. All costs in this report are reported in United States dollars (“$” or “US$”). Gold (“Au”) and silver (“Ag”) metal assay values are reported in metal grams per tonne (“g/t”) unless ounces (“oz”) are specifically stated. The coordinate system used by MSC for locating and reporting drill hole information and channel sampling is Gauss Kruger, Zone 2. The majority of the Property maps in this Report use this coordinate system. 2.4 SOURCES OF INFORMATION This Report is based, in part, on MSC and Hochschild technical reports, and maps, published government reports, company letters and memoranda, and public information as listed in the "References” Section 27 at the conclusion of this Report. Several sections from reports authored by other consultants have been directly quoted or summarized in this Report, and are so indicated where appropriate. It should be noted that the authors have used selected portions or excerpts from material contained in the following NI 43-101 technical reports. These reports are publicly available on SEDAR (www.sedar.com): Puritch, E., Hayden, A., Pearson, J., Brown, F.H. and Burga, D. (2013) Technical Report on the San José Silver-Gold Mine, Santa Cruz, Argentina. NI 43-101 report prepared by P&E Mining Consultants Inc. for McEwen Mining Inc., dated August 15, 2013. Puritch, E., Hayden, A., Pearson, J., Brown, F.H. and Burga, D. (2012) Technical Report on the San José Silver-Gold Mine, Santa Cruz, Argentina. NI 43-101 report prepared by P&E Mining Consultants Inc. for McEwen Mining Inc., dated August 15, 2012. Belanger, M., Bergeron, S. (2011) Cerro Negro Gold Project, Santa Cruz Province, Argentina. NI 43-101 Technical Report on Updated Feasibility Study. NI 43-101 report prepared by Goldcorp Inc., dated April 5, 2011. Puritch, E., Malloch, K., Armstrong, T., Hayden, A., Pearson, J., Brown, F.H. and Burga, D. (2010) Technical Report on the San José Silver-Gold Mine, Santa Cruz, Argentina. NI 43-101 report prepared by P&E Mining Consultants Inc. for Minera Andes Inc., dated December 22, 2010. Puritch, E., Hayden, A., Pearson, J., Yassa, A., Brown, F.H. and Malloch, K. (2009) Technical Report on the San José Silver-Gold Mine, Santa Cruz, Argentina. NI 43-101 report prepared by P&E Mining Consultants Inc. for Minera Andes Inc., dated July 29, 2009.


Mach, L. and Elliott, C. (2009) NI 43-101 Technical Report, Minera Andes Inc. San José Silver-Gold Project, Santa Cruz, Argentina. NI 43-101 report prepared for Minera Andes Inc. by SRK Consulting, dated May 29, 2009. Colquhoun, W., Henry, E., Simon, A and Rocque, P. (2007) NI 43-101 Technical Report Update on the San José Property, Santa Cruz Province, Argentina. NI 43-101 report prepared for Minera Andes Inc. by AMEC Americas Limited, October 1, 2007. Cinits R., Rocque, P., Colquhoun, W. and Marinho, R. (2007) San José Property, Santa Cruz Province, Argentina, NI 43-101 Technical Report. NI 43-101 report prepared for Minera Andes Inc. by AMEC Americas Limited, June 30, 2007. Cinits, R., Taylor, G., Colquhoun, W., Brisebois, K. and Elfin, S. (2005) Technical Report on the San José Property, Santa Cruz Province, Argentina. NI 43-101 report prepared for Minera Andes Inc. by AMEC Americas Limited, November 11, 2005. McEwen Mining is not the operator and therefore can only verify information in this report to the best of its ability. Where necessary, P&E has verified information in this Report with MSC and Hochschild. 2.5 GLOSSARY OF TERMS Abbreviation Description °C Degrees Celsius < Less than > Greater than % Percentage Ag Silver AgEq Silver Equivalent Alex Stewart Alex Stewart (Assayers) Argentina S.A. AMEC AMEC Americas Limited Ar Argon Au Gold AVR Acidification volatization recovery Cateo Exploration License CCD Counter current decantation CIM Canadian Institute of Mining, Metallurgy and Petroleum CIM

Definition Standards on Mineral Resources and Mineral Resources adopted by CIM Council as amended, prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council, December 11, 2005

CIM Standards

COV Cut-off value CSAMT Controlled Source Audio-frequency Magnetotellurics CRM Certified Reference Material d Day DPM Santa Cruz Provincial Department of Mining E East ECOV Economic cut-off value EIA Environmental impact assessment EIR Environmental impact report el Elevation level


Abbreviation Description EQC Environmental quality certificate EW Electrowinning FA Fire assay g Gram GR Gravity / flotation g/L Grams per litre g/t Grams per tonne h Hour ha Hectares HMC Hochschild Mining (Argentina) Corporation Hochschild Hochschild Mining PLC HS High sulphidation HVC Huevos Verdes Centro HVN Huevos Verdes Norte HVR Huevos Verdes Ramal HVS Huevos Verdes Sur ILR Intensive leach reactor IP Induced polarization IS Intermediate sulphidation JORC Code Australasian Code for Reporting Mineral Resources and Ore

Reserves (2004) published by the Joint Ore Reserves Committee (“JORC”)

JV Joint venture K Potassium kg Kilogram kg/t Kilograms per tonne km Kilometre km2 Kilometres squared kV Kilovolts LIMS Laboratory Information Management System LOM Life of Mine LS Low sulphidation m Metre m3 Cubic metre M Million M & I Measured and Indicated Resources Ma Million years Manifestation Claim in process for mining claim status MASA Minera Andes S.A. McEwen McEwen Mining Inc. MCOV Marginal cut-off value Mina Mining Claim (Approved) Minera Andes Minera Andes Inc. mm Millimetre MSC Minera Santa Cruz S.A. Mt Million tonnes N North NE Northeast NI 43-101 National Instrument 43-101 (Canada)


Abbreviation Description NN Nearest neighbour NW Northwest NSR Net Smelter Royalty OCR Operationally constrained resources oz Troy Ounces P&E P&E Mining Consultants Inc. Pb Lead ppm Parts per million QA/QC Quality Assurance/Quality Control Quantec Quantec Geoscience Limited RC Reverse circulation (drill hole) S South SE Southeast SEDAR System for Electronic Document Analysis and Retrieval SEGEMAR Servicio Geológico Minero Argentino SMA Provincial Environmental Department SRK SRK Consulting SW Southwest t Tonnes (metric measurement) t/d Tonnes per day TIN Triangulated Irregular Network tpd Tonnes per day U Uranium US$ United States dollars VAT Value added tax veta Vein (Spanish) W West 3.0 RELIANCE ON OTHER EXPERTS P&E has relied on the following in the preparation of this technical report:

• Opinion of Zaballa Carchio Abogados (legal counsel to McEwen) with respect to, among other things, the verification and legal status of mining properties pertaining to the San José Project held by Minera Santa Cruz S.A., and facilities thereof, addressed to McEwen and dated July 30, 2014. P&E relies on this report with respect to any discussion contained herein dealing with the tenure and legal status of the Project.

• Information provided by Minera Santa Cruz. S.A., in May 2014, with respect to permitting and royalty information contained in section 4.

A draft copy of the Report has been reviewed for factual errors by McEwen. Any statements and opinions expressed in this document are given in good faith and in the belief that such statements and opinions are not false and misleading at the date of this Report.


4.0 PROPERTY DESCRIPTION AND LOCATION 4.1 LOCATION The San José silver-gold Property is located in the Province of Santa Cruz, Argentina, located approximately between latitude 46°41’S and 46°47’S and longitude 70°17’W and 70°00’W (Gauss Kruger, Zone 2 coordinates approximately 4830000N 2400000E) (Figure 4.1). The mine is located 1,750 km by air south-southwest of Buenos Aires and 230 km south-west of the Atlantic port of Comodoro Rivadavia. The nearest town is Perito Moreno, located approximately 30 km west of the Property. Figure 4.1 Location Map of the San José Property, Argentina

4.2 PROPERTY DESCRIPTION AND TENURE The San José Property covers a total area of approximately 50,491 ha and consists of 50 contiguous mining concessions (consisting of 18 “Minas” or approved mining claims; and 32 ‘Manifestations’ or claims that are in the application process for mining claim status). One exploration license (‘Cateo’) was converted into four new Manifestations, namely Verano I, II, III and IV. A part of these Manifestations, Verano II and III were objected to by the Mining Authority of the province. MSC filed a claim against the objection and the issue was not resolved at the time of this report. These new Manifestations will be required to pay bi-annual fees, but only after a three year grace period from the initial application dates for Manifestation status in 2009. Due to the procedural status of the Verano claims, no payment is due on them at the time of this report. As of the effective date of this Report, all of the remaining concessions comprising the San José Property were in good standing. Additionally, 11 exploration rights and 46 mining concessions were transferred on December 2013 by MH Argentina Corporation S.A.., Las Yaretas S.A. and Minera Andes S.A. to MSC (“New Properties”). As of the date of this report, these rights were converted into 10 exploration rights and 48 mining concessions, totalling 139,313 ha. These New Properties are located nearby the Properties. MSC is conducting a due diligence on these New Properties to confirm their legal status.


TABLE 4.1 CONCESSION LOCATIONS OF THE SAN JOSÉ PROPERTY

Concession* File Number Area (ha)

Initial Application Date

Mina Application Date

Mina Approval

Date

Annual Holding

Cost ($AR) El PlumaE2 412.278/MA/99 1,000.00 22/11/1999 12/08/2005 9/08/2006 $8,000 El Pluma3 412.279/MA/99 750.00 22/11/1999 12/08/2005 18/10/2006 $6,400 El PlumaE3 412.280/MA/99 800.00 22/11/1999 12/08/2005 18/10/2006 $6,400 El Pluma4 412.281/MA/99 1,000.00 22/11/1999 12/08/2005 18/10/2006 $8,000 El PlumaE1 410.412/MA/99 1,000.00 16/04/1999 11/04/2005 9/08/2006 $8,000 Tres Colores A 411.332/MA/99 1,000.00 4/08/1999 1/07/2005 9/08/2006 $8,000 Saavedra 5 410.089/MA/99 800.00 10/03/1999 30/10/2002 $6,400 Saavedra 7a 410.090/MA/99 1,000.00 10/03/1999 15/04/2002 26/07/2007 $8,000 Saavedra 2a 410.091/MA/99 1,000.00 10/03/1999 5/05/2004 13/08/2007 $8,000 Saavedra 8 410.092/MA/99 1,000.00 10/03/1999 15/02/2006 15/05/2008 $8,000 Saavedra 1a 410.093/MA/99 1,000.00 10/03/1999 5/05/2004 29/07/2009 $8,000 Saavedra 6b 410.094/MA/99 800.00 10/03/1999 1/07/2005 $6,400 Saavedra 4 410.095/MA/99 800.00 10/03/1999 1/07/2005 29/08/2007 $6,400 Saavedra 3 410.096/MA/99 800.00 10/03/1999 1/07/2005 $6,400 El Pluma1 410.411/MA/99 750.00 16/04/1999 1/07/2005 $6,400 Tres Colores B 411.331/MA/99 998.50 4/08/1999 1/07/2005 $8,000 El Pluma2 412.277/MA/99 1,000.00 22/11/1999 12/08/2005 1/09/2008 $8,000 Tres Colores D 414.640/MA/00 901.00 1/09/2000 17/04/2006 17/10/2007 $7,200 Tres E 414.266/MA/00 999.93 24/06/2000 20/10/2005 $8,000 Tres F 414.267/MA/00 999.93 24/06/2000 12/12/2005 $8,000 Tres Colores G 414.639/MA/00 397.50 1/09/2000 15/02/2006 20/11/2007 $3,200 Uno C 413.097/MA/00 820.20 6/03/2000 12/08/2005 $7,200 Saavedra 10 413.395/MA/00 1,000.00 6/04/2000 10/12/2004 $8,000 Saavedra 9 413.396/MA/00 1,000.00 6/04/2000 10/12/2004 $8,000 Tres Colores F 414.641/MA/00 901.00 1/09/2000 12/12/2005 $7,200 Tres Colores C 414.642/MA/00 901.00 1/09/2000 29/03/2006 8/10/2007 $7,200 Tres Colores E 414.643/MA/00 901.00 1/09/2000 17/04/2006 1/10/2007 $7,200 SaavNE1 400.625/MA/01 1,000.00 21/03/2001 10/12/2004 $8,000 SaavNE2 400.626/MA/01 1,000.00 21/03/2001 10/12/2004 $8,000 SaavNE3 400.627/MA/01 500.00 24/03/2001 10/12/2004 $4,000 Uno F 400.764/MA/01 594.00 4/04/2001 17/05/2005 $4,800 Uno D 400.765/MA/01 840.00 4/04/2001 17/05/2005 $7,200 Uno E 400.766/MA/01 840.00 4/04/2001 10/12/2004 $7,200 Uno G 401.507/MA/01 1,103.70 20/06/2001 15/02/2006 $9,600 Uno H 401.508/MA/01 560.40 20/06/2001 1/07/2005 $4,800 Uno I 401.509/MA/01 560.40 20/06/2001 10/12/2004 $4,800 Saavedra 11 401.874/MA/01 1,000.00 2/08/2001 10/12/2004 11/12/2006 $8,000 Saavedra 12 401.875/MA/01 1,000.00 2/08/2001 1/07/2005 $8,000 Saavedra 13 401.876/MA/01 1,000.00 2/08/2001 3/11/2005 13/09/2007 $8,000 Saavedra 14 401.877/MA/01 1,000.00 2/08/2001 1/07/2005 $8,000 Uno A 413.095/MA/00 840.00 6/03/2000 12/08/2005 $7,200 Uno B 413.096/MA/00 840.00 6/03/2000 12/08/2005 $7,200 Tres A 411.333/MA/99 1,000.00 4/08/1999 1/07/2005 $8,000 Tres B 411.334/MA/99 750.00 4/08/1999 12/08/2005 $6,400 Tres C 414.264/MA/00 980.00 24/07/2000 12/08/2005 $8,000 Tres D 414.265/MA/00 770.13 24/07/2000 15/02/2006 $6,400 Verano I 423.893/MSC/09 4,091.33 16/02/2009 Verano II 429.264/MSC/09 1,856.17 4/11/2009 Verano III 429.268/MSC/09 2,000.00 4/11/2009 Verano IV 429.269/MSC/09 2,045.00 4/11/2009 Total of Manifestations & Minas 50,491.19 $329,600 Minas 18 16,450.50 Manifestations 32 34,040.69

*Concessions are granted for unlimited periods of time, subject to the following conditions: (a) the payment twice a year of a mining fee or canon of 80 pesos per unit, or pertenencia (disseminated ore); and (b) the filing of a minimum investment plan and compliance with a one-off minimum investment in the concession equal to 500 times the relevant canon over a five year


period; and (c) existence of continuous work in order to avoid abandonment pursuant to Section 225 of the Argentine Mining Code.

TABLE 4.2

CONCESSION LOCATIONS OF THE NEW PROPERTIES

Concession* File Number Area (ha) Annual Holding Cost ($AR)

Primavera 412.629/MH/06 6.928 Rosalía II 412.630/MH/06 3.396 Guadal 412.631/MH/06 4.300 $28.000 Rosalía III 402.226/MH/07 3.840 Guadal II 403.320/MHA/07 800 Primavera I 404.607/MH/07 4.097 Primavera II 423.894/MH/09 3.937 Guadal III 424.811/MH/11 800 Guadal IV 424.812/MH/11 800 Guadal V 424.813/MH/11 800 Guadal VI 424.814/MH/11 800 Guadal VII 424.810/MH/11 800 Guadal VIII 424.809/MH/11 800 Guadal IX 424.846/MH/11 800 Guadal X 424.845/MH/11 800 Guadal XI 429.009/MSC/14 5752.62 Guadal XII 429.010/MSC/14 4100 Los Pinos II 408.184/MH/08 7.499 Los Pinos III 423.931/MH/09 4.844 Los Pinos IV 423.932/MH/09 9.556 Los Pinos VI 420.907/MH/10 3,853.75 Rosalía IV 425.103/MH/11 9.987 Primavera III 425.104/MH/11 9.965 Dos A 411338/MA/99 1.000 $4.800 Dos B 411337/MA/99 1.000 $4.800 Dos C 411336/MA/99 1.000 $4.800 Dos D 411335/MA/99 501,20 Dos E 414525/MA/00 911 Dos F 414526/MA/00 990 Dos G 414524/MA/00 990 Dos H 401218/MA/01 911,35 $8.000 Dos I 401219/MA/01 789,53 $6.400 Dos J 401220/MA/01 900 $7.200 Ocho C 414285/MA/00 844 Nueve A 413104/MA/00 1.000 Nueve B 414268/MA/00 1.000 Nueve C 414269/MA/00 671,50 Nueve D 414270/MA/00 671,50 Cinco B 413099/MA/00 950 Cinco C 413100/MA/00 490,60 Cinco A 413098/MA/00 1.000 Cinco D 400637/MA/00 920 Cinco E 400638/MA/01 230 Ocho B 414286/MA/00 1.000 Cuatro B 413102/MA/00 750 Seis A 412844/MA/00 999,75 Once C 414782/MA/00 1000 Este I 420.615/MA/08 3.340,41 Este 402.746/MA/07 1.188 Oeste 402747/MA/07 990 Oeste 10 412574/MA/04 2.420 Oeste 20 412575/MA/04 2.557,17 $20.800


Pirámides Sur I 420443/MA/08 3.219 Pirámides Norte I 420441/MA08 3.712,25 Piramides Este 421625/LY/10 1,329.88

Tobias I 420224/LY/09 3,983.05 Tobias II 420225/LY/09 5,897.25 Hestela 424993/LY/10 900 Total of Manifestations & Minas 139,313 $84.800 Manifestaciones 48 81,498 Cateos 10 57,815

4.3 SURFACE RIGHTS A mining licence alone is not sufficient to permit mining operations. Environmental and related permits are also required. Despite the fact that mining rights and concessions do not establish ownership on the overlapping surface lands, such lands – and in some cases also the surface land contiguous to the mining area1 - are legally subject to different types of mining easements (e.g. right of way, occupation of land, use of water, etc.) provided that a compensation is paid to the surface land owner. When no agreement is reached between the surface owner and the miner regarding compensation, resolution of the issue shall be fixed by the Courts. Meanwhile, the miner can start or continue with the mining activities, by establishing a bond or guarantee to the benefit of the surface owner, in a reasonable amount, thus ensuring that compensation shall be paid, once finally determined by the Court. No mining easement is required when the miner owns the surface land overlapping its mining concessions. To ensure the integrity of its operations, MSC has purchased land and correspondingly the surface occupation rights in 2002 from the Beitia Family known as “Estancia San José”, for an area of 2,875 ha covering the area required to construct the mine and the facilities for San José. The sale price agreed on was US$353,400. An amendment to the agreement in November 11, 2005 allowed MSC to adjust the location of Estancia San José. MSC was granted easement rights and use of existing roads covered by the surface rights. MSC quarries material from Estancia San José for road construction and other mining operations. The owners of Estancia San José are entitled to collect US$0.90 plus VAT/m3 of rock extracted.

1The mining easement on the overlapping surface land is mandatory; the mining easement on the surface land contiguous to the mining area needs to be granted by the Authority upon verification of additional requirements.


Figure 4.2 Mining Concessions and Surface Rights of the San José Mine

Source: Hochschild


A new agreement signed on June 1, 2006 ratified easement rights, and detailed and regulated the obligations of each party in connection with the easements. The owners of Estancia San José shall be entitled to collect compensation from MSC as noted below:

• MSC quarries material from Estancia San José and the owners of Estancia San José collect US$0.90 plus VAT/m3 of rock extracted.

• If MSC performs exploration activities, compensation to the owners of Estancia San José will be paid as follows:

• Construction of Mining Road: US$270/km. • Construction of roads: US$250/km. • Construction of trenches: US$450/km. • A monthly payment of US$950 will be paid to the owners of the Estancia San José for

the use of a house located in the Estancia San José. Payment of this price also entitles MSC to use roads connecting Estancia San José and the neighbouring properties.

To further clarify the compensation arrangements the following agreements were established”

• In May of 2012, the Beitia family granted MSC a right of access to Estancia Pituras charging US $36,000 per year.

• On February 14, 2006, MSC together with members of the Flores family purchased the surface rights to ‘Estancia La Carmencita’, a 5,543 ha land package covering a portion of the area between Highway 43 and the Estancia San José where the mine facilities are located. MSC holds 66.6% of the surface rights to Estancia La Carmencita which grants MSC free right of access. All obligations regarding this transaction have been completed by MSC.

The location of concessions and the limit of the MSC surface rights are shown on Figure 4-2. With these two agreements in place, the main access route to the Property from Highway 43 and all required mine infrastructure, tailings, dumps, etc., are provided for. MSC has expressed its intent to purchase additional land in due course, as may be necessary to ensure its control of any target areas of economic mineralisation. On June 18, 2010 MSC purchased 3,725 ha located in Estancia Pinturas. The purchase enabled MSC to carry out mining activity in Saavedra. The purchase price was US$1,050,000. The purchase deed was executed on December 15, 2011 and is registered with the Registry of Real Estate Property. 4.4 ARGENTINA’S MINING TITLE LAWS Under the Argentinean National (Federal) Constitution, natural resources, including mineral resources, are owned by the provinces where those resources are located. Argentina has provincial mining procedural codes which apply on a provincial basis, and core legislation, passed by the National Congress, which is applicable throughout the country. The main such national legislation is the Mining Code, which regulates the exploration and exploitation of mineral resources. Other legislation relevant to the mining industry includes environmental laws passed at both national and provincial level, the national Mining Investment Law (Law No 24,196) and the provincial royalty laws. In Santa Cruz province, all concessions are granted by an administrative action under the authority of the Provincial Mining Office according to Provincial Law No. 990 (Godoy 2007). Mineral rights in Argentina are separate from surface ownership and are owned by the provinces where the minerals are located. Under the Mining Code, two types of mineral permit may be granted:


• Exploration permits, or cateos, grant the holder the right to explore minerals within a certain area for a limited period of time; and

• Mining concessions, or minas, grant the holder the right to mine and process ore for an unlimited period of time (subject to the fulfillment of certain obligations).

Mining concessions may be granted for the mining and processing of any minerals (other than uranium and thorium, which are governed by separate regulations) within the concession. The existence of an exploration permit is not a condition to the granting of a mining concession, and mining concessions can be granted to protect a discovery made within an exploration permit held by the discoverer or on free land. As with exploration permits, concessions are granted on the basis of pertenencias, which vary in size and number depending on the type of mineral. Mining concessions also grant the holder the right to request rights of way over the surface land in question from the relevant mining authority, in order to enable the concession holder to commence development of the property. Concession holders may also apply to the courts for a judgment requiring the owner of the surface land to sell the land covered by the concession to the concession holder. Under Argentinean Law, mining concessions are real property, which can be transferred freely and can also be mortgaged. Concession holders are not required to be domiciled in Argentina. However, it is not possible for a foreign holder of mining concessions located in Argentina to develop a project without organizing a local subsidiary, due to corporate, tax, labour laws and other reasons. Concessions are granted for unlimited periods of time, subject to the following conditions: (a) the payment twice a year of a mining fee or canon of 80 pesos per unit, or pertenencia (disseminated ore); and (b) the filing of a minimum investment plan and compliance with a one-off minimum investment in the concession equal to 500 times the relevant canon over a five year period. Of the figure set out in the minimum investment plan for investment over five years, 20% must be invested in the first two years. Failure to comply with these conditions may result in the termination of the concession. There are no production target obligations on the holders of a mining concession. 4.5 ARGENTINA’S MINING ROYALTIES As legal owners of the mineral resources, provinces are entitled to request royalties from mine operators. Regulations vary from province to province. In Santa Cruz, where the San José Property is located, the royalty is fixed at a maximum of 3% of the mine-site value per year payable monthly. However, under Mining Tax Stability Agreements executed between MSC and the Province the mining royalties were fixed at 1.85% of the mine-site value per year when the final product is doré and 2.55% when the final products are concentrates or precipitates. In December of 2012, the province increased the royalty to 3% of the mine site value. MSC paid US$6,694,682 in mining royalties during 2013. National Export Retention Tax is fixed at 5% for doré and 10% for concentrates or precipitates although rebates are available if the final products are shipped from a Patagonian maritime port (depending on the port of exportation these rebates were reduced to nil from 2009 and 2010). A new provincial tax was created in 2013, under which mining companies must pay, on a yearly basis, 1% of their proven mining reserves. MSC filed a legal claim before the National Supreme Court arguing the un-constitutionality of this tax. The legal claim is pending to be declared. 4.6 OTHER PERMITTING REQUIREMENTS Other permits applied and / or accepted in order to advance the Property are outlined in Table 4.2.


Grants of mining rights, including water rights, are subject to the rights of prior users. The mining code also contains environmental and safety provisions administered by the provinces. Environmental Impact Reports (“EIR”) must be submitted to the provincial government prior to conducting mining operations. On March 1, 2006, MSC received approval for the Environment Impact Assessment (“EIA”) for the Property. The EIR must describe the proposed operation and the methods that will be used to prevent undue environmental damage and must be updated biennially. Mine operators are liable for environmental damage and violators of environmental standards may be required to shut down mining operations. An EIR must be submitted every two years in accordance with Argentinean law. All of the known mineralized zones, mineral resources and mineral reserves and active mine workings, existing tailings ponds, waste etc., are within MSC’s concessions. There are no other back-in rights, payments or other agreements or encumbrances or environmental liabilities to which the Property is subjected. All work permits have been acquired and are in good standing.

TABLE 4.3 PERMITS FOR PROPERTY OPERATIONS AT SAN JOSÉ MINE, ARGENTINA

Permit Agency Observation

Mining Claim (Mina)

Santa Cruz Provincial Department of Mining (“DPM”)

Mina status for 18 claims (covers all areas of production)

Mining Claim (Manifestation) DPM Remaining 78 Manifestations registered to MSC, awaiting final title. Four

newly registered Manifestations converted from Cateo. Exploration Rights Claim (Cateo) DPM Remaining 11 Exploration Rights registered MSC, awaiting final title.

Investment plan DPM Presented on February 15, 2005 for each of the claims Mineral Producer Certificate DPM Registered since January 29, 2002 (403.305/02); renewed annually before

March. Fee paid for 2014.

Environmental Impact Report DPM

Approved by DPM on March 1, 2006. Extension requested for 2010-2012 bi-annual report. An extension to the corresponding 2014 bi-annual report was to be filed at the time of this report.

Hazardous Waste Generator

Provincial Environmental Department (SMA)

Registered with the Provincial Environmental Department (SMA) since May 2, 2006 (Res. N° 046-SMA/06). Request of incorporation of Hazardous Waste corresponding to categories Y1 and Y33 has been submitted to SMA. Certificate expired 23/08/2014. Certification for hazard waste generator – bio-pathogens, expires 09/10/2014 with renewal pending. An extension for both certificates has already been requested.

Environmental Quality Certificate (“EQC”)

DPM EQC 2014 was issued.

Explosives Use National Arms Registry

“User that receives explosive services” Register Number RE7082, issued on August 2011. Registration expired in August 2012 and was not renewed. “User that manipulates explosives” Renewed each year: Register Number 980007082, issued in August 2014.

Explosives Storage National Arms Registry Issued on May 31, 2006 for 6 deposits. Date for renewal: Four in May 2016, two in September 2015. Issued on May 31, 2014 for 14 deposits. Date for renewal: May 2019.

Water Use Department of Water Resources (DRH)

Permit for water for industrial use expired in September 2013. The permit was extended for a one year period. The current permit expires in October 2014. Permit for water camp use, expired in April 2014. The permit was extended for 15 month period. The current permit expires in July 2015.


Registry of Importers and Exporters

Import/Export National Administration (Dirección General de Aduana)

Registered since January 28, 2004. Renewed on June 10, 2008.

Radio Frequency use

National Committee of Communications (CNC) Permit issued for use of the assigned frequency and equipment.

Registry of Mining Investors

National Direction of Mining Investors (depending on National Mining Secretary)

Registered Since April 18, 2002 (Registry Number 422)

Fiscal Stability Certificate

National Mining Secretary Certificate issued May 15, 2006 (valid 30 years)

Hydrocarbon storage permit

Secretary of Energy (National level)

Storage of hydrocarbons, tank Certification from Secretary of Energy was obtained in June 2014.

ARN (Nuclear Regulatory Authority)

National Atomic Energy Commission

Permission to use nuclear component in machinery/equipment issued in 2009 and expires in October 2016. Registered License Number 3885/09.


5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY 5.1 ACCESS The principal access route to the San José Mine comprises a good unsealed (gravel) road section of 32 km and then paved road to the port of Comodoro Rivadavia, a total distance of 350 km. Comodoro Rivadavia has scheduled national air services to Buenos Aires, the capital of Argentina, with international flight connections. Principal road connections are illustrated on Figure 4.2. The main incoming materials are diesel fuel, process plant chemicals, cement, timber supports, spare parts, explosives, zinc powder, sodium cyanide and hydrogen peroxide. Transportation of materials to and from the Property is by highway transport truck. Mine haulage roads provide access from the mine portals to the ore stockpile at the process facility and temporary rock stockpile facilities. Concentrate is exported via the port of Puerto Deseado in the province of Santa Cruz, 250 km south of Comodoro Rivadavia. 5.2 CLIMATE The Property is within an arid to semi-arid area of Argentina, with short warm summers with temperatures above 10°C and winters with temperatures commonly below 0°C. Strong and persistent winds can be encountered especially during the warmer months (October to May). Average rainfall at the site is estimated to be 144 mm and snowfall amounts to 32.5 mm. The annual average temperature is 8.9°C. MSC has maintained a weather station at the Property since January 2005. Mining and exploration can continue year round in this part of Argentina. 5.3 RESOURCES AND INFRASTRUCTURE The nearest town to the Property in Argentina is Perito Moreno, approximately 30 km to the west. Las Heras, Pico Truncado, and Perito Moreno are small towns (populations ranging from approximately 3,600 to 15,000), which mostly provide labour for the local oil industry, or, in the case of Perito Moreno, for tourism and agricultural purposes. These towns have grown during the last decade from supplying only the most basic needs (food, accommodations, fuel, hardware, labour, etc.) for projects in the early stages of exploration to centres that are more advanced in their abilities to supply services to operating and developing mines. Other major services are provided by Caleta Olivia, Comodoro Rivadavia, or Buenos Aires. The immediate area surrounding the Property is isolated, and initially electrical power was provided at the mine and plant site by diesel generators. It was determined that a more cost effective and longer term option would be to connect the site to the national grid, which required a power line spur of 130 km of 132 kV electric line The transmission line was completed in March 20, 2009 at a cost of US$ 21 million. The diesel generators, which are fully capable of providing sufficient power for the expanded 1,650 tpd operation, are on site for emergency back-up power generation. Fresh water is obtained from wells that, which have been situated so as to dewater the Frea Vein mining area. Water is stored in a surface impoundment. Water for the underground mine is sourced from the mine site settling ponds. The closest deep water port facility is at Comodoro Rivadavia, a driving distance of approximately 350 km. Alternatively, the port of Puerto Deseado is located approximately 400 km east–southeast of the Property. The San José Property consists of camp facilities that can accommodate up to 712 personnel, medical clinic, security building, maintenance shop, processing facilities, mine and process facility warehouse,


surface tailings impoundment, support buildings and mine portals, change house, core shack, an administration building and offices. MSC has installed a cellular-based telephone, data and internet communication system. A satellite-based communication system remains as a back-up. 5.4 PHYSIOGRAPHY The topography of the Property in Argentina is gently rolling, with a few deeply incised valleys. Elevations on the Property range between approximately 300 m and 700 m above sea level. The Property area is semi-desert. Vegetation comprises low scrub bushes and grass, typical of harsh climate and poor soils. Fauna consists of birds, small mammals and reptiles. Most of the Property area is uninhabited, however, it is occasionally used by local farmers for sheep and cattle grazing.


6.0 HISTORY 6.1 HISTORICAL EXPLORATION Historical ownership and exploration of the San José Property are summarized below. There is no formally-recorded exploration on the Property prior to work carried out by Minera Andes Inc. (acquired by McEwen) in the late 1990s. The Property was acquired by Minera Andes in 1997, after a regional structural study and prospecting program uncovered areas of Landsat colour anomalies, and coincident anomalous gold and silver values. Based on these results, Minera Andes embarked on an exploration program commencing in 1997. Information on exploration on the San José Property from 1997 to December 2012 is described in Table 6.1 below.

TABLE 6.1 SUMMARY OF EXPLORATION ON THE SAN JOSÉ PROPERTY, 1997-SEPTEMBER 2011

Year Operators Description

1997 to 2001 Minera Andes

5-year program consisting of prospecting; soil sampling; stream sediment sampling; mapping and sampling; trenching and channel chip sampling. IP/Resistivity (74 line km) CSAMT (42 line km) and magnetic surveys (186 line km) by Quantec Geofisica Argentina S.A. RC drilling (85 holes) and diamond drilling (3 holes); alteration studies (Portable Infrared Mineral Analyzer); metallurgical studies; discovery of Saavedra West and Huevos Verdes Zones, plus numerous prospects.

2001 to 2003 MSC

JV company created between Minera Andes and Hochschild; 2 year program consisting of surveying; IP/Resistivity (45 line km), and Real Section IP (20.25 line km) surveys by Quantec Geofisica Argentina S.A.; diamond drilling (30 holes); further definition of the Huevos Verdes Zone; mineral resource estimates at Huevos Verdes and Saavedra West vein and breccia zones.

2003 to 2004 MSC

Hochschild vested at 51 % ownership; 2 year program consisting of underground development at HVN and HVS; surface rights land purchasing; road construction; diamond drilling (39 holes); program further outlined the Huevos Verdes Zone and resulted in the discovery of the Frea Zone.

2004 to 2005 MSC

Definition-style diamond drilling (144 holes). Initiation of Feasibility Study including mineral resource and mineral reserve estimates at Huevos Verdes and Frea managed by MTB Project Management Professionals Inc. of Denver, USA, includes mine design, capital and operating cost estimation, metallurgical, geotechnical environmental EIA and social studies by Vector Argentina, AMEC retained to do resource audit; continued underground development on 480 and 430 levels at HVN and HVS; IP/Resistivity (215 line km) surveys; additional 38 diamond drill holes to test regional targets.

October 2005 MSC Completion of Feasibility Study in October 2005, decision to proceed to production was made on March 28, 2006.

November 2005 to June 2006

MSC

Phase 1 and Phase 2 drilling at Kospi Vein (128 holes); EIA approved by DPM on March 1, 2006; continued underground development (ramp construction and drifting at HVS and Frea); Granting of Environmental Permit, production decision (March 28, 2006); change of metallurgical processing and recovery methodology to a Gekko system; supporting metallurgical test work; mine construction, permitting

July 2006 to September 2007

MSC Ongoing plant and infrastructure construction, continued mine development, mineral resource/mineral reserve estimation (Huevos Verdes, Frea, Kospi), continued metallurgical test work, official mine opening (June 26, 2007), continued drilling of regional prospects.

September 2007 MSC Preparation of a technical report by AMEC, including a mineral resource and mineral reserve

estimation with effective date of December 31, 2006

October 2010 to December 2010

MSC

Drilling focused on extending Micaela, Luili; Susana, Rml and HVSur veins in order to identify new areas of mineralization and extensions. Drilling was also undertaken at the Saavedra Oeste prospects to identify new veins and mineralization. Ground magnetic survey conducted over 342 km. 4 lines of IP totalling 19.45 km conducted on North block. 19 lines of IP totalling 99 km conducted on South block.

January 2011 to December 2011

MSC Drilling focused on the Pilar, Luli, Antonella, Rml 861 A, Dalila and Sanson veins, in order to increase resources and Infill drilling on known Veins Micaela, Sofia, Luli, HVN A, Ramal A, Ramal Ayelen and Susana. This drilling identified new exploration targets, Pluma and Linea 4.


January 2012 to December 2012

MSC

Drilling focused on increasing resources on the Pilar veins while new exploration targets were identified in the Emilia, Estela and Esperanza veins. 3 lines of IP/resistivity totalling 23 km were conducted and 3 lines of pole-dipole IP totalling 20 km were conducted on the Property.

6.2 HISTORIC DRILL PROGRAMS From 1998 to December 2012, 1,369 reverse circulation (“RC”) and diamond exploration surface and underground drill holes totalling 216,059.34 m have been drilled on the Property. Table 6.2 gives the details on the program for each year to December 2012. Details of the 2013 drill program are in Section 10.0.

TABLE 6.2 DRILLING PROGRAM ON THE SAN JOSÉ PROPERTY, 1998-DECEMBER 2012

Year No. drill holes No. metres Core or RC Company 1998 38 3,956.00 RC Minera Andes 1999 21 1,648.00 RC Minera Andes 2000 29 3,698.21 RC & Core Minera Andes 2001 30 5,113.24 Core MSC 2002-2003 32 4,376.87 Core MSC 2004 13 2,807.45 Core MSC 2005 211 43,730.12 RC & Core MSC 2005-2006 178 25,100.36 Core MSC 2007 135 29,846.74 Core MSC 2008 85 18,915.05 Core MSC 2009 115 25,093.50 Core MSC 2010 234 53,692 Core MSC 2011 248 55,698 Core MSC 2012 370 97,876.50 Core MSC Total 1,739 371,532.04

6.3 PREVIOUS MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES A mineral resource estimate, compliant with CIM Standards, was completed in 2002 for the Huevos Verdes and the Saavedra West Vein and Breccia Zones and reported in Cinits et al. (2002). Cinits et al. (2005, 2007) and Colquhoun et al. (2007) for Minera Andes Inc. reported NI 3-101 compliant mineral resource and mineral reserve estimates in 2005 for the Huevos Verdes and Frea Veins and in 2007 for the Huevos Verdes, Frea and Kospi Veins. Mach and Elliott (2009) reported mineral resource and mineral reserve estimates, effective June 30, 2008, for the Huevos Verdes, Frea and Kospi Veins as well as mineral resource estimates for the Odín, Ayelén and Huevos Verdes Ramal veins. Mineral resource and mineral reserve estimates prior to 2012 are summarized in Puritch (2010) and the 2011 and 2012 mineral resource and mineral reserve estimates are summarized in Puritch (2012). 6.4 P&E MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES, 2012 Mineral resource estimates for the Property as of December 31, 2012 were reviewed by P&E for their August 15, 2013 Technical Report (Puritch et al., 2013). Measured and Indicated Resources as at December 31, 2012, at the San José mine, are 4.4 million tonnes grading 484 g/t Ag and 7.03 g/t Au containing 128 million silver equivalent ounces at a cut-off grade of 213 g/t AgEq. Please refer to Table 6.3.


TABLE 6.3 SAN JOSÉ MINERAL RESOURCES AS OF DECEMBER 31, 2012

Resource Category

Tonnes (000’s) Ag (g/t) Au (g/t) Ag M oz Au k oz

Measured 1,289 559 8.15 23.2 338.0

Indicated 3,098 453 6.56 45.1 653.6 Measured & Indicated 4,387 484 7.03 68.3 991.7

Inferred 2,099 476 7.37 32.1 497.1

(1) Mineral resources, which are not mineral reserves, do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.

(2) The quantity and grade of reported Inferred Resources are uncertain in nature and there has been insufficient exploration to define these inferred resources as an Indicated or Measured mineral resource and it is uncertain if further exploration will result in upgrading them to an Indicated or Measured mineral resource category.

(3) P&E believes the reported mineral resources are in compliance with the generally accepted CIM “Estimation of Mineral Resource and Mineral Reserves Best Practices” guidelines, as required by NI 43-101.

(4) Cut-off is 213 g/t AgEq. Based on a gold price of US$1,200/oz and a silver price of US$20.00/oz. (5) Resources are inclusive of Reserves Mineral reserves were estimated from selected diluted and extracted Measured and Indicated Mineral Resources. As at December 31, 2012 mineral reserves totalled 1,772,333.00 tonnes, grading 470 g/t Ag and 6.44 g/t Au. Of this total 830,400 tonnes, grading 470 g/t Ag and 6.73 g/t Au are Proven reserves and 942,000 tonnes grading 471 g/t Ag and 6.19 g/t Au are Probable reserves. A summary of Proved and Probable reserves, by vein, is presented in Table 6.4

TABLE 6.4 SAN JOSÉ PROVEN AND PROBABLE RESERVES AS AT DECEMBER 31, 2012

Vein Proven Reserves Probable Reserves Tonnes Ag (g/t) Au (g/t) Tonnes Ag (g/t) Au (g/t)

Susana 0 16,926 1,971 20.53 Sanson 7,072 454 2.43 15,235 397 2.31 Pilar 58,178 285 7.84 145,026 349 9.00 Piedad 1,948 136 1.46 236 245 2.52 Odin 25,093 547 6.37 96,623 331 4.00 Noel 1,158 1,393 12.98 3,812 568 4.29 Micaela 29,012 159 3.97 28,948 266 5.14 Marisa 21 38 7.97 2,425 36 8.24 Marcia 6,663 413 7.97 0 Mara 18,721 318 3.61 26,922 216 3.07 Luli 31,409 612 5.47 40,948 432 4.28 Kospi 116,454 637 7.32 181,050 814 8.04 Julieta 2,118 317 3.07 0 HVS 21,569 698 10.42 39 2,983 71.37 HVN 80,030 575 5.48 14,202 286 3.21 HVC 7,781 626 7.24 5,527 444 4.60 Frea 32,757 196 11.61 2,293 214 2.52 Cecilia 24,261 820 9.35 20,119 486 5.22 Benita 2,181 361 4.21 0 Ayelen 74,003 422 4.49 61,353 388 3.84 Antonella 23,781 415 16.46 41,564 177 7.70 Abril 26,641 301 4.77 14,901 341 4.45 290 6,158 384 12.16 3,061 406 14.70 Sigmoide Luli 0 14,699 718 7.27 R720 1,870 369 5.97 856 197 2.73 RN3 3,509 544 8.03 163 815 6.86 RN1 5,526 79 4.67 0 RKospi 7,859 73 4.00 16,044 97 3.08 RHVNC 2,635 260 3.45 13,383 278 2.42


RHVS 5,716 266 3.93 41,790 304 4.00 RFrea 66,391 477 6.81 31,394 289 3.16 RAyelen 16,275 214 1.85 2,939 255 1.95 R861X 15,919 764 7.02 5,795 242 3.29 R861W 4,631 752 5.43 2,638 1,024 6.51 R861Q1 5,787 446 5.49 547 373 4.36 R861I 9,671 456 4.45 5,397 328 3.03 R861H 2,117 276 1.65 913 243 0.98 R861F 158 415 5.55 1,919 578 7.59 R861E 9,493 1,048 9.65 7,270 637 5.41 R861D 8,585 188 5.35 5,557 144 2.80 R861C 7,335 398 5.70 7,439 577 6.96 R861B 11,916 272 12.79 5,208 311 8.12 R861A 23,261 370 5.29 33,587 527 6.06 R483 18,340 360 4.10 15,229 439 4.79 R425 5,031 989 8.38 8,000 528 5.17 R350 1,321 368 8.25 0 Total / Average 830,357 470 6.73 941,976 471 6.19


(2) P&E used a gold price cut-off of US$1,200 per ounce (oz) and US$20.00 per oz for silver for mineral reserves.

(3) The cut-off value used to estimate mineral reserves is based on historical January to October 2012 geologic, mining, plant and mine administration variable and fixed costs. P&E considers these costs to be reasonable as a basis for estimating mineral reserves.


7.0 GEOLOGICAL SETTING AND MINERALIZATION 7.1 REGIONAL GEOLOGY The Property is located in the northwest corner of the 60,000 km2 Deseado Massif of the Santa Cruz Province, Argentina (Figure 7.1). The Deseado Massif consists of Paleozoic metamorphic basement unconformably overlain by Middle to Upper Jurassic bimodal andesitic and rhyolitic volcanics and volcaniclastics. Cretaceous sediments and Tertiary to Quaternary basalts overlie the Jurassic volcanics. Figure 7.1 Geology of the Deseado Massif, Argentina

Modified from http://www.argentexmining.com/santacruz-province.php Jurassic magmatism in the Deseado Massif accompanied extensional tectonics marked by normal faults, horst and graben formation, and block tilting during the opening of the southern Atlantic Ocean. Several small basins formed after the main volcanic episodes, a consequence of intense diastrophic block faulting. Continental sediments were deposited in the Upper Jurassic to Lower Cretaceous in those basins, represented by tuffaceous sandstones, tuffites, limestones, conglomerates, and shales. Low sulphidation (“LS”) epithermal silver-gold deposits accompanied magmatism and deformation. Basaltic plateau volcanism was dominant during the Tertiary span, coupled with minor marine ingressions that produced the deposition of sandstones, shales and fossiliferous limestones. Intrusive rocks are scarce in


the area. They are represented by irregular bodies of rhyolitic porphyries that intrude the main silicic volcanic units, and by basaltic plugs that pierce the whole sequence. Large amounts of intermediate to silicic volcanics were erupted in the Jurassic, in a sub-aerial, cratonic back-arc tensional environment. These volcanics are subdivided into the Bajo Pobre Formation, predominantly of intermediate to basic composition, and the felsic Bahia Laura Group that discordantly overlies the Bajo Pobre Formation. The Bahia Laura Group is further subdivided into the interdigitating Chon Aike Formation (dominantly ignimbrites) and the La Matilde Formation (dominantly volcaniclastics). The volcanic rocks of the Deseado Massif host the producing silver-gold mines of Cerro Vanguardia, Marta Mine, Manantial Espejo and San José (Figure 7-1), as well as the prospects and development projects of Cerro Negro, Lomada de Leiva and La Josefina. The principal host rock for silver and gold mineralization in the San José district is the Bajo Pobre Formation where veins are typically developed in competent andesite flows, and to a lesser extent, in volcaniclastic units. 7.2 PROPERTY GEOLOGY The Property is covered by the El Pluma 4769-I map sheet of the 1:250,000 Servicio Geológico Minero Argentino (‘SEGEMAR’) geological map series. A geological map covering the major vein deposits for the San José Property is illustrated in Figure 7.2. 7.2.1 Bajo Pobre Formation (Upper Jurassic) The Jurassic Bajo Pobre Formation at around 145-150 Ma is the lowermost stratigraphic unit on the San José Property and is assumed to underlie the entire area. It is the main host of Au and Ag mineralization at the Huevos Verdes, Frea, Kospi and all other vein deposits at San José as well as many regional prospects. The formation also hosts some of the mineralization at Saavedra West Zone. The formation comprises a lower andesite volcaniclastic unit and an upper andesite lava flow and has a maximum thickness of 120 m. A dacitic, hornblende-megacrystic lava flow of restricted extent has been identified but its stratigraphic position within the Formation is unknown.

___________________________________________________________________________________________________________________________ P&E Mining Consultants Inc. Page 31 McEwen Mining Inc., San José Property - Report No. 289

Figure 7.2 Geology of the San José Property


An epiclastic environment is inferred for the andesitic volcaniclastic unit, supported by the chaotic change in facies. This unit is generally pervasively altered and commonly has at least a propylitic overprint. Age dating of the volcaniclastic and lava flows indicates a hiatus of around 5 Ma between the two volcanic events. The andesitic and dacitic lava flows discordantly overlie the volcaniclastics. The andesitic lava flow has a thickness of up to 50 m. These flows are massive, with columnar jointing and auto-breccia textures where weathering and hydrothermal alteration is concentrated. 7.2.2 Bahia Laura Group - Chon Aike & La Matilde Formations (Upper Jurassic) The andesitic volcanics are discordantly overlain by volcanic rocks of the Bahia Laura Group. Subdivision of the Group into the Chon Aike and La Matilde Formations is not well defined on the Property, and in some earlier reports the formations have been grouped together and referred to as the Chon Aike Formation (Colquhoun et al. 2007) and this practice is adopted in the section below. Previously, outcrops of the Chon Aike Formation were thought to be restricted to geologically-mapped areas to the north of the Rio Pinturas valley and in the Saavedra West area. However, mapping of a widespread tuffaceous unit overlying the Bajo Pobre Formation by Dietrich et al. (2004), indicated that these rocks may belong to the tuffaceous facies of either the Chon Aike or La Matilde Formation. The Saavedra West basin is interpreted to be a syn-volcanic graben, possibly a caldera, developed within the Bajo Pobre Formation and infilled by pyroclastics correlated with the La Matilde Formation. Pebble dykes are abundant within the graben, and ignimbrites that may be correlated with the Chon Aike Formation occur as dykes along one edge. In the Saavedra West area, the thickness of the Group is around 80 to 100 m, however at Huevos Verdes, La Sorpresa and Rio Pinturas the thickness is only 15 to 20 m. Pyroclastic rocks of the Chon Aike Formation are laterally extensive. Age dating of the ignimbrites within the Chon Aike Formation gives ages around 147-151 Ma, younger than the age of the volcaniclastic sequence but older than the andesitic flows of the Bajo Pobre Formation. Where this Group is overlain by sedimentary rocks of the Cretaceous Castillo Formation, the upper contacts of the Chon Aike Formation are concordant. However, this contact is discordant with the overlying Tertiary flood basalts of the Alma Gaucha Formation. 7.2.3 Post-Jurassic Geology Deposition of Cretaceous sedimentary rocks of the Castillo Formation is interpreted to be controlled by block faulting which created small, normal fault-controlled depressions. Thickness of the formation varies, but is generally between 5 to 80 m and decreases towards the south. The formation is divided into three members, with the lowermost member redefined as a tuffaceous deposit belonging to the Chon Aike Formation. The north-western part of the Deseado Massif is covered by an extensive area of Tertiary-aged basalts with at least two basaltic episodes recognised in the San José region. The Upper Oligocene Alma Gaucha Formation occurs as uniform flat-lying flood basalts up to 30 m that cover a significant portion of the Property. Recent basaltic flows from the Cerro Portuguese volcanic centre form lava flow channels that overlie the flood basalts. Glacially-derived, unconsolidated till deposits up to 50 m in thickness occur predominantly in the Rio Pinturas valley. 7.3 STRUCTURAL GEOLOGY The district surrounding San José is transected by two north-northeast striking major lineaments. The Rio Pinturas lineament follows the Rio Pinturas valley and is one of the main structural features of the


Deseado Massif. This lineament can be traced for over 100 km. A second, sub-parallel lineament is located 2 km east of the Rio Pinturas lineament. The main structural trend of fault and vein systems on the Property is west-northwest to north-northwest. Less prominent are east-striking faults and veins and those north to northeast striking. The vein systems at Huevos Verdes, and possibly also those at Frea, developed along north-northwest striking (average orientation of 325° / 65° NE) sinistral strike-slip faults that were reactivated during Triassic rifting. The Huevos Verdes vein system is known to be composed of three main segments along strike. Variations of vein orientation in bends and jogs along, and in between, sub-parallel sinistral faults control vein width and mineralization style. Sinistral shearing along the north-northeast striking lineaments such as Rio Pinturas may have resulted in overall extension within the bounding blocks that host the San José mineralization, facilitating formation of structural openings along re-activated faults of favourable north-northwest strike. Further details on the structural geology of the Property and its relation to mineralization are outlined in Section 8.2. 7.3.1 Alteration Alteration is typically a LS epithermal with silicification accompanying all of the veins and fractures and occurring as a narrow alteration halo, generally surrounded by an extensive zone of intermediate argillic mixed with phyllic alteration. Strong argillic alteration is interpreted to be a supergene overprint of the propylitic halo with disseminated pyrite. 7.3.2 Mineralization Mineralization in the vicinity of the Property occurs as LS epithermal quartz veins, breccias and stockwork systems accompanying normal-sinistral faults striking 330° to 340° and conjugate dextral faults. Most of the known mineralization at the Property is hosted by the Jurassic Bajo Pobre and Chon Aike Formations. 7.4 VEINS AND VEIN SYSTEMS Regional exploration has identified numerous vein targets, of which five, Huevos Verdes, Frea, Kospi, Ayelén and Odin have been extensively explored by surface diamond drilling and subsequently developed by underground mining. After reviewing the various drilling programs, Colquhoun et al. (2007) concluded the Frea and Kospi Veins were the most significant zones in terms of grade and tonnage. The mineralized Frea has been traced over a 1,200 m strike length and to depths of up to 250 m, with an average width of up to 2.5 m (Colquhoun et al. 2007, Minera Andes News Release, September 2, 2008). The Kospi Vein has been traced for over 1,300 m strike length (Mach and Elliott 2009) and to depths of up to 230 m, with an average width of around 3.0 m. Major vein systems and exploration targets on the San José Property are discussed in detail below and illustrated in Figure 6-1.


7.5 HUEVOS VERDES The Huevos Verdes vein system is one of the most important targets on the Property consisting of three to four discontinuous zones: Huevos Verdes Norte (“HVN”), Huevos Verdes Sur (“HVS”), Huevos Verdes Centro (“HVC”) and Huevos Verdes Ramal (“HVR”). The system is comprised of an array of sub-parallel veins striking 325° with dips ranging between 45° and 75° to the northeast that can be traced almost 2,000 m along strike. Mineralization is hosted by the Jurassic Bajo Pobre Formation, close to the contact of andesitic lava flows with underlying volcaniclastics. The veins pinch and swell and have numerous bends and jogs. Several sub-parallel veins and splays off the main vein have been identified. The width of the vein zone is variable, ranging from less than 1 m to around 15 m. With the exception of limited outcrops of the HVS, the remainder of the veins are blind targets, below a cover of Tertiary basalt layers of up to 50 m. Within the HVN and HVS zones, the strongest mineralization is restricted to sub-vertical 50 to 80 m long ore shoots which can extend 50 to 200 m vertically. The location of these shoots may locally correspond to structural bends and jogs. High-grade portions of the veins consist of banded to mottled quartz with irregular sulfide bands mineralized by fine-grained argentite and pyrite. Ruby silver and native silver are locally observed. The base metal content (zinc, lead, copper) of the veins and the amount of sphalerite, galena and chalcopyrite tends to increase with depth. 7.5.1 Huevos Verdes North (HVN) The main HVN vein is irregularly-shaped and pinches and swells along the 400 m of strike. The vein width varies between 0.5 to 4 m and the dip ranges between 65° to 70° to the north-northeast. The vein and surrounding host rocks have associated strong illitic and argillic alteration with minor propylitic and potassium feldspar alteration. The northern and southern extents of the vein have been closed off by drilling. At depth, mineralization is mostly closed off, except at the northernmost end of the zone. This zone is the weakest mineralized structure of the three Huevos Verdes zones. The strongest levels of gold and silver mineralization are restricted to two principal sub-vertical shoots, which are each approximately 50 to 80 m long and can be traced approximately 150 to 200 m vertically. 7.5.2 Huevos Verdes South (HVS) The HVS vein has been traced for approximately 520 m along strike and ranges in width from 0.5 to 3 m. The dip of the vein ranges from 42° to 75° to the north-northeast and the strike varies from 100° to 190°. The change in orientation may explain the better mineralization and higher gold and silver grades at HVS compared to the HVN vein. Four main sub-vertical shoots, up to 80 m long horizontally and up to 200 m vertically appear to control the majority of the mineralization. Mineralization is open to the north-northwest, and, similar to the HVN, gold and silver grades are strongest in the uppermost parts of the vein and appear to decrease with depth. 7.5.3 Huevos Verdes Central (HVC) The HVC vein has been traced approximately 400 m along strike and ranges in width between 0.5 to 5.0 m. The dip of the vein ranges from 70° to 75° to the north-northeast. The strongest mineralization is restricted to a gently plunging ore shoot 40 to 70 m in width. The shoot has been traced for almost 300 m and remains open at depth.


7.5.4 Huevos Verdes Ramal (HVR) The HVR vein has been traced approximately 200 m along an east-west strike and ranges in width from 1 to 3 m. The vein is located between the HVC and HVS and has been traced vertically for 250 m. 7.5.5 Frea Vein The Frea vein is hosted in Jurassic volcanics and controlled by northwest trending faults. The vein is a blind target below Cretaceous sediments and Tertiary basalts, discovered in 2003 as a result of test drilling an IP/resistivity target. The vein has been traced approximately 1,200 m along its northwest-trending strike and vertically to 200 m. The width of the vein varies from 0.5 to 7 m and dips at approximately 52° to the northeast. The vein remains open in all directions except the northwest extension, which is closed off by drilling. 7.5.6 Kospi Vein The Kospi vein is also hosted by Jurassic volcanics and controlled by northwest trending faults, however, it dips to the southwest at about 70°. Kospi is also a blind target beneath Cretaceous and Tertiary cover rocks, discovered in 2005 as a result of drilling an IP/resistivity target. The vein has been traced for approximately 1,300 m along its northwest strike at 308° and vertically to 230 m. The thickness of the vein ranges from 0.25 to 9.5 m. The vein remains open to the southeast but is closed off by drilling in its northwest extent. 7.5.7 Odín and Ayelén Veins The Odín and Ayelén veins are the two most north-easterly northwest-striking sub-parallel systems that have been drilled. As a result of the 2008 drilling program, Odín has been traced approximately 1.6 km along strike and Ayelén 1.2 km along strike, with both dipping to the southwest (Minera Andes News Releases, September 2, 2008 and January 9, 2009). Mach and Elliott (2009) reported an extension to these veins of 1.9 km for Odín and 1.6 km for Ayelén. Both of these vein systems were discovered by test drilling blind geophysical targets. The Odín vein remains open to the west along strike and at depth where it has been tested to 200 m. 7.5.8 Luli and Susana Veins The Luli and Susana veins are part of an E-W trending vein system that has an orientation different from the typical northwest trend of all other veins at San José. This system does not outcrop. The Luli Vein has an inferred strike length of 1,300 m and the Susana Vein has an inferred strike length of 1,200m. 7.5.9 Micaela Vein The Micaela vein has been traced approximately 1,000 m along an east-west strike and ranges in width from 1 to 4 m. The vein has been traced vertically for approximately 200 m. 7.6 STRUCTURAL CONTROLS ON MINERALIZATION The most important control on mineralization at San José is structure, which governs the formation and opening of faults and fractures, and the creation of open space during the mineralizing events. Huevos Verdes veins have the best developed ore shoots with respect to grade and width at strike directions of 320° to 305°. Vein segments with strikes greater than 325° usually lack significant mineralization and are characterised by brecciation and fault gouge. These findings led to the conclusion that the Huevos Verdes vein system developed in a sinistral strike-slip setting. Counter-clockwise bending of a sinistral strike-slip fault creates a dilational setting, whereas clockwise bending creates a


compressional environment. Therefore, open space will preferentially form in counter-clockwise bends whereas increased tectonic friction with fault gouge and brecciation will develop preferentially in a compressional setting along clockwise-rotated bends. With respect to the Huevos Verdes system, the best mineralization will generally occur where structures bend counter clockwise from the average strike (less than 325°). Mineralized shoots would be expected to occur along the vein system where vein strike bends towards less than 325°. Early north-northwest striking normal faults were formed in the region in response to Permian-Triassic rifting (Dietrich et al. 2005). Dextral east-west to west-northwest-trending wrench faulting associated with mineralization in the Deseado Massif occurred at 150 to 125 Ma. The Huevos Verdes vein system formed as sinistral extension fissures within this dextral wrench fault system. The Permian-Triassic north-northwest trending faults were reactivated and became hosts to mineralization. The Huevos Verdes system is discontinuous and displays counter-clockwise bending at the tips of mineralized sections. This geometry is interpreted to reflect formation of mineralized tension fissures with sinistral strike-slip displacement in between dextral master wrench faults. The bending indicates proximity to dextral east-west trending master faults. Dextral wrench faulting is thought to have occurred during mid- to upper-Jurassic times in the region and related to the early opening of the southern Atlantic. Outcrops of east-west striking, weakly-to-unmineralized quartz veins are exposed in the intermittent segments between the three zones of the Huevos Verdes system. East-west trending lineaments are rare but are present in the northwestern Deseado Massif. Sinistral, north-northeast striking lineaments on the San José Property, illustrated in Figure 7.3, limit the known occurrences of the north-northwest striking mineralized veins such as Huevos Verdes. The Rio Pinturas and the San José lineaments form a prospective corridor, with no known mineralization either east or west of this corridor. Litho-stratigraphy may also play an important role in governing mineralization where certain litho-stratigraphic horizons favoured the opening of fractures. Mapping in the Pluma Zone noted that the fracturing of rocks is far more intense in andesitic lava flows than in underlying volcaniclastic rocks. Fracture-controlled wall rock alteration and mineralization is more pronounced in the lava flows. Host lithology may be a factor controlling the depth of mineralized shoots.


Figure 7.3 Structural Lineaments on the San José Property

The structure at the Saavedra / Saavedra West (Discovery Hill) deposits has been interpreted to be a syn-volcanic graben, possibly a caldera that developed within the Bajo Pobre Formation and infilled with sedimentary rocks of the La Matilde Formation (Colquhoun et al. 2007). A series of N-NW trending steeply dipping gold-silver quartz veins and siliceous structures occur at Discovery Hill. These veins may have been emplaced along graben-bounding faults. This trend is sub-parallel to that at Huevos Verdes and IP / resistivity surveys have traced this trend from just northeast of Discovery Hill to a point that occurs 100 m directly southwest of the HVS zone. A cross-section of the Horst and Graben structure at San José is presented in Figure 7.4.


Figure 7.4 Cross-Section Showing the Horst and Graben Structure at San José


8.0 DEPOSIT TYPES The San José deposit is considered to be a typical low sulphidation (“LS”) silver-gold epithermal deposit. 8.1 EPITHERMAL AU-AG DEPOSIT CLASSIFICATION SYSTEMS Epithermal gold-silver deposits form in near-surface environments, from hydrothermal systems at shallow crustal levels (<1 km) or low temperatures. They are commonly associated with centres of magmatism and volcanism, but form also in shallow marine settings. Hot-spring deposits and both liquid- and vapour-dominated geothermal systems are commonly associated with epithermal deposits. The deposits contain precious metals deposited by the mixing of upwelling mineralized fluids which contain a magmatic component, with oxidizing ground water. Much of the gangue mineralogy comprising quartz, adularia, and carbonate forms in response to the boiling of dominantly meteoric fluids upon periodic, structurally-controlled pressure release, and so may develop the characteristic banded fissure vein ores. Historically, epithermal deposits have been exploited for a wide variety of metals and minerals, however, many of the more economically significant deposits are mined for their precious metals. 8.1.1 Epithermal Au-Ag Deposit Sub-Types Epithermal deposits are primarily distinguished using criteria of varying gangue and ore mineralogy, deposited by the interaction of host rocks and groundwater with different ore fluids. The deposits are commonly considered to comprise one of two sub-types: LS and high sulphidation (“HS”) (Figure 8.1). Each sub-type is denoted by characteristic alteration mineral assemblages, occurrences, textures, and in some cases, characteristic suites of associated geochemical elements. LS epithermal deposits are distinguished from HS primarily by their sulphide mineralogy. Many LS veins are well banded and each band represents a separate episode of hydrothermal mineral deposition. LS deposits develop from dilute near-neutral pH fluids and can be subdivided further into two groups: those which display mineralogies derived dominantly from magmatic source rocks (arc LS) and others with mineralogies dominated from circulating geothermal fluid sources (rift LS). LS epithermal deposits form in high-level hydrothermal systems from depths of less than 1 km to surficial hot springs and are associated with regional-scale fracture systems related to grabens, calderas, flow-dome complexes and rarely, maar diatremes (Panteleyev 1996). Extensional structures in volcanic fields such as normal faults, fault splays, ladder veins etc. are common as is locally graben or caldera-fill clastic rocks. High level (sub-volcanic) stocks and / or dykes and pebble breccia diatremes occur in some areas. High grade ores are commonly found in dilational zones in faults at flexures, splays and in cymoid loops. Styles of LS gold-silver are distinguished according to mineralogy and relation to intrusion source rocks and influence precious metal grade, silver to gold ratio, metallurgy and gold distribution. The following subsets of LS have been distinguished by Corbett (2007): quartz-sulfide gold ± copper; carbonate-base metal gold; polymetallic silver-gold; epithermal quartz gold-silver; chalcedony-ginguro epithermal gold-silver.


Figure 8.1 LS and HS Epithermal Deposit Model

Source: Corbett (2007)

Intermediate sulphidation (“IS”) sub-types are considered to be a subset of LS types. In some epithermal deposits, notably those of IS sub-type, base metal sulphides may comprise a significant ore constituent. HS systems vary with depth and permeability control, and are distinguished from several styles of barren acid alteration. HS systems develop due to the reaction of hot acidic magmatic fluids with the host rocks, producing characteristic zoned alteration and later sulfide and gold + copper + silver deposition. Ore systems display permeability controls governed by lithology, structure and breccias and changes in wall rock alteration and ore mineralogy with depth of formation. Taylor (2007) subdivides based on LS and HS, which is further subdivided into those hosted by volcanic and plutonic rocks and those that are hosted in sedimentary and mixed host rocks. 8.2 SOUTH AMERICAN EPITHERMAL AG-AU DEPOSITS The polymetallic silver-gold vein systems of South America are considered the Andean equivalent of the southwest Pacific carbonate-base metal gold epithermal systems. These systems typically occur with the following sulphides: pyrite > sphalerite > galena > chalcopyrite with electrum, silver sulphosalts (tennantite-tetrahedrite, argentite). The deposits are mainly quartz ± calcite ± adularia ± illite assemblage of LS and IS sulphidation. Fernández et al. (2008) divided the Patagonian deposits based on metallic association into: a) gold-silver and silver > gold; b) polymetallic with silver-gold or only silver; and, c) complex polymetallic mineralization with silver-gold. These deposits mostly form in tectonically formed veins. The Deseado Massif in Argentina, a large bimodal igneous province, is host to numerous occurrences of silver-rich and polymetallic epithermal mineralisation that includes the deposits of the San José Mine


(Figure 8.2). LS epithermal silver-gold and polymetallic deposits accompanied Jurassic magmatism and deformation in the Deseado Massif. Limited K-Ar and U-Pb ages on some of the larger deposits in the Deseado Massif tentatively confirm a Late Jurassic age of mineralization, slightly younger than the Jurassic volcanic host rocks (Fernández et al. 2008). Figure 8.2 Epithermal Gold-Silver Deposits of the Deseado Massif, Argentina

Modified from Wallier et al. 2006


9.0 EXPLORATION Information on exploration on the Property prior to 2013 is detailed in Table 6.1. 9.1 2013 EXPLORATION PROGRAM After substantial new resources were added during 2012, the exploration focus for 2013 shifted to geological mapping of the southwest sector of the joint venture property with the objective of defining new exploration targets leading to the discovery of new veins. During 2013, MSC completed 10,528.5 m of exploration drilling in 32 holes and 13,495.1 m of infill and mine development drilling in 63 drill holes. By comparison, in 2012, MSC completed 81,096 m of exploration drilling in 297 drill holes and 16,780.5 m of mine development drilling in 73 drill holes. The principal targets that were investigated by drilling during 2013 were Juanita, Zona 2, 290+Emilia, Pablo G, Kospi SE, and Saavedra Southwest (Figure 9.1 and Table 10.1). These targets are described below. Drill targets were identified and prioritized on the basis of geological and alteration mapping, surface geochemical sampling, geophysical surveys (surface magnetics, resistivity, gradient and pole-dipole array induced polarization, CSAMT and structural modeling. Juanita is as two kilometer long system of narrow veins intersected by drilling between 100-200 m from the surface. The area at surface consists of quartz float, sub-outcrops and sparse outcrops of narrow quartz veining and breccias emplaced in felsic tuffs. The Juanita zone has been interpreted to be a “high level” epithermal system. Seven exploration drill holes and one infill hole were completed at Juanita, which is a low-grade, bulk-tonnage target that is open at depth. Juanita is located about 10 kilometers south-southeast of the San José mine complex, about 400 m east-northeast of the former Saavedra West pit. Zone 2 is a broad area located two to three kilometers southwest of the San José mine where a series of northwest to west-northwest quartz veins occur in outcrops with individual vein widths up to 1.5 m. Superficially, the veins in Zone 2 appear to be similar to the productive veins at San José. Seven holes were drilled in Zone 2 approximately 700 m apart, but although quartz veins were intercepted in two of the holes, the values were sub-economic. No further work is planned at Zone 2 at this time. The 290+Emilia target is an area where the 290 and Emilia veins intersect on the eastern side of the San José mine. Three drill holes intercepted the intersection with good thicknesses and grades, and this area will be pursued in the course of mine development. The Huevos Verde West Extension target is a target to extend the Huevos Verde West vein to the north some 700 m. Two drill holes were drilled without economic grade mineralization. The Kospi SE target is the southeast extension of the Kospi vein underneath the area of the current tailings dam. One exploration hole, four infill holes and one mine development hole were drilled with generally favorable results. One of the holes intersected the vein at an elevation of 200 m asl, which extends the depth of known economic mineralization on the Kospi vein. Pablo G is a northwest trending vein that is located about one to two kilometers southeast of the San José mine complex. Five holes were drilled to test the vein, but the results were not encouraging, and no further work is planned on the vein.


Figure 9.1 Exploration Targets Evaluated During 2013


10.0 DRILLING For drilling prior to 2013, please refer to Section 6.2. 10.1 MSC DRILLING In 2013, MSC conducted drill programs for exploration and mine development purposes. Exploration drilling totalled 10,528.5 m in 32 drill holes and mine development drilling totalled 13,497.1 m in 63 drill holes. A summary of 2013 drilling is presented in Table 10.1. Surface drilling was conducted with a crawler mounted Sandvik DE 710 drill rig operated by Macizo del Deseado Perforaciones SA. Core diameter was HQ. Borehole surveys were completed using Reflex instruments and measurements were generally taken every 30 m. Collar locations were spotted using GPS with a Trimble Model R5 base station with a Trimble external radio model HTL 450H, and with a Trimble Model R6 mobile station.

TABLE 10.1 SUMMARY OF 2013 SAN JOSE DRILLING

Exploration Drilling # of Drill Holes Total Meters (m) Target

Resource Definition 0 0

Potential 32 10,528.5 Juanita, Zone 2, 290+Emilia,

Huevos Verdes Oeste, Kospi SE, Pablo G, Antonella

Near Mine 0 0 Total 32 10,528.50

Development Drilling Infill 33 7,032.9 290, Frea, Esperanza, K, Kospi SE, Saavedra Pit

Mine Development 30 6,462.2 Esperanza, Estela, Kospi SE, Kospi SW, Kospi, Kospi Ramal X, Ramal Frea, Juanita, Saavedra Pit

Total 63 13,495.1

Drill intersections for Exploration Drilling (“Potential” category) are presented below in Table 10.2. No exploration holes were drilled for “Resource Definition” or “Near Mine” during 2013. Drill intersections for infill and mine development drilling are not shown.

TABLE 10.2 2013 RESULTS FOR “POTENTIAL” DRILL HOLES

Drill Hole From (m)

To (m)

Intercept (m)

True Width (m)

Au (g/t)

Ag (g/t)

Vein

SJD-1372 224.60 225.35 0.75 0.40 4.02 57.31 Juanita SJD-1373 251.65 253.60 1.40 1.00 0.96 19.98 Juanita SJD-1373 263.10 264.00 0.90 0.64 2.22 3.58 Juanita SJD-1374 194.10 197.80 3.70 2.40 0.01 1.61 Juanita SJD-1375 269.20 271.15 1.95 1.70 0.11 1.79 Juanita SJD-1376 157.45 157.85 0.40 0.31 0.05 1.00 Juanita SJD-1376 178.40 179.00 0.60 0.46 0.06 1.00 Juanita SJD-1376 233.80 247.45 13.65 10.51 0.09 1.81 Juanita SJD-1376 321.00 321.30 0.30 0.23 0.50 2.21 Juanita SJD-1376 336.25 338.65 2.40 1.85 0.05 1.91 Juanita SJD-1377 178.00 178.45 0.45 0.40 0.17 3.69 Juanita SJD-1377 204.65 205.1 0.45 0.15 0.14 2.29 Juanita SJD-1377 308.45 309.45 1.00 0.60 2.56 6.51 Juanita SJD-1378 140.60 141.10 0.50 0.30 0.01 1.00 Zone 2


SJD-1379 no significant intercept Zone 2 SJD-1380 149.55 168.20 18.65 16.50 0.02 1.29 Zone 2 SJD-1381 151.60 156.31 4.71 3.50 0.03 1.06 Zone 2 SJD-1382 no significant intercept Zone 2 SJD-1383 no significant intercept Zone 2 SJD-1386 no significant intercept Zone 2 SJD-1388 no significant intercept Juanita SJD-1393 301.75 310.43 8.68 5.00 40.08 881.71 290 + Emilia Veins SJD-1398 430.50 432.10 1.60 1.50 4.28 152.46 290 + Emilia Veins SJD-1402 157.20 158.45 1.25 0.55 Unnamed SJD-1402 297.60 300.40 2.80 2.00 290 + Emilia Veins SJD-1405 277.85 278.15 0.30 0.25 0.01 1.00 Huevos Verdes West SJD-1406 172.30 173.45 1.15 0.90 1.37 82.86 Huevos Verdes West SJD-1408 485.00 486.63 1.63 1.00 7.42 522.13 Kospi Southeast SJD-1417 214.55 215.15 0.60 0.40 0.02 7.22 Unnamed SJD-1417 216.00 216.45 0.45 0.30 3.65 174.06 Unnamed SJD-1419 116.00 117.40 1.40 1.10 0.18 10.76 Kospi West SJD-1420 433.00 434.00 1.00 0.80 0.19 22.82 Unnamed SJD-1420 477.80 479.40 1.60 1.10 0.05 15.03 Unnamed SJD-1423 No reported intercepts Kospi SE SJD-1424 134.00 135.15 1.15 0.85 0.04 1.00 Micaela SJD-1424 275.80 276.25 0.45 0.35 0.01 4.06 Kospi West SJD-1424 311.15 317.60 6.45 5.60 0.01 1.19 Micaela SJD-1425 189.45 190.15 0.70 0.55 0.06 1.00 Pablo G SJD-1426 215.40 215.70 0.30 0.20 0.68 9.21 Pablo G SJD-1427 136.20 138.00 1.80 1.12 1.61 4.70 Pablo G SJD-1428 156.10 169.60 13.50 8.55 1.14 2.83 Juanita SJD-1428 174.00 226.00 52.00 42.00 0.23 2.32 Juanita SJD-1428 274.00 300.00 26.00 21.00 0.27 2.18 Juanita SJD-1429 98.60 99.20 0.60 0.50 0.52 43.99 Pablo G SJD-1430 233.90 234.30 0.40 0.30 0.01 2.58 Pablo G SJD-1450 316.35 317.70 1.35 0.70 2.27 209.87 Antonella


11.0 SAMPLE PREPARATION, ANALYSES AND SECURITY To the best of P&E’s knowledge, sample preparation is routinely carried out by MSC employees. In 2013, all drill core and material from the underground drilling and channel sampling program, as well as the production samples, were sent to the Alex Stewart Laboratory in Perito Moreno for sample preparation and analysis. Drill samples and channel samples are processed in batches of 30 samples and were assayed for both gold and silver using fire assay with gravimetric finishing and for lead, zinc, copper and iron by atomic absorption spectroscopy (“AAS”). Detection limits are < 0.4 ppm Au and < 2 ppm Ag. MSC geologists add four QA/QC samples (one field duplicate, one coarse duplicate, one pulp duplicate and alternating one low and one medium standard) to each batch of sample for exploration drilling, for a total batch size of 34 samples. For interior mine drilling and channel sampling, MSC geologists add seven QA/QC samples to each batch of samples, for a total batch size of 37 samples; four are added at the mine during sample preparation (one field duplicate, one pulp duplicate, one coarse duplicate and alternating one low, one medium or one high standard) and three QA/QC samples are conducted at the Alex Stewart laboratory (one coarse reject, on pulp duplicate and one check duplicate). An MSC representative is in charge of overseeing the insertion of these additional standards at Alex Stewarts’ laboratory. The samples in between standards are re-assayed when a standard fails. Control samples were expected to fall within the ranges listed below:

• Field duplicates—permitted range was ± 30 %, 90 % of the time; • Coarse preparation duplicates—permitted range was ± 20 %, 90 % of the time; • Fine preparation duplicates (pulps)—permitted range was ± 10%, 90 % of the time; • Standards were considered to be acceptable if they fell within approximately 2 standard

deviations (2σ) of the accepted certified value, 95 % of the time; • Coarse blanks were acceptable if the result was under 3x the laboratory detection limit;

and • Fine blanks were acceptable if the result was under 2x the laboratory detection limit.

All QA/QC data is captured by the laboratory managers and plotted in excel charts. Results for standards, duplicates and blanks are charted and reported in the MSC monthly internal reports. P&E reviewed these monthly reports and verified that the control samples fell within the established QA/QC ranges. The laboratory also tracks the granulometry from the sample preparation and plots the results in charts each month. The results from the blanks are also charted. P&E examined both sets of data and verified that the data fell within the established QA/QC ranges. 11.1 UNDERGROUND CHANNEL SAMPLES Channel sampling is undertaken with a pneumatic drill in order to obtain representative samples with consistent fragment and sample size. The minimum sample length is 0.3 m. Channel lines are painted on the drift/stope back and surveyed at one extremity as a collar. Azimuth and from / to intervals are entered in the database and the channels are recorded as drill holes. Sample lines extend across the entire drift/stope back to include wall rock. Samples are collected from the adjacent wall rock to provide information for dilution analysis as well as identifying possible new zones of mineralization that may not be visually evident.


Geological contacts are painted on the face of new development headings and photographed prior to sampling to aid in the calculation of more accurate weighted average silver-gold grade. The total mass of all samples taken across a face, sampled perpendicular to mineralization, is no less than 20 kg. The average silver-gold content of 3 m of new development is calculated by using information from two consecutive face samples (i.e. 40 kg of sample). Waste channel samples are taken away from mineralized contacts where a high silver-gold grade may be encountered. Material from the waste channels is used to prepare blank material. 11.2 DRILLHOLE SAMPLING The project geologist is responsible for ensuring procedures are followed at the drill rig which includes verifying core retrieval and assembly, core box orientation, core marker placement and mark-up, core transportation methodology and also security, geotechnical logging procedures, core recovery and photography in the core shed. The logging process includes recording lithology, alteration, mineralogy and structure. Sample intervals are marked both on the core and the core box. The geologist marks the core splitting line on the core. Friable zones are taped prior to the cutting of the core to avoid loss at the saw. A metallic wedge is used on friable core to force it into two halves and then all material from one of the halves is sampled in its entirety including fines. Sample intervals take into account geological, mineralogical and structural boundaries. Sample lengths were a minimum of 0.3 m. The project geologist ensures that the core is cut properly in half by the technician using a diamond saw. One half of the core is returned to the core box, the other half is placed in a pre-numbered and tagged sample bag. Once the sample is complete, the bag is immediately sealed. The sample bag has the sample number clearly written on both sides of the bag and the corresponding sample tag included in the bag with the sample. Individual sample tags have pre-assigned sample numbers to account for the insertion of blanks, duplicates and certified standards that will be submitted with the shipment. All samples are then entered into the database. Certified Reference Material (Standards or “CRM”s) and blanks were inserted by MSC approximately every 30 samples for QA/QC purposes. Coarse reject and pulp duplicates were prepared and analyzed by Alex Stewart. The performance of the CRM material and blanks are discussed in Section 12. It should be noted that some confusion was caused by using the same name (MRA and MRB) for standards of differing values. This issue was easily resolved but in the future each type of CRM should be given a unique internal code. P&E is of the opinion that the 2013 drilling programs have been run well and that MSC was using industry best practices for drilling, logging and sample chain of custody. During the 2013 drill programs, drill holes were HQ in size. 11.2.1 Sample Handling and Data Management Samples were kept in a secure storage area and loaded into a truck when sufficient numbers were ready for shipment to the laboratory, All 2013 drill core from the underground and surface drill programs were shipped directly by truck to Alex Stewart laboratory in Perito-Moreno for preparation and analysis. The Alex Stewart laboratory in Perito-Moreno is accredited to international quality standards ISO 17025.


The data used for the current mineral resource and mineral reserve estimation was generated from underground channel sampling and diamond drill core and is further discussed in Sections 14 and 15 of this Report. 11.3 SAN JOSE IN-HOUSE LABORATORY The San José in-house laboratory handles only control samples from the processing plant. The laboratory has been audited by assay laboratory specialists Smee and Associates in 2008 (Smee 2008) and by AMEC in 2010 (Simón 2010). The following description of QA/QC procedures and laboratory sample preparation and analyses to March 31, 2010 are taken from these two reports and MSC internal monthly reports. AMEC reviewed as part of its 2009-2010 audit of the MSC laboratory at site:

• Sample preparation procedures (including reception, drying, crushing, splitting, pulverizing and quality control (“QC”) associated with sample preparation);

• Analytical procedures (including analytical protocols, equipment and chemical certificates, scales and calibrations, verification protocols, certified reference material, insertion of standards and control samples and the processing of QC data);

• Procedures for data entry and result reporting; and • Security and chain of custody.

Since 2009, CRMs have been randomly inserted into each batch of samples. All of the standards have undergone round-robin testing at both CDN Resource Laboratories and Alex Stewart Laboratories and have been certified by Alex Stewart. As recommended by Smee and AMEC, MSC has implemented a Laboratory Management Information System to assist the managers in compiling, tracking and reporting data and limit handling errors. The San José in-house laboratory is ISO 17025 certified. The laboratory has had PTP-MAL certification since December 2009. Audits were routinely performed on procedures and record keeping of the San Jose laboratory in 2013. Requested copies of these audits were not available to P&E. However, based on detailed observations and discussions with laboratory staff in early 2014, P&E believes that the quality of the data is reliable and that the sample preparation and analysis continue to be carried out in accordance with exploration best practices and industry practices. 11.3.1 Security With regards to the acquisition of samples at the processing plant, the laboratory staff is responsible for managing and securing sampling at the different sampling points and transporting those samples to the laboratory for preparation and analysis. Samples are acquired at designated secure depositories by plant personnel who then deliver the samples to the head of the laboratory. The on-site laboratory has detailed written protocols and procedures for plant sampling, sample preparation and sample analysis, which detail chain of custody and security. The Smee (2008) audit of the San José internal laboratory and sample analysis concluded that the laboratory was being operated in accordance with industry best practice. Pulp and reject duplicates checked by Smee and AMEC show that the MSC laboratory is preparing samples correctly and the precision for both the pulp and rejects are satisfactory.


P&E believes that the sample preparation and analysis are carried out in accordance with best exploration best and industry practices. 12.0 DATA VERIFICATION 12.1 P&E 2014 SITE VISIT AND INDEPENDENT SAMPLING The San José Property was visited by Mr. Eugene Puritch, P. Eng., on February 20 and 21, 2014. A tour of the drill sites was undertaken and core handling, core logging and sample protocols were observed. Coordinates for select drill hole collars were collected by GPS. During the February 2014 site visit, 12 assay verification samples were taken from 10 drill holes from the 2013 drilling. Sample intervals were taken from a variety of low, medium and high grade mineralized material. The low grade material was defined as the cut-off grade, between 2-2.5 g/t AuEq. The medium grade material was defined as the average grade, between 10-15 g/t. The high grade material was defined as twice the average grade, between 20-30 g/t. The chosen intervals were then sampled by splitting the remaining half split core. The samples were documented, tagged with a unique sample number, bagged and sealed with packing tape and taken by Mr. Puritch to Comodoro Rivadavia, where they were shipped by bus to Alex Stewart in Mendoza, Argentina. At no time, prior to the time of sampling, were any employees or associates of McEwen advised as to the location or identification of any of the sample intervals to be collected nor did they, at any time, have access to the sampled material. A comparison of the P&E independent sample verification results versus the original assay results for gold and silver can be seen in Figure 12.1 and Figure 12.2. The P&E results for gold and silver were satisfactory and clearly demonstrate that the tenor of the mineralization is similar to what was originally reported. Figure 12.1 San José Verification Sampling – Au

0.00

5.00

10.00

15.00

20.00

25.00

Sample Number

McEwan Au g/t

P&E Au g/t

McEwen Au g/t


Figure 12.2 San José Verification Sampling – Ag

12.2 QUALITY ASSURANCE/QUALITY CONTROL PROGRAM 12.2.1 Performance of Certified Reference Materials Ten different certified reference materials, prepared by Ore Research & Exploration, SGS and Alex Stewart, were used at San Jose. The reference materials were certified for gold and silver and grades ranged from a low of 0.34 g/t Au and 0.439 g/t Ag to a high of 19.40 g/t Au and 2953.83 g/t Ag. Any assay of a standard that fell outside of +/- two standard deviations from the certified value resulted in the resampling of all samples between standards in a sample batch. For the OREAS 901 standard, with a certified grade of 0.34 g/t Au and 0.439 g/t Ag, there were 13 data points and 5 failures and the remainder of the samples showed an even distribution around the certified value. The MR-7 reference material, with a certified grade of 3.81 g/t Au and 128.66 g/t Ag, had 8 data points. 2 samples were mislabelled and the remaining data points analyzed at Alex Stewart fell within +/- two standard deviations from the certified value. The assays for MR-7 showed a tendency to be higher than the certified grades for both Au and Ag. The MR-8 reference material, with a certified grade of 5.17 g/t Au and 490.15 g/t Ag, had a total of 35 data points and 7 failures. The assays for MR-8 showed a tendency to be lower than the certified grades for both Au and Ag. The MR-9 reference material, with a grade of 19.40 g/t Au and 2953.83 g/t Ag, had only one sample that was mislabelled. The remainder of the samples showed an even distribution around the certified value. Standard STD4, with a certified grade of 3.80 g/t Au and 123.33 g/t Ag, had a total of 228 data points. All data points analyzed at Alex Stewart showed an even distribution within +/- two standard deviations from the certified value.

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0

McEwen Ag g/t

P&E Ag g/t


Standard STD6, with a certified grade of 23.88 g/t Au and 3251.66 g/t Ag, had a total of 577 data points and 11 failures. The remaining data points analyzed at Alex Stewart fell within +/- two standard deviations from the certified value, although the assays for STD6 showed a tendency to be lower than the certified grades for Au. Ag values showed an even distribution around the certified value. Standard ST1200001, with a certified grade of 2.73 g/t Au and 146.00 g/t Ag, had a total of 745 data points. One sample was mislabelled and the remainder of the data points analyzed at Alex Stewart fell within +/- two standard deviations from the certified value. The assays for ST1200001 showed a tendency to be higher than the certified grades for Au. Ag values showed an even distribution around the certified value. Standard ST120002 with a certified grade of 5.05 g/t Au and 772.94 g/t Ag, had a total of 175 data points and 14 failures. The assays for ST120002 showed a tendency to be slightly higher than the certified grades for both Au and Ag. Standard ST1200003, with a grade of 4.84 g/t Au and 690.14 g/t Ag, had a total of 977 data points. Three samples were mislabelled and the remainder of the data points analyzed at Alex Stewart fell within +/- two standard deviations from the certified value. The assays for ST1200003 showed a tendency to be higher than the certified grades for Au and lower than the certified grade for Ag Standard ST1200004, with a grade of 10.99 g/t Au and 1186.35 g/t Ag, had a total of 433 data points. There was one failure and the remainder of the data points analyzed at Alex Stewart fell within +/- two standard deviations from the certified value. The assays for ST1200004 showed a tendency to be lower than the certified grades for both Au and Ag. Several standards showed biases for Au, Ag or both but remained within the 2 standard deviation limit. The geologists at San Jose were aware of the situation and new standards were ordered for use in 2014. 12.3 PERFORMANCE OF BLANK MATERIAL Two blanks were used at San Jose to monitor contamination, BLNF and BLNG. BLNF was a certified blank prepared by Alex Stewart and BLNG was barren material sourced from the San Jose property. There were 3115 blank assays for BLNF and only one failure, sample 143080, which was a mislabelled sample. The remainder of the blanks were within the limits of three times the detection limit. There were 3800 blank assays for BLNG, one sample, 147092 was mislabelled and another sample, 1028441, showed and elevated Ag value of 16.4 g.


13.0 MINERAL PROCESSING AND METALLURGICAL TESTING 13.1 METALLURGICAL TESTING AND PROCESS SELECTION Metallurgical testing had extended over nine years prior to start of production. Six bench-scale metallurgical test programs had been conducted on San José samples between 1998 and 2007 in laboratories in Canada, Peru and the U.S. In brief these were:

• Degerstrom – U.S. (1998-1999): Performed scoping level gravity, flotation and cyanidation tests on oxide ores.

• Tecsup – Peru (2002): Performed gravity, flotation concentration; cyanidation tests on concentrates and gravity tails.

• Plenge (2004): Conducted gravity, flotation with cyanidation of concentrates and whole ore cyanidation tests on chip and rock samples from HVN and HVS structures.

• SGS / Lakefield – Canada (2004-2005): Approximately 150 individual tests were conducted on a series of composites, the results of which were used for initial process design. The original design included gravity separation followed by flotation of gravity tails and cyanidation of flotation concentrate. Gravity separation was replaced by flash flotation in later versions of initial process design. In October 2005, AMEC issued a feasibility study, based on the SGS / Lakefield testwork which described a 750 t/d operation comprised of the following unit processes for the production of a gold-silver doré:

• Two-stages of crushing, single stage ball milling, • Flotation and concentrate thickening, • Concentrate aeration and conventional stirred tank leaching, • Merrill-Crowe silver and gold recovery, and • Residual cyanide would be recovered by the acidification-volatization-recovery (“AVR”)

process.

• Gekko – Australia (2006-2007): Following the issuance of the 2005 Feasibility Study, MSC decided to examine the potential of using the Gekko process for the treatment of plant concentrates to produce a doré. Gekko technology is centered on Intensive Leach Reactors (“ILR”) and for San José the process would include ILR leaching of flotation and gravity concentrates, electrowinning (EW) gold and silver from clarified leach solution. Leach tailings would be washed in a thickener and a Gekko-designed resin column would scavenge the gold and silver in the overflow. The cyanide content of the thickener underflow would be destroyed using SO2-air methodology.

• Tecsup – Peru (2007): In 2007, two composite samples from the Kospi vein were tested at Tecsup for initial metallurgical amenability testing based on the proposed San José design parameters and flow sheet excluding the Gekko flow sheet.


Based on Gekko test results, in 2006, the AMEC flowsheet was modified to eliminate the following:

• Flotation concentrate thickening – pre-aeration, filtering, • Conventional concentrate leaching, • Merrill-Crowe (MC) recovery, and • Acid volatilization recovery (AVR) of cyanide.

The following unit operations were added:

• Gravity circuit including Gekko gravity jigs, centrifugal concentrator line gravity pressure jigs and concentrate regrind,

• Cleaner flotation, • Gekko continuous Intensive Leach Reactors (“ILR’s”) Six to 8 units were purchased, 3

were installed, • Counter current decantation (“CCD”) washing of concentrate leach tailings with barren

EW solution, • Direct EW of clarified ILR/CCD leach solution, • Gekko resin column, resin stripping and strip solution EW Flotation tailings thickening,

and • Application of SO2-Air process to destroy cyanide in leach tailings slurry instead of

AVR on the MC barren bleed solutions. Doré bars are the final product. Some of these installed unit processes were subsequently removed from operations, including:

• Gravity circuits, • Resin absorption system, and • SO2-air cyanide destruction system (replaced with the use of peroxide).

The failure of the resin absorption system that was designed to recover residual silver and gold resulted in significant amounts of dissolved silver and gold reporting to the leached tailings pond. In order to recover these values, a dedicated Merrill Crowe circuit was installed in 2009. Gekko test work had indicated metal recoveries of 83% for Au and 87% for Ag. The actual gold reported for the last four years are significantly higher and silver recoveries slightly lower as shown below in Table 13.1.

Table 13.1 San José Plant Metallurgical Performance

Year Tonnes Processed

Feed Grade, g/t Recoveries

Flotation Overall Au Ag Au Ag Au Ag

2010 461,134 6.14 397.3 88.8 89.2 86.85 85.79 2011 462,826 5.86 444,1 90.6 90.9 88.74 85.57 2012 509,850 5.79 427.3 89.7 90.0 88.31 85.67 2013 536,937 6.41 424.5 90.9 92.5 88.82 86.47

13.2 SAN JOSÉ PROCESSING FACILITY The 7-year old San José processing plant is a relatively complex facility, including primary circuits of conventional crushing, grinding, and production by flotation of a silver-gold-sulphide concentrate. This flotation concentrate tonnage is split between on-site production of a doré metal destined to a refinery and the shipment of moist concentrate to a smelter for toll processing. On site metal production facilities include intensive cyanide extraction of silver and gold from the flotation concentrate using Gekko


technologies followed by countercurrent decantation solution recovery, electrowinning and refining in a foundry to produce silver-gold doré bars. A small Merrill Crowe facility is used to recover residual gold and silver from cyanide leach tailings pond water. Two types of tailings are produced – flotation and cyanide leach tailings. These are stored close to the plant in adjoining facilities are separated by a lined berm. Residual cyanide in the leach tailings is destroyed by hydrogen peroxide treatment before discharge. Water is recycled to the processes from both tailings facilities. During 2013 some operating time was lost due to labour disruptions totaling 200 hours, but there were no other significant unscheduled shutdowns such as resulting from power interruptions. Operating time of the primary circuits was 97.5%, close to budget plans. The leaching/foundry sections of the plant were inactive for much of December 2013 during which ventilation equipment to exhaust ambient cyanide fumes was installed. The San José process plant with flotation tailings in the foreground is shown in Figure 13.1. Figure 13.1 San José Process Plant

Observations in February 2014 by P&E, indicated that the plant was operating reasonably well at the facility nominal capacity of 1,650 tonnes of ore per day. Ore supply tonnage was observed to be very good with a large number of stockpiles containing dry ore and these were being replenished by mine-accessible trucks. The truck contents were being directed to the appropriate stockpile by the geology department. Pads for larger stockpiles were being prepared near the plant. No significant amount of oversize was observed in the ore being delivered to the plant. Most sections of the plant were observed to be clean and apparently in good mechanical condition. The presence of scrap metal bolts and wire as well as fragments of plastic in the ore is a continuing challenge as indicated in Figure 13.2. The handling of metal scrap in the confined spaces at San José appears to be a risk to workers. The plastic debris can produce crusher screen plugging, blockage at flotation cell overflow edges and blockage of sample cutters. No such sample cutter blockage was observed - this is likely the result of worker diligence.


Figure 13.2 Metal and Plastic “Tramp Material”

The San José plant has been continuously improved or modified since operations began in 2007. In early 2012, modifications had been completed to intensive cyanide leaching (a 4th reactor installed – Figure 13.3), countercurrent decantation (a 4th CCD), electrowinning (2 EW cells) and foundry components to improve gold and silver recovery. Figure 13.3 Intensive Leaching Reactor (ILR 5000) (one of 4 reactors)

In 2013, plant improvements included the installation of a large baghouse dust collection system in the crushing facility, forced ventilation in the leaching area2, improved peroxide handling and video camera monitors in the crushing area. The crusher baghouse was observed to be operating effectively. This dust collector is configured to discharge collected dust on to a conveyor carrying crushed ore as shown in Figure 13.4. Subject to minor improvements in dust collection points, this has been an excellent plant improvement.

2 Note orange pipe in Figure 13.3 to collect contaminated air from ILR feed location.

(b) Plastic Debris removed by Ball Mill Trommel Screen

(a) Metal Scrap removed from Conveyor


Figure 13.4 New Crusher Baghouse; Collected Dust Deposited on Crushed Ore

The current San José plant flowsheet is shown in Figure 13.5. The flowsheet indicates that flotation concentrate would be split 50:50 between concentrate bagging/sale and cyanide leaching. In practice, flotation concentrate is distributed to the two sections using valves and flow monitors on a single SRL-type pump discharge; in 2013 the percentage of flotation concentrate leached was 39% of total concentrate. A flowsheet and actual plant modification from previous years was the configuration of the ILR reactors into 2 by 2 format as opposed to 4 reactors operating in parallel. Figure 13.5 San Jose Plant Circuit 2013 (Merrill Crowe Circuit Excluded)

Baghouse, Dust Conveyor, Dust on Crushed Ore


Because active crushed ore capacity is only 2,000t, the crushing plant operates 14-16 hours per day. Two stages of crushing are used – a single Metso C-100 jaw crusher followed by two Metso-Nordberg HP200’s operating in parallel. Double deck screening produces a ball mill feed of a P80 (80% size less than) of 8,000µm, and 93% < 3/8 inches. The feed tonnage (825t to each of 2 grinding and flotation circuits) to grinding is recorded by belt weightometers which are calibrated weekly by the plant instrument technicians. Grab samples are obtained bi-hourly from the parallel feed conveyors to assess moisture content. The two parallel grinding and flotation circuits were observed to be operating steadily with limited amounts of oversize ore fragments being screened out by the ball mill discharge trommel screens. An internal audit of the grinding circuits in May 2013 indicated a high (average) circulating load of 315% and a low cyclone efficiency of 46%. Grinding performance over the year was very consistent at 66.7% -200M. The flotation circuit is composed of 2 parallel circuits of Denver DR-30 roughers and scavengers, and DR-24 Sub-A cleaners. The circuit was observed to be operating well – consistent with observations in previous years. Laboratory-scale kinetic tests in 2013 with a variety of reagents confirmed that rougher flotation is reasonably fast. Silver recovery is essentially complete in 4-5 minutes and gold in 6-8 minutes. Flotation feed and flotation tailings are sampled with a two-stage sampler – the flotation feed sampler was observed to operating property, with a primary cut every 5 minutes. Secondary samples are collected every 4 and 12 hours for assay. While there are two grinding and flotation circuits, grinding discharge is combined, sampled and subsequently split for flotation feed. Flotation concentrate is combined in one pump box, then split for distribution to leaching and concentrate filtering and bagging. If the tonnage split of concentrate to leaching and filtration would be about 50:50 as earlier considered, isolation of the two grinding and flotation circuits with concentrate 1 going to leaching and concentrate 2 going to filtration would provide the opportunity for more accurate metallurgical accounting in each pathway. At the present time (according to the flowsheet provided and as observed in the plant), the following process streams are combined and subsequently split – grinding cyclone overflow, rougher flotation concentrate, scavenger concentrate and cleaner concentrate. All of the splitters can considered to be only approximately accurate including the split of the flotation cleaner concentrate, the flow of which to leaching is measured by flow and density instrumentation. This instrumentation was observed to be attached to a horizontal discharge line of an SRL type pump, which was pumping frothy material. It is challenging to achieve accurate calibration and measurement in such conditions (measurements on a full vertical line are preferred). The leaching circuit and CCD circuits were operating well during the visit and ambient cyanide levels were noticeably (by odour) reduced (from previous years’ observations) as a result of the newly installed ventilation. These two circuits have been installed in limited space rendering routine operator movement and maintenance somewhat difficult. Two mechanics were observed to have positioned themselves on process piping 2-3 metres above the plant floor to conduct valve repair on the feed lines to one of the ILR reactors which was in operation. A nearby emergency shower was tested and found to be inoperable. It remains unclear which pipelines carry which specific liquids or slurry in the leaching area. This aspect could benefit from some review. For example, normally, in such a leaching facility, pipelines and valves carrying concentrated cyanide solutions would be clearly identified (colour coded) stainless steel. While the time for review of the actual leaching/CCD circuits was limited during the visit, based on the flowsheet provided, some potential improvements in solution management around the leaching and CCD circuits are possible. For example, adjustments in reagent conditions could be made at the discharge of the first ILR’s which feeds the second reactors. Peroxide for leaching and detoxification (detox) is now being distributed from a central facility, an important improvement from the previous usage of 1-tonne tote bins. The solution detox system was


operating normally during the visit. A large mine-type portable fan had been placed in the worker walkway near detox tank No. 2 to disperse airborne contaminants. P&E understands that relocation of the detox circuit to a new facility outside the current plant building is being considered. The concentrate thickening, filtration and bagging facilities were observed to be operating normally. An appropriately sized forklift has been acquired, replacing an oversize unit. The secure foundry facility containing electrowinning (EW) cells, furnaces and the Merrill Crowe circuit was visited. Two EW units were observed to be out of service as was the Merrill Crowe circuit. Plant personnel indicated that the Merrill Crowe circuit stoppage was the result of employee concerns about cyanide contamination in workplace air. The overall foundry facility was observed to be in need of cleaning and “housekeeping”. 13.3 PLANT METALLURGY The recent 3-year average overall recoveries of gold and silver have been 90.0% and 91.1% respectively. In 2013 overall recovery was 90.9% and 92.5%; 61% of the concentrate was bagged and shipped to a smelter, while 39% was processed by leaching and refining to doré metal on site. This represents a significant reduction in the proportion of flotation concentrate being leached (42% in 2012, 48% in the previous 2 years). The lower % processed to doré has a positive effect on recorded overall recovery since about 93% of gold and silver contained in the processed concentrate is recorded as recovered. A summary of San José’s 2013 plant process statistics compared to previous years is presented in Table 13.2.

Table 13.2 San José Process Plant Statistics

Description / Year Units 2011 2012 Plan 2013 Actual 2013

Compared to Plan 2013 (%) Plan 2014

Plant capacity t/d 1469 1468 1650 1650+ 1650 Plant Operating Days d 315 347 353 356 101 341 Tonnage Treated t 462,826 509,850 582,450 536,937 92.2 540,827 Grades Au g/t 5.86 5.79 6.02 6.41 106 5.86 Grades Ag g/t 444.11 417.30 395.13 424.45 107 436.95 Flotation recoveries Au % 90.64 89.7 89.3 90.9 102 90.0 Flotation recoveries Ag % 90.86 90.0 89.4 92.5 103 89.7 Flotation Concentrate Dry t 28,639 34,101 35,662 31,585 88.6 Au g/t 87.33 91.60 85.2 100.8 118 Ag g/t 6,447 6,450 5,650 6,559 116 Product Tonnes as concentrate t 14,866 17,679 20,518

(58%) 19,403 (61%) 94.5

Tonnes leached to produce doré (% of total)

t 13,773 (48%)

16,422 (48%)

15,144 (42%)

12,182 (39%) 80.4 (44%)

Leaching recoveries Au % 95.96 96.2 96.59 100 96.0 Leaching recoveries Ag % 93.94 95.7 96.60 101 95.0 CCD recoveries Au % 98.63 97.7 97.77 100 97.7 CCD recoveries Ag % 97.96 97.7 98.19 101 97.7 Overall recovery Au % 88.74 88.57 86.26 88.82 103 88.5 Overall recovery Ag % 85.57 85.73 86.29 86.47 100 88.1 Concentration ratio 16.2 16.5 17.0 103 16.5 Concentrate moisture % 10.5 10.0 105 10.5 Concentrate capacity t/d 45 53 118

Metallurgical performance in 2013 was good with important parameters exceeding the 2013 plan and previous years’ performance. The good performance in 2013 was due to diligent operations management in spite of 3 labour-influenced disruptions and some parts of plant shutdown for modifications. Performance was enhanced by 7% higher than originally planned silver and gold head grades. Measured


leaching recoveries exceeded 96% with the 4 ILR reactors operating in 2 by 2 in series. Calculated CCD recoveries at 98% appear satisfactory with recently upgraded 4-stage circuit. The Merrill Crowe circuit at San José is dedicated to recovering from tailings water gold and silver, which represents soluble metal loss from the CCD circuit. A total of 24,749 m3 of tailings water was treated during 2013. The gold and silver content of the tailings water averaged 1.30 mg/Land 30.8 mg/L gold and silver respectively during 2013. Treated tailings water gold content was relatively constant at about 0.62 mg/L (reflecting the limited capacity of the circuit to recover gold at very low concentrations), while silver content ranged from 1.9 mg/L to 13.57 mg/L over the year; the average silver content was 6.6 mg/L. These values are in contrast to the measured concentrations of gold and silver in the liquid phase discharged with leached tailings – 2.23 and 198 mg/L; however these concentrations are half those of 2 years earlier (2011) – 4 and 460 mg/L. The contribution of gold and silver recovery from the leached tailings water, using the Merrill Crowe circuit, while declining from previous years, remains significant as shown in Table 13.3. The 2013 recovery of soluble gold and silver from the leached tailings facility was 49% and 44% respectively of the 2013 discharge from the plant.

Table 13.3 Merrill Crowe Production, San José 2013

Oz Au (% of total) Oz Ag (% of total) Flotation Concentrate 62,890.29 (63.6) 4,091,488.63 (64.4)

Doré 35,459.54 (35.9) 2,244,354.86 (35.3) Sub total 98,349.82 (99.5) 6,335,843.50 (99.7)

Merrill Crowe 477.08 (0.5) 20,957.38 (0.3) Total 98,826.90 (100) 6,356,800.88 (100)

2013 Soluble Loss from CCD Circuit 481 42,826 Merrill Crowe Effluent 495 5,224

2013 Soluble Metal to Tailings 976 48,050

Power usage and reagent consumption in 2013 is shown in Table 13.4 below.

Table 13.4 Power and Reagent Consumptions, San José Plant, 2013

Material Kg/t, Ore Kg/t,

Leached Conc.

$ 2013 $/t ore Comments

Power 44.9kwh/t Reasonable Grinding

3.5” balls 0.975 3” balls 0.697 2.5” balls 0.448

Total grinding balls 2.12 1,263,839 2.35 40% increase over previous year

Flotation, etc Xanthate 0.150 264,872 0.49

Reasonable costs Frother 0.035 95,929 0.18 Flocculent 0.025 10,436 0.02 Other chemicals 521,355 0.97

Leaching

Sodium cyanide 1.266 55.5 2,244,204 4.18 Very high amount and costs Caustic soda 0.038 1.66 20,222 0.04 35% Peroxide, leaching 0.788 34.5 363,428 0.67 High amount

35% Peroxide, DETOX 7.840 344 3,438,733 6.40 Excessive amount and cost

Foundry


Table 13.4 Power and Reagent Consumptions, San José Plant, 2013

Material Kg/t, Ore Kg/t,

Leached Conc.

$ 2013 $/t ore Comments

Borax 0.044 1.93 54,034 0.10 Nitrate 0.014 0.62 19,846 0.04

Other materials 242,459 0.45

The composite 2013 operating costs allocated to each section of the San José plant were not available for review. The material usage rates and associated costs for grinding media and flotation chemicals are reasonable, but the chemical costs for cyanide and peroxide used for leaching and cyanide destruction are exceptionally high for each tonne of concentrate treated ($495 – about 7% of the value of gold and silver recovered from the concentrate). 13.4 TAILINGS MANAGEMENT Leached tailings are disposed in the double lined leached tailings facility which has 5 ½ years capacity at current tailings production rates. A 5-7 metre gas bubble had evolved between the two liners in 2012 and remains in place. San José reported (to P&E) that engineering studies (by Vector and others) had been completed and remedial recommendations have been outlined (relevant reports were not available to P&E). The operating objective for WAD cyanide in the leached tailings facility pond water is a maximum concentration of 50 mg/L. While this objective is regularly complied with, a secure fence is in place and a bird-specific noise maker is in operation to keep hoofed animals and birds out of the enclosure. The flotation tailings facility is expected to be full at the end of 2014 or in early 2015 using the current tailings deposition strategy. Much more capacity to store tailings appears to exist if the centre of the basin could be filled with thickened tailings to a level above the established perimeter. This option has been rejected by San José citing concerns about erosion by the exceptionally vigorous local wind conditions (~ 100km/hr in July and August). An Environmental Impact Assessment for the closure of the current flotation tailings facility and construction on a new facility had been submitted to the Provincial Authorities but not yet approved (as of February 2014). The new tailings facility with 15 years capacity has already been constructed about 2 km east of the current plant and existing tailings facilities. This new No. 3 facility is located in a valley requiring one dam, which is expected to be 20 m high on completion. Permits are expected allow the use of this facility from the Natural Resources Directorate of Santa Cruz in August 2014. 13.5 SAMPLING, ANALYSES, METALLURGICAL TESTING AND ACCOUNTING The San José Laboratory is composed of two components - analytical chemistry and metallurgical laboratories. The San José Laboratory is also responsible for sampling and measurement in the plant and is well-staffed with modern and well maintained equipment. The facilities are maintained in clean and neat condition. Most of the analytical procedures and analyses are dedicated to processing mill samples. The laboratory is certified under ISO 17025 and a LIMS system is in place. Internal audits were performed in 2013 by Hochschild corporate staff. Based on previous external audit reports, recent internal audit reports and site observations, P&E is satisfied that most of the sample preparation methods and all of the analytical procedures and reporting meet acceptable standards. Two minor deficiencies in sample handling were noted during the February 2014 visit. First, a drying oven was observed to be operating at 106.5C – this temperature is slightly elevated for sulphide-


containing materials. Second, the procedure for handling leached slurry samples can be improved to more precisely determine soluble gold and silver in a sample. For the slurry samples, the procedure has been, and continues to be the sampling of undiluted filtrate and washed solids. The wash water is discarded. Dissolved gold and silver is determined from assays (mg/L) and slurry density. Rather than relying on density measurements, which can be imprecise, it is recommended that the volumes and metal content of primary filtrate and sample wash water (containing dilute cyanide) be measured and the metal content of liquid and solid phases be determined by assay. Two years earlier, in order to reduce costs, the assaying of geological samples was transferred to a commercial laboratory operated in the nearby village of Perito Moreno. The facility is owned and operated by Alex Stewart. In February 2014, P&E conducted a review of the Stewart laboratory operation including sample handling and preparation, analysis procedures, QA/QC and record keeping. Based on this review and a previous audit by San José staff, P&E has concluded that the performance of the Alex Stewart laboratory meets acceptable standards to accurately determine gold and silver content in geological samples. The San José metallurgical laboratory staff routinely conducts a series of plant and laboratory investigations. An example report (December 2013) provided to P&E indicated the following: • About 50% of gold and silver is in the -400M fraction in flotation feed and concentrate; 30% of losses

to flotation tailings were in the same fine fraction, • 33% of gold and silver losses in leached tailings are in the -400M fraction. The mineralogical

explanation for this has not been determined by P&E, • During 2013 the following (Table 13.5) were the recorded gold and silver recoveries in the leaching

circuit; this data indicates that a significant amount of leaching occurs in the 4th CCD vessel. This tends to indicate that the Gekko reactors are not performing well, and

• An audit indicated a slight material imbalance between the two flotation circuits, but identical recoveries. This imbalance supports (P&E) concerns about inaccurate circuit splitting (noted above in Section 13.2).

TABLE 13.5

LEACH CIRCUIT RECOVERY PROFILE Location Au, % Recovery Ag, % Recovery

ILR 1 & 2 disch. 86.3 84.5 ILR 3 & 4 disch. 93.7 92.6 CCD 4 underflow 96.2 96.5

While some concerns have been noted, P&E concludes that the sampling and measurement systems in place at San José are reasonably sufficient to accurately measure metallurgical performance in the plant. The San José Plant has an active metallurgical test program with includes flotation testing of various ore zones and types, bottle-roll leach testing, and in-plant investigations. P&E has reviewed available test results and have found the test reports to be thorough and clearly presented. A pilot scale ILR reactor has been acquired as shown in Figure 13-6. However because of worker concerns related to ambient levels of cyanide vapours in the laboratory, no testing had been completed using this equipment by the time of the P&E visit in February 2014. The use of this equipment will permit comparisons with standard bottle rolls (equipment shown in the background in Figure 13-6) which may represent more aggressive mixing conditions than either the pilot or full scale Gekko ILR reactors.


Figure 13.6 Pilot Scale Gekko Reactor

Metallurgical accounting includes both “theoretical” and “effective” determination of % gold and silver recoveries. The closeness of the two measurements in 2013 represents the accuracy of process sampling and measurement (theoretical) versus the actual measured production of doré and concentrate (effective). As shown in Figure 13-7, at year-end 2013, the agreement was good with slightly more gold produced than expected. This reflects the success of recent efforts to improve sampling and measurement in the San José plant. Figure 13.7 Effective and Theorectical % Recoveries, San José 2013

P&E concludes that the sampling and measurement systems in place at San José are reasonably sufficient to accurately measure metallurgical performance in the plant. 13.6 CYANIDE MANAGEMENT The management of sodium cyanide (NaCN) remains a challenge at San José. These technical challenges range from handling the purchased product to destruction of residual dissolved cyanide (CN) in tailings water. While many important improvements have recently been made at San José, some additional actions can be considered:

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• Purchase liquid 50% CN solution in “ISO” containers. While the current usage of 650t/yr may not be sufficient to attract a supplier, cooperation with other cyanide users in the region might generate sufficient interest. The ISO system is widely accepted to be more secure from a handling and distribution perspective and would eliminate the cumbersome box and bag handling and mixing,

• Revise the plant cyanide distribution system with quality stainless steel pipe loops and valves that are clearly labelled and colour coded,

• Ensure that all work areas are instrument monitored/alarmed, ventilated, lighted and free from physical workplace hazards,

• Make certain that all safety stations are fully operational at all times, and possibly most importantly, Cyanide recycle/recovery technologies should be considered. Based on available 2013 data on solution chemistry, well established (and previously considered by MSC) acid volatisation recovery (“AVR”) technology may be one of the applicable technologies for San José. It is recognised that while such technologies are somewhat capital intensive and the containment of gaseous HCN may generate some concerns, the current inefficient peroxide destruction system adds substantially to operating costs. Recycle technologies will also assist in maintaining total and WAD CN levels in tailings well below current levels and closer to industry accepted levels. In July 2014, barren solution and effluent analyses as well as plant operating data were provided to P&E. A summary of important parameters is shown in Table 13.6.

Table 13.6 Detox Circuit, July 9-14, 2014

Barren Solution Detox Circuit Discharge Tailings Pond Notes

mg/L Au 0.92 1.65 Ag 1.84 8.74 Cu 894 Fe 758 Zn 773 Pb 1.55

CN- free 37,667 13 13 CN- WAD 18 32 CN- Total 39,900* 24 44 *assuming Cu and Zn CN

complexes destroyed by H2O2

Free cyanide concentrations in the barren solution are higher than the 20 g/L concentration expected from the previously reported strength of leach solutions. With a reported barren flow of 4.5 m3/hr and a daily peroxide usage of 12.5 tonnes3, peroxide additions are approximately twice the stoichiometric requirement indicated by total cyanide content. The difference can be attributed to oxidation reactions with the expected thiocyanate (SCN) content of the barren solution and with process inefficiencies. P&E recommends a campaign of complete analyses of the barren and treated barren solutions including thiocyanates. This could be followed by a test program to evaluate the best option for recovering/recycling cyanide at San José. Due to the challenges of shipping sufficient volumes of solutions for test purposes the use of synthetic solutions for tests at a commercial test laboratory could be considered. A test program, economic evaluation and permitting review are suggested in advance of a decision to relocate the current detox circuit.

3 Assumed 12.5 tonnes of contained peroxide in 35% solution


13.7 CONCENTRATE VS DORÉ PRODUCTION Based on available cost data (e.g. Valor de Punto) the economic incentive for producing doré versus concentrate is about $55/t of concentrate based on a reserve of 1,813,280 tonnes assaying 515 g/t Ag and 7.03 g/t Au, and 44% of concentrate converted to doré. Deducting supplies costs of $12/t for leaching and foundry, a margin of about $43/t of concentrate is available to cover other operating expenses, maintenance, depreciation and other allocated costs. This $43/t value indicates that incentive remains in place to optimize and maximize the use of the leaching-CCD-EW-refining facilities. Actions that could be considered include:

- Upgrading CN handling, - Optimizing (or replacing with stirred reactors) the ILR leaching system, - Optimizing CCD flowsheet, and as noted above, - Replacing the peroxide detox circuit with CN recovery and peroxide polishing.

14.0 MINERAL RESOURCE ESTIMATES 14.1 INTRODUCTION P&E has audited the mineral resource estimates for the San José property, Santa Cruz province, Argentina, as prepared by Hochschild Mining plc., using all data and information available as of December 31, 2013. P&E believes that the mineral resource estimate presented herein has been reported in accordance with the Canadian Securities Administrators’ National Instrument 43-101 and has been estimated in conformity with generally accepted CIM “Estimation of Mineral Resource and Mineral Reserves Best Practices” guidelines. Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no guarantee that all or any part of the mineral resource will be converted into mineral reserve. Confidence in the estimate of Inferred mineral resources is insufficient to allow the meaningful application of technical and economic parameters or to enable an evaluation of economic viability worthy of public disclosure. Mineral resources may also be affected by further infill and exploration drilling that may result in changes to subsequent mineral resource estimates. P&E is not aware of any known environmental, permitting, legal, title, taxation, socio-economic, marketing, political, or other relevant factors that could materially affect the mineral resource estimate. The auditing of the mineral resource estimate reported herein was carried out by Fred Brown P.Geo., an independent Qualified Person in terms of the Canadian National Instrument 43-101 (“NI43-101”) and a Competent Person as defined by the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (“JORC”). All information and data were supplied by Hochschild. Auditing of the supplied mineral resource models was carried out using the commercially available Gemcom GEMS software program Total mineral resources declared by MSC at San José as of December 31, 2013 at a cut-off of 215 g/t silver-equivalent (Valor de Punto US$94.76) include 72.8 million and 1.05 million Measured and Indicated ounces of silver and gold, respectively, and 27.1 million and 0.43 million Inferred ounces of silver and gold, respectively (Table 14.1). The mineral resources have not been adjusted to reflect the proportion attributable to Hochschild on the basis of their joint venture participations.


TABLE 14.1 TOTAL SAN JOSÉ MINERAL RESOURCES DECLARED AS OF DECEMBER 31, 2013(1-4)

Tonnes Ag g/t Au g/t Ag Mozs Au kozs

Measured 1,523,936 640 8.85 31.4 433.6 Indicated 2,873,987 448 6.71 41.4 619.7 Meas + Ind 4,397,923 515 7.45 72.8 1,053.3 Inferred 1,851,710 455 7.23 27.1 430.6

(1) Represents 100 % of the mineral resource. Hochschild has a 51 % interest in San José. (2) Mineral resources, which are not mineral reserves, do not have demonstrated economic viability. The estimate of

mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.

(3) The quantity and grade of reported Inferred Resources are uncertain in nature and there has been insufficient exploration to define these inferred resources as an Indicated or Measured mineral resource and it is uncertain if further exploration will result in upgrading them to an Indicated or Measured mineral resource category.

(4) The mineral resources are reported in compliance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (“JORC”). P&E believes the reported mineral resources to be in compliance with the generally accepted CIM “Estimation of Mineral Resource and Mineral Reserves Best Practices” guidelines, as required by National Instrument (NI) 43-101 Item 19, Standards of Disclosure for Mineral Projects.

P&E notes that Hochschild declares all mineral resources using a silver-equivalent grade calculated at a gold-to-silver ration of 60.0 to 1, but algorithmically accumulates mineral resources using a NSR value calculated at 62 to 1 for San José. This results in a trivial discrepancy of less than one percent total contained metal. Declared mineral resources at San José currently consist of 144 deposits. P&E has selected eleven distinct deposits for review, namely the Antonella, Ayelen, Frea, Huevos Verdes Norte, Kospi, Luli, Micaela, Odin, Pilar, Ramal Frea and Sigmoide Luli deposits. These deposits represent 58% of the total silver-equivalent San José Measured and Indicated mineral resources declared for 2013 in terms of metal content (Figure 14.1).


Figure 14.1 Plan View of the San José Deposits with Topography Removed


Audited deposits are shown in green. Saavedra deposit not shown. 14.2 DATA SUPPLIED The information provided by Hochschild for the San José mineral resources consists of volumetric summaries, estimation parameters, drilling and sampling databases, block models, and desurveyed composite files. All data were provided electronically in Excel spreadsheets or ASCII coma-separated-value text files. AutoCAD format dxf triangulated wireframes defining vein shapes, depleted veins and sub-domains as well as topographic surfaces were also provided. The supplied sampling database for San José contains 61,137 collar records, 87,949 survey records, and 276,480 assay records, an increase of 32% from the 2012 database. Industry standard validation checks were completed on the supplied database, which included checking for inconsistencies in naming conventions or analytical units, duplicate entries, interval, length or distance values less than or equal to zero, blank or zero-value assay results, out-of-sequence intervals, intervals or distances greater than the reported drill hole length, inappropriate collar locations, and missing interval and coordinate fields. P&E noted 71 incorrect header records, 42 incorrect survey records and 58 incorrect assay intervals. P&E compared the desurveyed composite records to assay data for those records flagged with survey errors, and the composites appear to have been properly calculated. The assay database also reports 95 zero-grade Ag values and 110 zero-grade Au values, the majority of which represent unsampled intervals or intervals that have been sampled and are pending results. Although insignificant in terms of the total database count, P&E recommends that all database errors be corrected, as their behavior is undefined during the estimation process. P&E believes that the sample database for San José is suitable for mineral resource estimation. 14.3 BULK DENSITY For San José a global bulk density value per deposit has been applied for volumetric calculations, based on the median measured bulk density. The bulk density factors used for the audited deposits are listed in Table 14.3.

TABLE 14.2 BULK DENSITY VALUES FOR SELECTED DEPOSITS

Deposit Bulk Density Tonnes per Cubic Metre

Antonella 2.60 Ayelen 2.592 Frea 2.60 Huevos Verde Norte 2.60 Kospi 2.604 Luli 2.60 Micaela 2.60 Odin 2.583 Pilar 2.60 Ramal Frea 2.60 Sigmoide Luli 2.60

P&E notes that these values are consistent with values used in previous mineral resource estimates for San José and have been implemented correctly in the block models.


14.4 DEPOSIT MODELING AutoCAD format wireframes representing the San José deposits were supplied by Hochschild, including unmined and mined deposit models. The wireframe representations of mineralized deposits have been constructed from drillhole intervals, survey data, surveyed mining excavations and visual examination of grades in underground chip sample channels. P&E imported the supplied wireframes for the audited deposits and validated the wireframes. No significant triangulation errors were noted. 14.5 COMPOSITING De-surveyed composite files for each vein were supplied. Each composite record contains midpoint coordinate values and a vein code, as well as composite length and capped composite Ag and Au grades. Composite grades were imported as point samples by P&E and visually checked for location relative to the appropriate block model. No significant composite errors were observed. P&E notes that the compositing method used may cause a small local sample bias during estimation due to the non-uniform support size. 14.6 TREATMENT OF EXTREME VALUES The influence of high-grade outliers has been restricted by capping composite grades above a threshold value prior to estimation (Table 14.4). P&E verified the implementation of the selected capping levels for the composite files and block models. Based on the supplied database, P&E believes that the capping strategy as implemented meets industry standards for linear estimation of grade.

TABLE 14.3 COMPOSITE CAPPING THRESHOLDS FOR AUDITED DEPOSITS

Deposit Ag g/t Au g/t Antonella 2,500 65 Ayelen 6,500 100 Frea 7,500 350 Huevos Verde Norte 9,000 80 Kospi 30,000 300 Luli 3,800 25 Micaela 2,300 50 Odin 14,600 160 Pilar 7,500 60 Ramal Frea 10,000 120 Sigmoide Luli 8,000 70

14.7 ESTIMATION Where there is sufficient information available to construct a semi-variogram, estimation is by Ordinary Kriging (“OK”) of capped composites. Where insufficient information is available to establish a semi-variogram estimation is by Inverse Distance (“ID”) weighting of capped composites, applying similar search criteria as that used for OK (Table 14.5). At San José, the block models are based on either a 5m x 5m x 5m or a 10m x 10m x 10m block size. Selected deposits have also been divided where appropriate into low and high-grade sub-domains for estimation. The block model orientation has been rotated to accommodate the general strike of the deposit. The mineral resource models consist of separate block models by deposit for Au and Ag estimated grades, diluted Au and Ag estimated grades, average interpolation distance, number of samples used for estimation, ore codes, percentage remaining ore, dilution factors, vein thickness, estimation variance, classification and geological confidence. A volumetrics check was generated by P&E for the audited


deposits using the supplied block models, returning an exact match to the declared mineral resource inventory dated December 2013. Hochschild reports mineral resources based on a minimum stoping width. Mineral resources have been accumulated relative to a NSR value, the “Valor de Punto”. Based on a price of US$20 per ounce Ag and US$1,200 per ounce Au, the cut-off used for the 2013 mineral resources at San José is US$94.76 per tonne. P&E notes that the two-year trailing average for Ag and Au as of December 2013 is US$27 per oz Ag and US$1,540 per oz Au.

TABLE 14.4 ESTIMATION PARAMETERS FOR AUDITED DEPOSITS

Veta Antonella Veta Ayelen Veta Frea Veta HVN

Estimation Method ID ID OK OK OK OK OK OK

Minimum Composites 1 1 1 1 1 1 1 1

Maximum Composites 4 8 4 8 4 8 4 6

Major Axis Distance (m) 105 70 95 50 110 75 130 75

Minor Axis Distance (m) 70 40 70 30 90 60 60 35

Vertical Distance (m) 35 30 30 30 35 35 30 30

Major Axis Trend (deg) 95 95 197 197 130 130 50 50

Minor Axis Trend (deg) 0 0 -70 -70 -20 -20 -65 -65

Minor Axis Plunge (deg) -75 -75 0 0 50 50 0 0

Maximum Sectors 1 1 1 2 1 1 1 1

Veta Kospi Veta Luli Veta Micaela Veta Odin

Estimation Method OK OK ID ID ID ID OK OK

Minimum Composites 1 1 1 1 1 1 1 1

Maximum Composites 4 8 4 8 4 8 4 8

Major Axis Distance (m) 95 75 90 60 90 60 145 95

Minor Axis Distance (m) 75 50 90 60 90 60 95 63

Vertical Distance (m) 30 30 60 30 30 30 30 30

Major Axis Trend (deg) 125 125 114 114 98 98 110 110

Minor Axis Trend (deg) -65 -65 0 0 0 0 0 0

Minor Axis Plunge (deg) 0 0 60 60 90 90 -70 -70

Maximum Sectors 1 1 1 1 1 1 1 1

Veta Pilar Ramal Frea Sigmoide Luli

Estimation Method ID ID ID ID ID ID Minimum Composites 1 1 1 1 1 1 Maximum Composites 4 8 4 8 4 8 Major Axis Distance (m) 90 60 110 60 90 60 Minor Axis Distance (m) 60 30 90 60 90 60 Vertical Distance (m) 60 30 50 30 60 30 Major Axis Trend (deg) 120 120 110 110 117 117 Minor Axis Trend (deg) 0 0 0 0 0 0 Minor Axis Plunge (deg) -70 -70 45 45 65 65 Maximum Sectors 1 2 1 1 1 1


14.8 CLASSIFICATION San José mineral resources have been classified in accordance with the requirements of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (“JORC”). Classification is based primarily on the number of drillhole or channel samples within the uncapped composite experimental semi-variogram ranges, with geologically complex deposits requiring more samples. At San José in general between three and four samples within 1/3 of the defined range (generally 30 metres) are required for Measured resources. For Indicated resources in general between two and four samples within 2/3 of the defined range (generally 60 metres) are required, and for Inferred resources in general between one and four samples within the defined range are required (generally 90 metres). Classification is assigned algorithmically, which generates a small number of locally incongruent blocks. P&E notes that the application of these criteria has restricted sample selection in a number of cases to a maximum of four channel samples. Mineral resources have also been confined to areas considered by staff mine geologists to have a reasonable degree of geological confidence, and resource blocks within the wireframes but outside these areas are typically estimated using a more stringent set of estimation criteria, downgraded to Inferred resources or not reported.

TABLE 14.5 AVERAGE NUMBER OF SAMPLES PER CLASSIFICATION CATEGORY

Deposit Measured Indicated Inferred Antonella 3.5 2.7 1.4 Ayelen 6.1 3.6 1.3 Frea 3.9 2.9 2.0 Huevos Verde Norte 3.7 3.1 1.4 Kospi 3.6 2.7 1.2 Luli 3.7 2.9 1.2 Micaela 3.5 2.8 1.6 Odin 3.9 3.1 2.5 Pilar 6.4 4.2 1.6 Ramal Frea 3.8 3.0 1.4 Sigmoide Luli 3.7 2.9 1.5

P&E queried the supplied block models in order to verify the classification criteria used and found the results to be consistent with the methodology as described (Table 14.6). P&E considers the classification scheme as implemented to be compliant with JORC and NI 43-101 standards, but notes that the use of a small number of samples combined with inconsistent compositing intervals may produce a local estimation bias. 14.9 VALIDATION P&E examined the supplied block model grade estimates as well as nearest neighbor models. In addition, for each audited deposit P&E also reviewed and compared the statistical distribution of the assay data, composite data, block model estimates and diluted block model. Examination of Nearest Neighbor and block model estimates suggests that the mineral resource estimates at San José may be slightly conservative in nature (Table 14.7).

TABLE 14.6 CORRELATION COEFFICIENT BETWEEN NEAREST NEIGHBOUR GRADE AND BLOCK

ESTIMATE Deposit Ag g/t Au g/t

Antonella 0.92 0.92 Ayelen 0.72 0.70


Frea 0.71 0.69 Huevos Verde Norte 0.69 0.69 Kospi 0.87 0.87 Luli 0.91 0.91 Micaela 0.71 0.73 Odin 0.77 0.80 Pilar 0.86 0.86 Ramal Frea 0.93 0.93 Sigmoide Luli 0.92 0.92

As an additional check of the mineral resource base P&E has compared the calculated volume of the total resource estimated per vein at a zero grade cut-off and the theoretical volume of the supplied vein wireframes (Table 14.8). Observed differences in volumes are attributed to the delineation of portions of the veins as geologically risky, as well as strict restrictions on search ranges used during estimation resulting in a small number of unestimated blocks within the defined wireframe. P&E notes that the actual wireframe representations are not used directly for the calculation of vein widths or dilution.

TABLE 14.7 VOLUME COMPARISON OF AUDITED DEPOSITS

Deposit Wireframe Volume x 1000 m3 Block Model Volume x 1000 m3

Antonella 80 79 Ayelen 332 297 Frea 243 228 Huevos Verde Norte 126 125 Kospi 352 325 Luli 169 157 Micaela 255 244 Odin 512 508 Pilar 276 269 Ramal Frea 135 134 Sigmoide Luli 68 68

14.10 CONCLUSION P&E believes that methodology used for San José represents a generally prudent and moderately conservative approach to the mineral resource estimates and that the mineral resources reported are in conformity with the requirements of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (“JORC”), as well as generally accepted CIM “Estimation of Mineral Resource and Mineral Reserves Best Practices” guidelines, as required by National Instrument (NI) 43-101 Item 19, Standards of Disclosure for Mineral Projects.


15.0 MINERAL RESERVES ESTIMATES The methodology used by MSC to convert mineral resources to mineral reserves is as follows, in sequential order. Based on the physical location of resources and mining method selected, 3,787,900 tonnes (approximately 86%) of Measured and Indicated mineral resources grading 544 g/t Ag and 7.93 g/t Au, were considered for conversion to mineral reserves. The balance of Measured and Indicated mineral resources, (ie. 610,000 t grading 329 g/t Ag and 4.47 g/t Au), were not considered for conversion to mineral reserves, at this time. These Measured and Indicated mineral resources, selected above, are diluted to a minimum 0.8 m thickness. Within the three dimensional boundaries of this 0.8 m thickness there is some low grade material that must be mined based on the mine plan and design. This low grade material is referred to as internal dilution. There is a total 302,500 tonnes of planned internal dilution grading 73 g/t Ag and 1.18 g/t Au that are considered for conversion to reserves. Thus, the total internally diluted resources considered for conversion to reserves is 4,090,400 tonnes grading 510 g/t Ag and 7.43 g/t Au. Of this total, 1,798,300 tonnes of Measured and Indicated internally diluted resources, grading 410 g/t Ag and 6.43 g/t Au will not be considered for conversion to reserves due to fact these resources have no development in the area. Thus, 2,292,100 tonnes of internally diluted measured and indicated resources, grading 588 g/t Ag and 8.22 g/t Au, remain to be converted to reserves. Mine recovery of the internally diluted Measured and Indicated mineral resources is calculated, based on the mine plan and design. Inaccessible resources, operationally constrained resources (“OCR”), uneconomic resources and resources tied up in development are excluded (not extracted or recovered) from the mine plan and design. OCR includes losses due to bad ground and blasted ore left in stopes. Uneconomic resources are mineral resources with values below the cut-off value. All of these resources include internal dilution. As of December 31, 2013 a total of 848,000 tonnes grading 487 g/t Ag and 7.19 g/t Au will not be recovered due to these factors. Consequently, a total 63% of internally diluted resources will be extracted, containing 69% and 68% of the internally diluted contained Ag and Au, respectively. Planned external dilution is estimated, based on the mine plan and design. This planned external dilution is estimated based on historical reconciliation data gathered, including excavation surveys, and includes slough and blasted waste rock from both the hanging and footwalls, mined backfill and blasted waste sent to the mill. This external dilution is added to the ‘internally diluted extracted’ mineral resources at zero grade, to end up with fully diluted mineral reserves. As of December 31, 2013 planned external dilution is estimated to be 369,300, at zero grade, or approximately 26% of the extracted mineral resources. Mineral reserves were estimated from selected diluted and extracted Measured and Indicated mineral resources. As at December 31, 2013 Proven and Probable mineral reserves totalled 1,813,300 tonnes, grading 515 g/t Ag and 7.03 g/t Au. A summary of these reserves is presented in Table 15.1.

TABLE 15.1 PROVEN AND PROBABLE MINERAL RESERVES AS OF DECEMBER 31, 2013(1-3)

Reserve Category Tonnes (000’s) Ag (g/t) Au (g/t) AgEq (g/t) Ag M oz Au k oz Proven 950 597 7.82 1,066 18.2 238.9 Probable 863 426 6.15 795 11.8 170.7 Proven & Probable 1,813 515 7.03 937 30.1 409.6


(2) P&E used a gold price cut-off of US$1,200 per ounce (oz) and US$20.00 per oz for silver for mineral reserves.


(3) The cut-off value used to estimate mineral reserves is based on historical January to October 2013 geologic, mining, plant and mine administration variable and fixed costs.

15.1 CUT-OFF VALUE MSC’s cut-off value (“COV”) is based on historical January to October 2013 geologic, mining, plant and mine administration variable and fixed costs. Economic Cut-off Values (“ECOV”) were estimated using both variable and fixed costs and Marginal Cut-off Values (“MCOV”) were estimated using variable costs only. Most of the mineral reserves are based on the ECOV. Ore with a grade above the MCOV and less than the ECOV are included in the mineral reserve estimate if it was necessary to develop mining headings through them in order to access ore grades above the ECOV. A total of 73% of the December 31, 2013 mineral reserves, containing 91% and 90% of the Ag and Au, respectively, are at or above the ECOV. A total of 27% of the December 31, 2013 mineral reserves, containing 9% of the Ag and 10% of the Au, are between the ECOV and the MCOV. A summary of average 2013 variable and fixed operating costs is presented in Table 15.2.

TABLE 15.2 VARIABLE AND FIXED OPERATING COSTS FOR 2013


Period Variable Costs (US$/t) Fixed Costs (US$/t) Variable& Fixed Costs (US$/t)

Jan – Jun 102.72 132.72 235.43 Feb – Jul 100.15 125.19 225.34 Mar – Aug 96.37 118.04 214.41 Apr – Sept 94.44 114.91 209.35 May – Oct 93.63 112.51 206.13 Average of Last 3 94.81 115.15 209.96

MSC used an average US$205.25/t variable and fixed cost to estimate the ECOV and a US$88.39/t variable cost to estimate the MCOV. MSC has included an allowance of US$-0.05/t in the MCOV and a US$-0.16/t allowance in the ECOV as an adjustment based on the estimated 2013 operating costs. Thus the ECOV and the MCOV are US$209.81/t and US$94.76/t, respectively, as summarized in Table 15.3.

TABLE 15.3 SUMMARY OF MARGINAL & ECONOMIC CUT-OFFS (US$/TONNE)

San José Mining Operation Description Variable Costs Fixed Costs Subtotal 2013 Adjustment Cut-off

Marginal Cut-off 94.81 94.81 -0.05 94.76 Economic Cut-off 94.81 115.15 209.96 -0.16 209.81

MSC estimates the NSR value for Ag and Au to be US$0.4415/g and US$27.1850/g head grade, respectively, based on gold prices of US$1,200/oz and silver prices of US$20.00/oz. Thus the economic and marginal cut-offs used to estimate mineral reserves are 475 g/t and 215 g/t Ag Equivalent, respectively summarized in Table 15.4.

TABLE 15.4 SAN JOSÉ ECONOMIC PARAMETERS

Silver Gold Price US$/oz US$20.00 US$1,200 NSR value US$/g 0.4415 27. 1850 Marginal Cut-off US$/t 94.76 Marginal Cut-off AgEq (g/t) 215 Economic Cut-off US$/t 209.81 Economic Cut-off AgEq (g/t) 475


15.2 MINERAL RESERVES The following abbreviations are used in this report for the veins on the San José Property:

• HVC Huevos Verdes Central • HVN Huevos Verdes Norte (North) • HVS Huevos Verdes Sur (South) • RAYELEN Ramal Ayelen • 480E Ramal 480E • 861A Ramal 861A • 861B Ramal 861B • 861C Ramal 861C • 861D Ramal 861D • 861E Ramal 861E • 861H Ramal 861H • 861I Ramal 861I • R350 Ramal 350 • R425 Ramal 425 • R483 Ramal 483 • R880 Ramal 880 • R720 Ramal 720 • RN2 Ramal RN • RFREA Ramal Frea • RHVNC Ramal Huevos Verdes North-Central • RHVNE Ramal Huevos Verdes North-East • RHVS Ramal Huevos Verdes Sur (South) • RKOSPI Ramal Kospi • SFREA Sigmoide Frea • SHVS Sigmoide Huevos Verdes Sur (South)

A total of 3,787,900 t of Measured and Indicated resources, grading 544 g Ag/t and 7.93 g Au/t were considered for conversion to San José reserves, before internal dilution. These resources were estimated to a minimum 0.8 m width. A summary of this estimate, by vein is presented in Table 15.5.

TABLE 15.5 MEASURED AND INDICATED RESOURCES INITIALLY USED IN RESERVE ESTIMATION

Vein Tonnes Ag (g/t) Au (g/t) R425 13,462 846 8.28 R483 27,914 513 5.89 R720 2,334 611 9.29 R861A 59,884 658 8.67 R861B 28,305 281 12.85 R861B1 7,132 348 11.14 R861C 12,731 579 9.29 R861D 19,701 426 7.08 R861E 42,847 849 7.46 R861I 12,891 606 5.50 R861Q1 12,454 829 8.30 R861W 15,741 1,156 8.09 R861X 17,738 1,319 12.84 RAyelen 59,298 436 3.94 RFrea 134,133 580 7.45 RHVS 52,183 401 5.16 RHVNC 43,263 357 5.59


RKospi 79,961 202 5.34 RN1 3,978 131 6.59 RN3 7,568 678 10.06 RNoel 3,848 235 4.36 SAyelen 3,260 316 4.18 SFrea 25,093 469 6.77 SLuli 68,282 1,306 12.58 SMarisa 12,367 236 8.84 290 49,907 559 17.53 Abril 41,065 359 5.47 Antonella 78,551 296 15.20 Ayelen 223,139 468 5.68 Benita 12,427 335 4.92 Cecilia 6,953 545 5.91 Frea 119,410 379 10.93 Hera 105,990 453 5.17 HVC 34,123 607 7.20 HVN 97,953 602 6.42 HVS 47,697 660 10.30 Ivon 5,529 484 5.09 Julieta 2,669 460 4.48 Kospi 286,313 830 9.49 Lola 5,240 807 8.89 Luli 150,674 1,301 12.98 Mara 35,582 358 4.46 Marcia 7,795 665 12.91 Marisa 9,057 257 3.43 Micaela 235,527 533 9.03 Noel 34,226 407 10.14 Odin 249,705 354 8.37 Pacha 3,780 392 4.26 Piedad 1,568 175 2.23 Pilar 332,993 430 9.70 Sanson 13,172 749 4.29 Shala 20,064 473 7.05 Ext Ayelen 68,046 407 6.03 Frod 26,215 371 4.38 RHVN 64,167 571 7.57 Paloma 69,566 533 4.18 Perla 23,810 403 5.29 360E 45,943 374 2.40 Adela 31,011 317 4.19 HVNA 41,016 255 4.42 350S 42,267 244 4.62 Elisa 23,633 456 3.86 Chenque 31,320 309 3.27 Ula 29,516 333 3.77 R480E 34,090 623 5.03 Marta 30,375 198 5.92 RHvnI 13,067 1,125 21.97 Susana 20,423 843 7.19 RHVNB 20,064 559 5.32 RHVNE 20,092 688 6.75 425A 18,614 123 3.70 RHVND 11,260 2,255 17.66 721 14,579 224 3.42 Tati 12,214 489 3.39 R350 13,648 251 8.77 Candela 14,198 232 2.98 Sasi 5,936 341 1.84 Dalia 6,795 103 3.77 RFrea 450 14,483 474 3.80 R861F 10,309 433 3.25


Sara 8,143 1,334 10.92 RHvnJ 9,899 373 4.23 Nina 8,847 225 1.71 Sofia 5,473 206 4.62 701 5,464 411 4.98 Hvs02 1,405 190 0.74 R861H 4,957 395 3.33 R861U 4,080 355 3.05 SLuli01 5,314 858 5.16 RN2 0 Total / Average 3,787,916 544 7.93

Note: Resources are inclusive of reserves

Within the area of the initial Measured and Indicated resources, used in the reserve estimation, there is an estimated 302,500 t of total internal dilution grading 73 g Ag/t and 1.18 g Au/t. This represents a total internal dilution of 8.0%, 1.1% and 1.2% by tonnes, contained silver and contained gold, respectively. A summary of this estimate, by vein is presented in Table 15.6.

TABLE 15.6 MEASURED AND INDICATED RESOURCES TOTAL INTERNAL DILUTION ESTIMATION

Vein Tonnes Ag (g/t) Au (g/t) Tonnes (%) Contained Ag (%)

Contained Au (%)

R425 1,404 79 0.39 10.4% 1.0% 0.5% R483 3,420 81 0.99 12.3% 1.9% 2.1% R720 707 49 1.06 30.3% 2.4% 3.5% R861A 6,517 59 1.08 10.9% 1.0% 1.4% R861B 619 44 1.13 2.2% 0.3% 0.2% R861C 524 109 1.22 4.1% 0.8% 0.5% R861D 1,359 58 1.28 6.9% 0.9% 1.2% R861E 4,651 75 0.87 10.9% 1.0% 1.3% R861I 2,096 71 1.07 16.3% 1.9% 3.2% R861Q1 203 103 0.61 1.6% 0.2% 0.1% R861W 1,242 52 0.69 7.9% 0.4% 0.7% R861X 880 72 1.22 5.0% 0.3% 0.5% RAyelen 7,170 105 0.78 12.1% 2.9% 2.4% RFrea 10,777 74 1.04 8.0% 1.0% 1.1% RHVS 6,770 72 1.03 13.0% 2.3% 2.6% RHVNC 2,933 97 0.96 6.8% 1.9% 1.2% RKospi 8,765 61 1.68 11.0% 3.3% 3.4% RN1 138 24 1.25 3.5% 0.6% 0.7% RNoel 329 83 1.53 8.6% 3.0% 3.0% SAyelen 181 93 1.27 5.5% 1.6% 1.7% SFrea 2,354 58 1.29 9.4% 1.2% 1.8% SLuli 4,638 59 0.91 6.8% 0.3% 0.5% SMarisa 996 36 1.62 8.1% 1.2% 1.5% 290 2,894 26 1.29 5.8% 0.3% 0.4% Abril 971 88 1.43 2.4% 0.6% 0.6% Antonella 2,379 25 1.27 3.0% 0.3% 0.3% Ayelen 10,121 89 0.63 4.5% 0.9% 0.5% Benita 1,244 114 1.14 10.0% 3.4% 2.3% Cecilia 594 21 0.29 8.5% 0.3% 0.4% Frea 9,105 59 1.71 7.6% 1.2% 1.2% Hera 2,599 81 0.88 2.5% 0.4% 0.4% HVC 5,820 54 0.93 17.1% 1.5% 2.2% HVN 8,108 79 1.37 8.3% 1.1% 1.8% HVS 5,534 51 1.39 11.6% 0.9% 1.6% Ivon 158 36 0.59 2.9% 0.2% 0.3% Julieta 234 136 1.10 8.8% 2.6% 2.2% Kospi 38,324 62 1.17 13.4% 1.0% 1.6%


Lola 65 63 0.64 1.2% 0.1% 0.1% Luli 3,666 84 0.75 2.4% 0.2% 0.1% Mara 5,264 69 1.55 14.8% 2.8% 5.1% Marisa 277 61 1.09 3.1% 0.7% 1.0% Micaela 28,435 72 1.29 12.1% 1.6% 1.7% Noel 4,010 101 0.76 11.7% 2.9% 0.9% Odin 26,114 65 1.59 10.5% 1.9% 2.0% Pacha 381 90 0.90 10.1% 2.3% 2.1% Piedad 386 81 1.49 24.6% 11.4% 16.4% Pilar 11,044 60 1.34 3.3% 0.5% 0.5% Sanson 2,626 110 0.55 19.9% 2.9% 2.6% Shala 1,948 92 1.06 9.7% 1.9% 1.5% Ext Ayelen 1,315 97 0.61 1.9% 0.5% 0.2% Frod 452 99 1.32 1.7% 0.5% 0.5% RHVN 4,852 92 0.92 7.6% 1.2% 0.9% Paloma 857 61 1.54 1.2% 0.1% 0.5% Perla 3,251 65 0.73 13.7% 2.2% 1.9% 360E 2,516 94 0.82 5.5% 1.4% 1.9% Adela 913 88 0.91 2.9% 0.8% 0.6% HVNA 941 58 1.06 2.3% 0.5% 0.6% 350S 4,654 83 1.40 11.0% 3.8% 3.3% Elisa 2,101 90 0.61 8.9% 1.8% 1.4% Chenque 3,574 110 1.26 11.4% 4.1% 4.4% Ula 2,284 108 1.10 7.7% 2.5% 2.3% R480E 5,537 99 0.83 16.2% 2.6% 2.7% Marta 2,890 24 1.75 9.5% 1.2% 2.8% RHvnI 3,739 93 1.54 28.6% 2.4% 2.0% Susana 1,394 76 1.30 6.8% 0.6% 1.2% RHVNB 716 100 1.01 3.6% 0.6% 0.7% RHVNE 762 67 0.40 3.8% 0.4% 0.2% 425A 319 36 2.33 1.7% 0.5% 1.1% RHVND 1,057 61 1.86 9.4% 0.3% 1.0% 721 1,360 44 0.38 9.3% 1.8% 1.0% Tati 277 85 0.98 2.3% 0.4% 0.7% R350 1,709 55 1.85 12.5% 2.8% 2.6% Candela 5,131 148 0.83 36.1% 23.1% 10.0% Sasi 496 129 1.26 8.4% 3.2% 5.7% Dalia 334 103 1.56 4.9% 4.9% 2.0% RFrea 450 429 118 1.39 3.0% 0.7% 1.1% R861F 865 76 0.82 8.4% 1.5% 2.1% RHvnJ 2,092 71 1.38 21.1% 4.0% 6.9% Nina 1,473 123 0.88 16.6% 9.1% 8.5% Sofia 1,300 82 1.40 23.7% 9.4% 7.2% 701 655 96 1.22 12.0% 2.8% 2.9% Hvs02 227 167 0.65 16.2% 14.2% 14.2% R861H 524 97 0.98 10.6% 2.6% 3.1% R861U 184 132 1.25 4.5% 1.7% 1.9% SLuli01 319 108 0.66 6.0% 0.8% 0.8% Total / Average 302,472 73 1.18 8.0% 1.1% 1.2%

Of the 3,787,900 tonnes of Measured and Indicated resources considered for conversion to reserves a total 1,798,300 tonnes of Measured and Indicated resources, without development, grading 410 g Ag/t and 6.43 g Au/t is not considered for conversion to reserves. A summary of these resources is presented in Table 15.7.

TABLE 15.7 UNDEVELOPED MEASURED AND INDICATED RESOURCES NOT USED IN RESERVE ESTIMATION

Vein Tonnes Ag (g/t) Au (g/t) R425 2,538 166 6.44 R720 1,077 609 7.62


R861A 8,524 349 2.18 R861D 6,831 368 5.40 R861Q1 2,377 731 5.39 RAyelen 35,208 506 4.40 RFrea 55,661 443 8.30 RHVS 3,573 369 2.77 RHVNC 25,879 284 6.33 RKospi 69,474 204 5.00 SAyelen 1,368 290 3.78 SFrea 25,345 426 6.01 SLuli 31,546 686 7.52 SMarisa 7,534 160 8.96 290 31,839 507 13.49 Antonella 29,410 334 16.68 Ayelen 123,559 379 5.65 Benita 7,429 195 2.77 Frea 5,865 162 19.01 Hera 39,128 475 5.97 HVN 7,793 161 5.39 Kospi 34,048 610 4.40 Luli 49,004 762 8.30 Marisa 4,166 381 2.77 Micaela 14,034 426 6.33 Noel 21,675 435 5.00 Odin 162,867 296 3.78 Piedad 1,054 129 6.01 Pilar 163,707 359 7.45 Shala 8,870 251 8.63 Ext Ayelen 69,361 401 5.93 Frod 26,667 366 4.33 RHVN 69,019 537 7.10 Paloma 70,423 527 4.14 Perla 27,060 363 4.74 360E 48,459 359 2.32 Adela 31,925 310 4.10 HVNA 41,957 250 4.35 350S 46,921 228 4.30 Elisa 25,734 427 3.60 Chenque 34,894 289 3.07 Ula 31,800 317 3.58 Marta 33,265 183 5.56 RHvnI 16,806 895 17.43 Susana 21,817 794 6.81 RHVNB 20,780 543 5.17 RHVNE 21,054 666 6.52 425A 18,933 121 3.68 RHVND 12,316 2,067 16.30 721 15,938 209 3.16 Tati 12,490 480 3.34 Candela 19,329 210 2.41 Sasi 6,432 325 1.79 Dalia 7,129 103 3.67 RFrea 450 14,912 464 3.73 R861F 11,174 406 3.06 Sara 8,143 1,334 10.92 RHvnJ 11,991 320 3.74 Nina 10,319 210 1.59 Sofia 6,773 182 4.00 701 6,119 377 4.57 Hvs02 1,632 187 0.73 R861H 5,481 366 3.11 R861U 4,264 345 2.97 SLuli01 5,633 815 4.91


Total / Average 1,798,334 410 6.43

Note: Resources are exclusive of reserves. This results in a total of 2,292,100 t of internally dilution resources grading 588 g Ag/t and 8.22 g Au/t to be further considered for conversion to reserves. Mine recovery losses at the San José mine include inaccessible resources, uneconomic resources, resources tied up in development and operationally lost resources. A total of 583,100 t of inaccessible resources, grading 443 g Ag/t and 6.59 g Au/t will not be recovered. A total of 38,700 t of uneconomic resources, grading 193 g Ag/t and 2.64 g Au/t will not be recovered. A total of 181,600 t of resources tied up in development, grading 655 g Ag/t and 9.65 g Au/t will not be recovered. A total of 44,700 t of operationally lost resources, grading 647 g Ag/t and 8.82 g Au/t will not be recovered. Summaries of resources not recovered are presented in Table 15.8, through Table 15.11.

TABLE 15.8 M&I INACCESSIBLE RESOURCES NOT RECOVERED

Vein Tonnes Ag (g/t) Au (g/t)

R425 800 1,133 5.97 R483 9,488 405 5.11 R720 580 59 3.97 R861A 17,601 281 7.28 R861B 12,201 284 15.15 R861B1 2,719 295 11.87 R861C 8,581 638 9.64 R861D 2,099 567 4.37 R861E 40,126 783 6.88 R861I 11,150 524 4.42 R861Q1 1,287 1,516 18.61 R861W 5,037 726 5.10 R861X 3,962 3,245 27.12 RAyelen 16,150 211 2.88 RFrea 28,671 651 4.98 RHVS 5,797 290 3.11 RHVNC 5,161 438 4.58 RN1 3,404 118 6.54 RN3 3,459 468 7.63 RNoel 2,352 205 4.29 SAyelen 626 351 6.81 SFrea 1,556 502 7.88 SLuli 3,909 230 3.03 290 1,424 126 8.61 Antonella 1,045 699 8.26 Ayelen 5,422 239 3.88 Benita 3,221 235 3.34 Cecilia 2,862 463 4.57 Frea 80,177 335 9.21 HVC 26,450 446 5.72 HVN 14,027 280 4.85 HVS 32,754 441 7.30 Ivon 1,246 677 5.52 Julieta 1,409 402 3.90 Kospi 76,014 488 6.33 Marcia 3,452 691 13.53 Micaela 42,765 280 6.07 Noel 15,835 269 4.53 Odin 25,247 182 3.51 Pacha 852 375 2.79 Pilar 3,593 265 4.00


TABLE 15.8 M&I INACCESSIBLE RESOURCES NOT RECOVERED


Shala 3,680 476 3.58 R480E 39,627 550 4.44 R350 15,358 229 8.00 Total / Average 583,089 443 6.59

Note: Resources are exclusive of reserves.

TABLE 15.9 M&I UNECONOMIC RESOURCES NOT RECOVERED


R425 353 196 3.35 R483 1,790 215 4.04 R861A 696 251 2.40 R861Q1 369 227 3.59 R861W 533 263 2.38 R861X 633 196 4.08 RFrea 994 104 2.87 RHVS 959 248 2.11 RNoel 53 184 2.39 SMarisa 436 107 2.63 Abril 2,005 126 3.28 Antonella 1,183 67 4.58 Ayelen 7,048 251 0.73 Cecilia 141 219 2.66 Hera 1,939 306 3.83 HVC 4 7 0.40 HVN 974 203 5.16 Kospi 2,283 156 1.86 Luli 948 551 0.38 Mara 5,926 81 2.71 Marisa 261 67 2.35 Micaela 791 159 1.60 Odin 6,092 188 3.73 Pilar 1,660 124 1.99 Sanson 587 489 3.71 Total / Average 38,660 193 2.64 Note: Resources are exclusive of reserves.

TABLE 15.10

M&I RESOURCES IN DEVELOPMENT PILLARS NOT RECOVERED


R425 468 1,042 7.78 R483 3,721 423 4.39 R861A 1,488 789 7.51 R861B 2,926 329 17.88 R861E 2,970 744 7.11 R861I 807 451 4.67 R861Q1 453 1,020 12.16 R861X 369 1,145 9.42 RAyelen 296 777 4.12 RFrea 10,049 760 9.11 RHVS 2,675 471 5.42 RKospi 2,956 227 6.13 RN1 193 52 3.47


SLuli 1,577 1,080 11.87 Abril 1,355 288 4.68 Antonella 4,079 256 13.07 Ayelen 12,061 561 5.54 Benita 390 618 9.74 Cecilia 119 601 8.32 Frea 35,588 453 10.82 Hera 2,059 372 5.11 HVC 1,887 729 7.80 HVN 4,632 769 7.81 HVS 5,724 908 15.73 Kospi 44,486 896 10.25 Lola 222 652 6.53 Luli 6,443 1,194 12.47 Mara 1,305 403 4.97 Micaela 7,796 475 7.00 Odin 7,011 543 7.01 Pilar 15,035 541 11.48 Sanson 477 743 4.13 Total / Average 181,618 655 9.65

Note: Resources are exclusive of reserves.

TABLE 15.11 MEASURED &INDICATED OPERATIONALLY LOST RESOURCES NOT RECOVERED

Vein Tonnes Ag (g/t) Au (g/t) R425 321 898 8.04 R483 490 538 5.86 R720 42 557 8.60 R861A 1,143 801 9.63 R861B 414 258 9.21 R861B1 132 380 10.69 R861C 140 417 7.75 R861D 367 394 7.82 R861E 132 699 6.05 R861I 91 576 6.62 R861Q1 245 748 7.32 R861W 342 1,267 8.88 R861X 410 736 8.44 RAyelen 444 347 2.49 RFrea 1,486 554 6.28 RHVS 1,378 369 5.04 RHVNC 455 403 3.77 RKospi 489 115 4.70 RN1 16 217 6.68 RN3 123 855 12.11 RNoel 53 249 3.98 SAyelen 43 296 3.05 SFrea 16 570 15.18 SLuli 1,077 1,817 16.58 SMarisa 162 317 7.83 290 586 597 22.37 Abril 1,160 367 5.51 Antonella 1,356 258 14.14 Ayelen 2,555 572 5.68 Benita 79 705 10.41 Cecilia 133 537 6.06 Frea 207 274 12.42 Hera 1,964 432 4.56 HVC 348 676 7.34 HVN 2,359 645 6.42 HVS 443 823 11.52


Ivon 133 414 4.81 Julieta 45 464 4.49 Kospi 5,034 846 9.44 Lola 153 804 8.88 Luli 2,938 1,539 15.69 Mara 1,008 360 4.30 Marcia 130 645 12.43 Marisa 147 151 3.98 Micaela 5,957 532 8.82 Noel 22 898 8.78 Odin 2,238 434 5.64 Pacha 99 361 4.25 Piedad 27 189 2.09 Pilar 4,801 473 11.47 Sanson 442 646 3.65 Shala 284 601 5.69 Total / Average 44,661 647 8.82

Note: Resources are exclusive of reserves. As shown in Tables 15.8 through 15.11, a total of 848,000 t, grading 487 g Ag/t and 7.19 g Au/t, will not be recovered. Consequently, a total of 63% of internally diluted resources can be extracted, containing 69% and 68% of the internally diluted contained silver and gold, respectively. The percentage of internally diluted resources that can be extracted is referred to elsewhere in this report as “mine extraction” or “mine recovery”. A summary of mine recovery (extraction) is presented in Table 15.12.

TABLE 15.12 M&I INTERNALLY DILUTED RESOURCES RECOVERED

Vein Total Recovered Recovery Tonnes Ag (g/t) Au (g/t) Tonnes (%) Contained Ag (%) Contained Au (%)

R425 10,386 898 8.04 84.2% 84.2% 87.3% R483 15,845 538 5.86 50.6% 58.4% 55.3% R720 1,343 557 8.60 68.3% 92.9% 81.3% R861A 36,949 801 9.63 63.8% 80.4% 70.1% R861B 13,384 258 9.21 46.3% 43.2% 33.8% R861B1 4,280 380 10.69 60.0% 65.6% 57.6% R861C 4,534 417 7.75 34.2% 25.5% 29.5% R861D 11,853 394 7.82 83.3% 78.5% 88.8% R861E 4,270 699 6.05 9.0% 8.1% 8.0% R861I 2,938 576 6.62 19.6% 21.3% 26.6% R861Q1 7,926 748 7.32 77.1% 68.9% 64.0% R861W 11,070 1,267 8.88 65.2% 76.8% 76.6% R861X 13,247 736 8.44 71.1% 41.6% 48.9% RAyelen 14,369 347 2.49 46.0% 56.7% 42.3% RFrea 48,050 554 6.28 53.8% 49.4% 55.0% RHVS 44,569 369 5.04 80.5% 81.7% 84.4% RHVNC 14,701 403 3.77 72.4% 70.8% 68.6% RKospi 15,807 115 4.70 82.1% 71.4% 78.4% RN1 503 217 6.68 12.2% 20.8% 12.7% RN3 3,985 855 12.11 52.7% 66.4% 63.4% RNoel 1,719 249 3.98 41.2% 45.8% 39.6% SAyelen 1,402 296 3.05 67.7% 64.1% 49.3% SFrea 528 570 15.18 25.2% 27.6% 39.1% SLuli 34,809 1,817 16.58 84.1% 93.3% 92.3% SMarisa 5,231 317 7.83 89.7% 94.4% 94.4% 290 18,951 597 22.37 90.4% 95.5% 94.4% Abril 37,516 367 5.51 89.2% 92.8% 91.5% Antonella 43,858 258 14.14 85.1% 83.7% 87.8% Ayelen 82,614 572 5.68 75.3% 80.7% 81.4% Benita 2,553 705 10.41 40.9% 63.0% 63.4% Cecilia 4,292 537 6.06 56.9% 60.6% 63.0%


Frea 6,679 274 12.42 5.4% 4.1% 6.9% Hera 63,500 432 4.56 91.4% 92.6% 91.5% HVC 11,255 676 7.34 28.2% 36.2% 32.9% HVN 76,275 645 6.42 77.6% 84.2% 79.7% HVS 14,310 823 11.52 26.9% 37.1% 33.0% Ivon 4,308 414 4.81 75.7% 66.5% 73.3% Julieta 1,449 464 4.49 49.9% 53.4% 53.3% Kospi 162,771 846 9.44 56.0% 62.8% 60.9% Lola 4,932 804 8.88 93.0% 93.7% 94.0% Luli 95,008 1,539 15.69 90.2% 92.0% 92.2% Mara 32,606 360 4.30 79.8% 89.5% 83.9% Marcia 4,212 645 12.43 54.0% 52.4% 52.0% Marisa 4,760 151 3.98 92.1% 94.8% 94.0% Micaela 192,619 532 8.82 77.1% 84.4% 82.2% Noel 705 898 8.78 4.3% 12.9% 7.9% Odin 72,363 434 5.64 64.1% 74.9% 70.2% Pacha 3,209 361 4.25 77.1% 76.5% 83.0% Piedad 873 189 2.09 97.0% 97.0% 97.0% Pilar 155,241 473 11.47 86.1% 86.4% 87.9% Sanson 14,292 646 3.65 90.5% 90.9% 90.1% Shala 9,178 601 5.69 69.8% 74.1% 77.9% Total / Average 1,444,026 647 8.82 63.0% 69.3% 67.6%

Note: Resources are inclusive of reserves. Removing the internally diluted resources that are not recovered from the 2,292,100 t of diluted resources leaves a total of 1,444,100 t, grading 647 g Ag/t and 8.82 g Au/t, which is scheduled to be recovered before external dilution. Within the area of the extractable, externally undiluted Measured and Indicated resources, used in the reserve estimation, there is an estimated 99,800 t of reserve internal dilution grading 72 g Ag/t and 1.16 g Au/t. This represents a total internal dilution of 6.9%, 0.8% and 0.9% by tonnes, contained silver and contained gold, respectively. A summary of this estimate, by vein is presented in Table 15.13.

TABLE 15.13 MEASURED AND INDICATED RESOURCES RESERVE INTERNAL DILUTION ESTIMATION

Vein Tonnes Ag (g/t) Au (g/t) Tonnes (%) Contained Ag (%)

Contained Au (%)

R425 1,284 86 0.43 12.4% 1.2% 0.7% R483 1,681 79 0.97 10.6% 1.6% 1.8% R720 326 63 0.74 24.2% 2.7% 2.1% R861A 1,352 95 0.93 3.7% 0.4% 0.4% R861B 235 25 0.57 1.8% 0.2% 0.1% R861C 519 110 1.22 11.4% 3.0% 1.8% R861D 750 57 1.58 6.3% 0.9% 1.3% R861E 254 109 1.03 6.0% 0.9% 1.0% R861I 111 80 1.33 3.8% 0.5% 0.8% R861Q1 77 104 1.03 1.0% 0.1% 0.1% R861W 852 40 0.59 7.7% 0.2% 0.5% R861X 879 73 1.22 6.6% 0.7% 1.0% RAyelen 2,553 81 0.70 17.8% 4.1% 5.0% RFrea 2,852 69 1.24 5.9% 0.7% 1.2% RHVS 5,632 73 1.06 12.6% 2.5% 2.7% RHVNC 2,071 113 0.90 14.1% 4.0% 3.4% RKospi 2,492 43 2.17 15.8% 5.9% 7.3% RN1 30 39 0.71 6.0% 1.1% 0.6% RNoel 80 81 1.28 4.7% 1.5% 1.5% SLuli 2,023 31 0.24 5.8% 0.1% 0.1% SMarisa 321 34 1.70 6.1% 0.7% 1.3% 290 513 25 2.04 2.7% 0.1% 0.2%


Abril 836 93 1.42 2.2% 0.6% 0.6% Antonella 1,269 16 1.62 2.9% 0.2% 0.3% Ayelen 2,770 63 0.53 3.4% 0.4% 0.3% Benita 170 70 1.80 6.6% 0.7% 1.1% Cecilia 179 14 0.25 4.2% 0.1% 0.2% Frea 521 40 2.25 7.8% 1.1% 1.4% Hera 1,149 103 1.18 1.8% 0.4% 0.5% HVC 595 39 0.84 5.3% 0.3% 0.6% HVN 4,543 82 1.18 6.0% 0.8% 1.1% HVS 1,273 54 0.97 8.9% 0.6% 0.8% Ivon 96 40 0.59 2.2% 0.2% 0.3% Julieta 234 136 1.10 16.1% 4.7% 4.0% Kospi 14,352 68 1.15 8.8% 0.7% 1.1% Lola 40 56 0.57 0.8% 0.1% 0.1% Luli 2,318 97 1.01 2.4% 0.2% 0.2% Mara 3,459 80 1.49 10.6% 2.4% 3.7% Marisa 99 66 1.70 2.1% 0.9% 0.9% Micaela 20,779 77 1.25 10.8% 1.6% 1.5% Noel 56 79 0.65 7.9% 0.7% 0.6% Odin 7,757 70 1.42 10.7% 1.7% 2.7% Pacha 44 78 1.04 1.4% 0.3% 0.3% Piedad 11 123 1.23 1.2% 0.8% 0.7% Pilar 6,773 60 1.27 4.4% 0.6% 0.5% Sanson 2,584 109 0.55 18.1% 3.1% 2.7% Shala 1,034 100 1.27 11.3% 1.9% 2.5% Total / Average 99,829 72 1.16 6.9% 0.8% 0.9%

The 1,444,000 t of extractable resources will be externally diluted by 369,300 t of material, at zero grade, averaging 26% external dilution. This external dilution includes slough and blasted waste rock from both the hanging and footwalls, and mined backfill and development waste sent to the mill. A summary of this external dilution is presented in Table 15.14.

TABLE 15.14 EXTERNAL DILUTION INCLUDED IN RESERVES

Vein Tonnes Percentage of Extracted Resources R425 2,102 20.2% R483 3,760 23.7% R720 733 54.6% R861A 9,961 27.0% R861B 3,217 24.0% R861B1 2,248 52.5% R861C 1,097 24.2% R861D 1,296 10.9% R861E 1,121 26.3% R861I 340 11.6% R861Q1 3,034 38.3% R861W 4,524 40.9% R861X 1,557 11.8% RAyelen 4,574 31.8% RFrea 10,835 22.5% RHVS 15,152 34.0% RHVNC 8,146 55.4% RKospi 6,926 43.8% RN1 121 24.1% RN3 470 11.8% RNoel 1,272 74.0% SAyelen 484 34.5% SFrea 56 10.6% SLuli 8,604 24.7% SMarisa 2,268 43.4%


290 6,298 33.2% Abril 9,010 24.0% Antonella 11,523 26.3% Ayelen 28,984 35.1% Benita 935 36.6% Cecilia 1,194 27.8% Frea 1,582 23.7% Hera 14,040 22.1% HVC 2,986 26.5% HVN 16,050 21.0% HVS 4,719 33.0% Ivon 957 22.2% Julieta 551 38.0% Kospi 33,211 20.4% Lola 1,300 26.4% Luli 21,188 22.3% Mara 9,793 30.0% Marcia 1,678 39.8% Marisa 3,040 63.9% Micaela 37,666 19.6% Noel 303 43.0% Odin 32,899 45.5% Pacha 1,188 37.0% Piedad 132 15.1% Pilar 25,549 16.5% Sanson 6,311 44.2% Shala 2,272 24.8% Total / Average 369,254 25.6%

Mineral reserves, which include extractable resources and external dilution (resources shown in Table 15.14 added to the resources shown in Table 15.12), total 1,813,300 t, grading 515 g Ag/t and 7.03 g Au/t, are summarized by vein in Table 15.15.

TABLE 15.15 SAN JOSÉ RESERVES AT DECEMBER 31, 2013


R425 12,488 747 6.69 R483 19,605 434 4.73 R720 2,076 360 5.57 R861A 46,909 631 7.59 R861B 16,600 208 7.43 R861B1 6,258 249 7.01 R861C 5,630 336 6.24 R861D 13,149 355 7.05 R861E 5,391 554 4.79 R861I 3,278 516 5.94 R861Q1 10,960 541 5.30 R861W 15,595 899 6.30 R861X 14,804 659 7.55 RAyelen 18,942 263 1.89 RFrea 58,884 452 5.12 RHVS 59,721 275 3.76 RHVNC 22,847 260 2.43 RKospi 22,733 80 3.27 RN1 624 175 5.38 RN3 4,455 764 10.83 RNoel 2,991 143 2.29 SAyelen 1,886 220 2.26 SFrea 585 515 13.72


SLuli 43,413 1,457 13.29 SMarisa 7,499 221 5.46 290 25,249 448 16.79 Abril 46,526 296 4.44 Antonella 55,381 204 11.20 Ayelen 111,599 423 4.20 Benita 3,488 516 7.62 Cecilia 5,486 420 4.74 Frea 8,261 221 10.05 Hera 77,540 354 3.73 HVC 14,240 534 5.80 HVN 92,325 533 5.30 HVS 19,030 619 8.66 Ivon 5,265 339 3.93 Julieta 2,000 336 3.25 Kospi 195,982 703 7.84 Lola 6,231 636 7.03 Luli 116,196 1,258 12.83 Mara 42,398 277 3.30 Marcia 5,890 461 8.89 Marisa 7,800 92 2.43 Micaela 230,285 445 7.37 Noel 1,008 628 6.14 Odin 105,262 298 3.88 Pacha 4,397 264 3.10 Piedad 1,005 164 1.82 Pilar 180,789 406 .985 Sanson 20,603 448 2.53 Shala 11,450 482 4.56 Total / Average 1,813,280 515 7.03

Of this total 950,200 t, grading 597 g/t Ag and 7.82 g/t Au are Proven reserves and 863,100 t grading 426 g/t Ag and 6.15 g/t Au are Probable reserves. A summary of Proven and Probable reserves is presented in Tables 15.16.

TABLE 15.16 SAN JOSÉ PROVEN AND PROBABLE RESERVES AT DECEMBER 31, 2013

Vein Proven Reserves Probable Reserves

Tonnes Ag (g/t) Au (g/t) Tonnes Ag (g/t) Au (g/t)

R425 5,298 971 8.13 7,190 581 5.63 R483 5,099 332 3.75 14,506 470 5.08 R720 2,076 360 5.57 0 0 0.00 R861A 14,256 888 11.48 32,653 519 5.89 R861B 8,315 258 8.57 8,285 158 6.28 R861B1 6,518 250 7.01 11 95 4.40 R861C 4,985 353 6.53 645 206 4.03 R861D 9,096 449 8.92 4,054 146 2.86 R861E 5,189 546 4.76 202 769 5.77 R861I 3,278 516 5.94 0 0 0.00 R861Q1 9,487 550 5.47 1,474 484 4.19 R861W 8,311 1,116 7.50 7,284 651 4.93 R861X 3,585 773 9.44 11,219 622 6.95 RAyelen 17,597 268 1.94 1,345 191 1.19 RFrea 53,494 472 5.12 5,390 256 5.16 RHVS 6,925 248 3.72 52,796 279 3.77 RHVNC 1,990 391 4.23 20,857 247 2.26 RKospi 7,864 67 3.85 14,869 87 2.96 RN1 512 204 5.90 112 42 3.00 RN3 4,416 763 10.79 39 919 15.98


RNoel 2,991 143 2.29 0 0 0.00 SAyelen 1,751 224 2.34 136 173 1.31 SFrea 518 478 11.56 67 808 30.47 SLuli 39,454 1,521 14.56 3,959 820 0.66 SMarisa 5,277 234 6.95 2,222 191 1.92 290 9,974 488 20.45 15,276 422 14.40 Abril 25,593 348 5.08 20,933 232 3.66 Antonella 28,971 207 12.05 26,410 201 10.26 Ayelen 71,405 462 4.65 40,193 354 3.41 Benita 3,393 525 7.25 95 196 20.89 Cecilia 4,402 450 5.04 1,084 297 3.51 Frea 8,261 221 10.05 0 0 0.00 Hera 40,565 348 3.82 36,974 360 3.63 HVC 8,784 583 6.51 5,457 456 4.65 HVN 76,177 575 5.74 16,148 332 3.26 HVS 19,011 617 8.60 19 3,002 71.80 Ivon 4,349 321 3.98 915 422 3.72 Julieta 2,000 336 3.25 0 0 0.00 Kospi 78,918 675 8.66 117,063 722 7.30 Lola 4,758 676 7.64 1,474 507 5.06 Luli 93,425 1,401 14.93 22,771 673 4.23 Mara 20,267 305 3.46 22,131 251 3.16 Marcia 5,890 461 8.89 0 0 0.00 Marisa 1,758 59 6,042 102 2.02 Micaela 102,822 444 3.84 127,464 446 7.79 Noel 927 671 6.53 81 138 1.65 Odin 26,796 237 4.06 78,466 320 3.81 Pacha 4,397 264 3.10 0 0 0.00 Piedad 449 150 1.53 557 176 2.05 Pilar 64,428 392 9.53 116,362 414 10.03 Sanson 6,712 479 2.56 13,891 433 2.52 Shala 7,496 395 3.93 3,954 646 5.75 Total / Avg. 950,207 597 7.82 863,073 4.26 6.15

At San José, the Proven and Probable Mineral Reserves are based on an Economic Cut-off Value (“ECOV”) of $209.81/t and a Marginal Cut-off Value (“MCOV”) of $94.76, using a price of $1,200/oz for gold and $20.00/oz for silver. The mineral reserves takes into account marginal blocks of ore located within or on the periphery of higher grade zones. The marginal cut-off was defined by the value of ore that meets the variable costs, but not the fixed costs. The mineral reserve COV is based on historical January to October 2013 geologic, mining, plant and mine administration variable and fixed costs. The ECOV was estimated using both variable and fixed costs and the MCOV was estimated using variable costs only. The mineral reserve estimate is primarily based on the ECOV. Ore with a grade above the MCOV and less than the ECOV are included in the mineral reserve estimate if it was necessary to develop through them in order to access ore grades above the ECOV. A total of 73% of reserves are at or above the ECOV and 27% of mineral reserves are between the ECOV and the MCOV. The economic and marginal cut-offs used to estimate San José’s mineral reserves are 475 g/t Ag equivalent and 215 g/t Ag equivalent, respectively. A summary of Economic and Marginal Reserves is presented in Table 15.17.

TABLE 15.17 ECONOMIC AND MARGINAL RESERVES AT DECEMBER 31, 2013

Vein Economic Reserves Marginal Reserves Tonnes Ag (g/t) Au (g/t) Tonnes Ag (g/t) Au (g/t)

R425 12,488 747 6.69 0 R483 14,497 514 5.32 5,108 208 3.07 R720 2,076 360 5.57 0 R861A 36,008 774 8.98 10,901 157 2.98 R861B 10,799 293 8.63 5,801 50 5.18 R861B1 6,518 250 7.01 11 95 4.40


R861C 4,985 353 6.53 645 206 4.03 R861D 9,096 449 8.92 4,054 146 2.86 R861E 5,391 554 4.79 0 R861I 3,278 516 5.94 0 R861Q1 10,525 553 5.49 435 254 0.66 R861W 14,579 948 6.63 1,016 205 1.52 R861X 14,804 659 7.55 0 RAyelen 0 18,942 263 1.89 RFrea 42,040 565 6.19 16,844 172 2.44 RHVS 26,384 315 5.54 33,337 243 2.35 RHVNC 14,076 327 3.16 8,771 151 1.26 RKospi 6,281 52 2.90 16,452 91 3.41 RN1 512 204 5.90 112 42 3.00 RN3 4,455 764 10.83 0 RNoel 0 2,991 143 2.29 SAyelen 0 1,886 220 2.26 SFrea 585 515 13.72 0 SLuli 40,529 1,542 14.14 2,884 252 1.42 SMarisa 4,998 255 7.33 2,501 154 1.74 290 20,599 530 19.94 4,651 85 2.84 Abril 25,358 424 5.52 21,168 142 3.15 Antonella 42,436 249 12.91 12,945 57 5.58 Ayelen 80,181 497 5.12 31,417 236 1.88 Benita 3,488 516 7.62 0 Cecilia 5,486 420 4.74 0 Frea 4,924 315 13.14 3,337 83 5.48 Hera 68,395 368 3.80 9,144 246 3.25 HVC 12,344 587 6.39 1,896 189 1.95 HVN 65,122 680 6.45 27,203 180 2.57 HVS 16,038 711 9.83 2,992 126 2.40 Ivon 5,265 339 3.93 0 Julieta 2,000 336 3.25 0 Kospi 172,433 775 8.56 23,549 175 2.60 Lola 5,596 690 7.61 636 159 1.97 Luli 112,616 1,292 13.20 3,579 217 1.38 Mara 15,736 381 4.45 26,662 215 2.63 Marcia 5,890 461 8.89 0 Marisa 0 7,800 92 2.43 Micaela 157,933 568 9.52 72,352 178 2.69 Noel 927 671 6.53 81 138 1.65 Odin 46,352 495 5.57 58,910 144 2.55 Pacha 0 4,397 264 3.10 Piedad 0 1,005 164 1.82 Pilar 152,192 456 11.18 28,598 142 2.81 Sanson 7,408 701 3.54 13,195 306 1.97 Shala 10,759 499 4.81 691 216 0.59 Total / Average 1,324,380 640 8.64 488,900 178 2.66

In summary, there is an average 7% internal dilution on resources used to convert to reserves. Of the internally diluted resources, 63% are extractable, and a 26% external dilution was added to these resources, at zero grade. In addition to the 848,000 t of Measured and Indicated resources not recovered a total of 610,000 t of Measured and Indicated resources grading 329 g Ag/t and 4.47 g Au/t remain to be considered for conversion to reserves. In addition to the 1,813,300 t of reserves there are 96,800 t of surface stockpile ore grading 279 g Ag/t and 4.04 g Au/t for a LOM production total of 1,910,100 t grading 503 g Ag/t and 6.88 g Au/t.


15.3 REMAINING RESOURCES A summary of resources not converted to Reserves (remaining Resources) is presented in Table 15.18.

TABLE 15.18 RESOURCES NOT CONVERTED TO RESERVES AT DECEMBER 31, 2013

Vein Tonnes Ag (g/t) Au (g/t) R425 1,965 700 8.67 R483 10,047 325 3.26 R720 580 379 5.63 R861A 8,419 428 6.51 R861B 6,968 257 10.78 R861B1 12 340 11.00 R861C 828 227 6.86 R861D 3,155 225 3.92 R861E 6,602 432 3.97 R861I 3,328 463 3.78 R861Q1 452 543 5.46 R861W 1,998 440 3.68 R861X 2,839 96 14.77 RAyelen 11,651 235 1.82 RFrea 12,414 270 3.68 RHVS 655 -342 0.46 RHVNC 6,587 275 2.97 RKospi 17,023 158 4.62 RN1 2,351 100 4.38 RN3 65 522 7.44 RNoel 234 120 3.89 SAyelen 109 220 2.93 SFrea 4,442 253 5.72 SLuli 3,648 972 10.95 SMarisa 1,814 72 4.03 290 11,626 399 12.07 Abril 2,953 211 3.99 Antonella 4,543 245 11.57 Ayelen 22,237 300 3.73 Benita 6,985 245 2.87 Cecilia 694 256 2.55 Frea 27,147 232 6.79 Hera 5,360 215 5.19 HVC 6,374 522 6.01 HVN 19,320 236 3.50 HVS 7,116 343 5.15 Ivon 1,757 625 4.30 Julieta 790 351 3.47 Kospi 56,173 396 5.46 Lola 756 468 6.42 Luli 10,640 475 3.83 Mara 6,745 264 3.75 Marcia 234 629 12.56 Marisa 670 284 2.50 Micaela 24,128 276 5.47 Noel 11,735 218 3.73 Odin 47,454 215 5.12 Pacha 3,133 365 3.09 Piedad 341 163 1.97 Pilar 24,586 412 7.06 Sanson 2,845 345 2.20 Shala 1,204 378 3.74 R480E 3,984 284 1.70 R350 5,285 198 4.71 Total / Average 610,000 329 4.47

Note: The mineral resources summarized in Table 15.18 are reported additional to the Ore Reserves.


16.0 MINING METHODS 16.1 MINE DESIGN San José is currently a ramp access underground mining operation. The San José veins are accessed from three main portals: The Tehuelche Portal, the Kospi Portal and the Güer Aike Portal. Initially two small inclined shafts were developed to provide access to the HVS and HVN veins. These shafts are now used to supplement the primary ventilation circuit. Main ramps are generally 4.0 m wide by 4.3 m high at a 12 % gradient on the straight sections and 10.5 % on the curves. A smaller profile is used in areas where truck access is not required. The main ramps are located about 50 m from the veins, depending on the dip of the ore. Cross-cuts to the ramp are centrally positioned on the vein and usually have an ore pass and a waste backfill pass. The average mining width across all of the vein systems is approximately 2m. The dip of the veins varies from 55º to 70º. Mechanized Cut and Fill mining using scoop trams, and jacklegs (pneumatic rock drills) or single-boom jumbos, respectively, is utilized at San José. The majority of production ore is derived from the “uphole retreat” mining technique where a panel of approximately 50m in length is drilled with upholes and retreated along strike. Horizontal “breasting” is only used on the initial lift in each stope. A “resue” mining technique is employed in narrow high grade areas. Stoping areas are separated by 3 m high sill pillars. A timber floor mat, for narrow stopes, or cemented backfill, for wider stopes, is placed on the sill pillar (1st lift). The primary ventilation utilizes the negative pressure system that is based on the main (primary) ventilation fan drawing the contaminated air from the mine. Fresh air enters the mine through either the main access declines or a dedicated fresh air raise where it is directed to each of the working areas via a secondary ventilation system. Development waste rock is usually hauled to a surface stockpile and then rehandled through waste passes when it is required underground as backfill. Supplementary backfill is available from a surface waste dump. The ground support consists of random rockbolts with occasional mesh and shotcrete. Timber sets are also used in some areas. Groundwater inflow is estimated to be between 8 and 20 L/s. Floor gradients are constructed to assist the natural flow of water to the sumps. Mine water is pumped to the main underground sumps using small 7ph Flygt submersible pumps. Grindex 50 hp submersible pumps are used to pump the water to the surface settling ponds. Clean water is pumped directly from the settling pond to the processing plant and the main water reservoir, or returned to the mine to be used as mine process water (for drilling, washing etc.). The mining equipment consists of development and production drills, scoop trams, haul trucks, service vehicles and personnel transport vehicles. Scooptrams range in size from 1.5yd3 to 6.0yd3. A fleet of 20t trucks is used to haul the ore to the surface. The underground equipment fleet required is presented in Table 16.1.


TABLE 16.1 UNDERGROUND MINE EQUIPMENT FLEET

San José Mining Operation Description Qty

Scooptrams Toro 151 3 Atlas ST2G 5 Toro 006 / LH307 5 Cat R1300 5 Toro 007 3 Single Boom Jumbos Quasar NV / DD210 3 Small Bolter 77 4 Troidon 44 6 Troidon 55 1 Axera D-05 1 Axera-6 DD-320-26X 1 Axera DD 311 1 Haul Trucks Volvo FM440 6 x 4 (20t) 12

Production from San José is estimated to deliver 1,910,100 tonnes of ore to the mill facility from January 1, 2014 to the second quarter of 2017 (LOM). A summary of San José’s mine operating development requirements and schedule is presented in Table 16.2.

TABLE 16.2 OPERATING DEVELOPMENT SUMMARY


Vein

Year LOM Total (m) 2014

(m) 2015 (m)

2016 (m)

861 A 360 360 861 B 180 180 861 C 45 45 861 D 90 90 861 E 45 45 861 I 45 45 Ayelen 265 275 540 Benita 90 90 Frea 130 130 HVC 405 405 HVN 1,100 1,060 2,160 HVS 180 180 Kospi 414 400 266 1,080 Noel 90 90 Odin 137 358 495 Ramal 425 270 270 Ramal 483 450 450 Ramal Ayelen 270 270


Ramal Frea 128 300 202 630 HVNC 360 360 Ramal HVS 420 300 720 Ramal Kospi 405 405 Ramal N1 45 45 Ivon 135 135 Sanson 280 280 Ramal 720 90 90 Antonella 477 18 495 Hera 360 360 Mara 450 450 Micaela 2,006 2,006 Pacha 45 45 Shala 225 225 Luli 144 171 315 Sigm Luli 270 270 Abril 405 405 Cecilia 180 180 290 135 135 Pilar 585 585 861 W 180 180 Ramal N3 135 135 Marcia 90 90 861X 180 180 861Q1 405 405 Julieta 90 90 Piedad 90 90 Ramal Noel 135 135 Sigm Marisa 585 585 Sigm Ayelen 135 135 Lola 405 405 Total (m) 4,285 6,607 6,553 17,446

In summary there is a total 17,446 m of LOM operating development itemized in Table 16.2. A summary of San José’s mine capital infrastructure requirements and schedule is presented in Table 16.3.


TABLE 16.3 CAPITAL INFRASTRUCTURE SUMMARY


Vein Year LOM Total (m) 2014

(m) 2015 (m)

2016 (m)

861 A 210 210 861 B 190 190 Ayelen 132 170 302 Frea 359 359 HVC 130 130 HVN 350 350 Kospi 162 178 340 Odin 182 300 289 770 Ramal 425 60 60 Ramal 483 550 600 1,150 HVNC 220 220 Ramal Kospi 310 310 Sanson 190 190 Antonella 662 80 742 Hera 180 180 Mara 120 120 Micaela 981 110 1,090 Pacha 120 120 Luli 73 73 Abril 250 250 Pilar 383 358 740 861 W 200 200 Marcia 250 250 861 X 170 170 861 Q1 150 150 Lola 120 120 Total 2,932 2,915 2,939 8,785

A summary of San José’s mine capital raisebore requirements and schedule is presented in Table 16.4.

TABLE 16.4 CAPITAL RAISEBORE SUMMARY San José Mining Operation

Vein Year LOM

Total (m)

2014 (m)

2015 (m)

2016 (m)

861 B 120 120 Ayelen 40 40

Frea 427 427 HVN 360 280 640 Kospi 50 50 Odin 75 75

Ramal 425 120 120


Ramal 483 180 180 HVNC 90 90

Ramal HVS 160 160 Ramal Kospi 340 340

Sanson 160 160 Ramal 720 110 110 Antonella 180 180

Hera 120 120 Mara 120 120

Micaela 849 240 1,089 Sigm Luli 180 180

Abril 160 160 290 240 240 Pilar 260 260

Piedad 160 160 Ramal Noel 160 160 Sigm Marisa 180 180 Sigm Ayelen 0

Lola 180 180

Total 1,701 2,250 1,590 5,541

In summary there is a total 8,785 m of LOM capital infrastructure development and 5,541 m of LOM capital raisebore development required for a total of 14,326 m of capital development required, LOM. A total of 1,910,100 t of ore, grading 503 g/t Ag and 6.88 g/t Au is scheduled to be processed from January 1, 2014 to the second quarter of 2017, life of mine, at San José. This includes 96,800 t of stockpiled ore grading 279 g/t Ag and 4.04 g/t Au. A summary of the mine process schedule is presented in Table 16.5.

TABLE 16.5 MINE PROCESS SCHEDULE


Units

Year LOM 2014-2017 2014 2015 2016 2017

Treated Tonnage t 562,650 582,450 582,450 182,503 1,910,053 Au grade g/t 5.74 7.35 7.35 7.35 6.88 Ag grade g/t 419 539 539 539 503

16.2 ORE STOCKPILE As of December 31, 2013 there was 96,800 t of ore stockpiled on surface grading 279 g/t Ag and 4.04 g/t Au.


17.0 RECOVERY METHODS Please refer to Section 13, ‘Mineral Processing and Metallurgical Testing’ for a description of the process plant recovery method.


18.0 PROJECT INFRASTRUCTURE The San José Mine is a producing mine that has been in production since June 2007. All of the infrastructure required including; roads, electric power, fuel storage, communication services, underground mine infrastructure, process plant, tailings facilities, etc. are in place to produce the Mine’s projected production. An exception is a new flotation tailings facility that has not been constructed as of the date of this report and is proposed for use in late 2014 or early 2015.


19.0 MARKET STUDIES AND CONTRACTS No market studies were completed in support of this Report. MSC estimates the NSR value for Ag and Au to be US$0.4415/g and US$27.1850/g head grade, respectively, based on a gold price of US$1,200/oz and a silver price of US$20.00/oz. P&E determined that these are suitable and somewhat conservative metal prices to be utilized for resource estimation as they are below those of the December 31, 2013 five year trailing average metal prices. The San José processing plant produces both a Au/Ag doré and a Au/Ag concentrate. These products are freely traded on the open market based on the then-current silver and gold prices less respective smelting and refining charges.


20.0 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL IMPACT The overall San José mine facility was certified under the ISO 14001 environmental standard in May 2011. A follow-up audit was completed in March 2012 and the entire facility was recertified in 2013. There were 3 environmental audits in 2013 – internal, external and intra-company. Measures are being taken to reduce wind erosion of the flotation tailings such as managing deposition to maximize wet surface area and the installation of sprinklers. With the end of deposition of flotation tailings in the No. 2 facility approaching, an opportunity exists to use waste rock to inhibit surface erosion. A conceptual site closure plan was prepared in 2005. Cost estimates for closure prepared in 2012 indicated a total cost of $23 million US over 3 years (2025 -2027). A significant proportion of the costs are allocated to placing erosion resistant soil covers on tailings. Placement of any type of cover on the flotation tailings which is a traditionally built facility composed of slime and sand zones may be a challenge. An opportunity may currently exist to deposit flotation tailings into the pond and slimes zones in the western and northern zones to achieve a more machine-trackable surface for closure activities. Large waste rock piles are on site and are continuously being expanded. While some of the waste rock is potentially acid generating according to standard tests, the very high evaporation rate (1200 mm/yr) and low precipitation rate (140 mm/yr) are assumed to prevent any significant acid rock drainage from occurring. San José has comprehensive environmental management and social programs in place. Reports available to P&E indicate a high degree of compliance with environmental objectives and regulations. There are significant on-going programs to support local communities, in particular, the interests of the citizens of Perito Moreno.


21.0 CAPITAL AND OPERATING COSTS 21.1 CAPITAL COST ESTIMATE All capital cost estimates, information and data were supplied by MSC. The capital cost estimates are based on MSC’s operational historical data and experience. San José’s capital cost items include: projects; mine development required to access reserves; support and infrastructure; sustaining capital and mine closure. A summary of San José’s project capital costs is presented in Table 21.1.

TABLE 21.1 PROJECT CAPITAL COSTS IN US$000'S


Item US$(000’s)

Nuevo Dique (new tailings dam) 510 Sistema de Impulsión (flotation tailings facility) 6,625 Total Project Capital Costs 7,135

A summary of San José’s mine development capital costs is presented in Table 21.2.

TABLE 21.2 MINE DEVELOPMENT CAPITAL COSTS IN US$000’S


Item Year

LOM Total 2014 2015 2016

Infrastructure (m) 2,932 2,915 2,939 8,785 $000’s/m 3.31 3.31 3.31 3.31 $000’s 9,716 9,662 9,740 29,118 Raiseboring (m) 1,701 2,250 1,590 5,541 $000’s/m 2,138 2,829 1,999 6,966 Capex Preparation (m) 2,130 2,130 $000’s/m 3.23 3.23 $000’s 6,877 6,877

Total Mine Development Capital Costs 18,732 12,490 11,739 42,961

A summary of San José’s support and infrastructure capital costs is presented in Table 21.3.

TABLE 21.3 SUPPORT AND INFRASTRUCTURE CAPITAL COSTS IN US$000’S


Item Year LOM

Total 2014 2015 2016 2017

Human Resources 2,035 2,107 2,107 660 6,909 Environment 61 63 63 20 207 Security 118 122 122 38 402 IT 120 124 124 39 408 Logistics 441 457 457 143 1,498 Other 244 252 252 79 827

Total Support Capital Costs 3,202 3,126 3,126 979 10,251


A summary of San José’s sustaining capital costs is presented in Table 21.4.

TABLE 21.4 SUSTAINING CAPITAL COSTS IN US$000’S


Item Year LOM

Total 2014 2015 2016 2017

Geology 27 28 28 9 93 Mine 5,100 5,280 5,280 1,654 17,314 Mill 2,799 2,898 2,898 908 9,503 Maintenance 3,330 3,447 3,447 1,080 11,304 Laboratory 105 109 109 34 356 Other 8 8 8 2 26

Total 11,370 11,770 11,770 3,688 38,597

A summary of San José’s closure capital costs is presented in Table 21.5.

TABLE 21.5 CLOSURE CAPITAL COSTS IN US$000’S


Item Year LOM

Total 2017 2018 2019 Direct Costs Mob and Demob 53 - - 53 Dismantle Surface Structures and Laydown Area, etc. 520 - - 520

Dismantle Office and Camp 583 - - 583 Cyanide Tailings Dam - 1,173 - 1,173 Flotation Tailings Dam - 2,309 - 2,309 Surface Ore Stockpile 126 - - 126 Transition Ore Stockpile 120 - - 120 FREA Waste Dump 147 - - 147 HVS Waste Dump 47 - - 47 KOSPI Waste Dump 232 - - 232 Top Soil - 43 - 43 Cap Portals 60 - - 60 Cap Surface Raises 50 - - 50 Ponds 1,2,3 and 4 2,333 - - 2,333 Surface Roads (Accesses) - 837 - 837 SAAVEDRA Open Pit 95 - - 95 SAAVEDRA Ore Stockpile 525 - - 525 SAAVEDRA Waste Dump 193 - - 193 Access to SAAVEDRA Open Pit 737 - - 737 Post Closure Monitoring - - 53 53 Post Closure Maintenance - - 335 335 Total Direct Costs 5,822 4,363 388 10,572 General Expenses (Overhead) 2,911 2,181 194 5,286 Profit 582 436 39 1,057 Contingency 1,164 873 78 2,114


IVA Tax 2,201 1,649 147 3,996

Total Estimated Cost 12,679 9,502 845 23,027

Total estimated LOM capital costs are summarized in Table 21.6.

TABLE 21.6 CAPITAL COST SUMMARY IN US$000’S


Item Year LOM

Total 2014 2015 2016 2017 2018 2019

Projects 7,135 7,135 Mine Development 18,732 12,490 11,739 42,961 Support & Infrastructure 3,020 3,126 3,126 979 10,251 Sustaining Capex 11,370 11,770 11,770 3,688 38,597 Mine Closure 12,679 9,502 845 23,027

Total Capex 40,256 27,386 26,634 17,347 9,502 845 121,970

21.2 OPERATING COST ESTIMATE All operating cost estimates, information and data were supplied by MSC. The geology costs include labour costs, and the cost of diamond drilling, underground development required to define the location mining areas (definition diamond drilling and underground development) and a cost distribution. The LOM geology cost is estimated to average US$11.59/t. Details of the geology OPEX are presented in Table 21.7.

TABLE 21.7 GEOLOGY OPERATING COST - TOTALS IN US$000’S


Item Year

LOM 2014 2015 2016 2017

Total US$/t Total US$/t Total US$/t Total US$/t Total US$/t Labour 5,050 8.98 5,228 8.98 5,228 8.98 1,638 8.98 17,143 8.98 Drilling 975 1.73 1,009 1.73 1,009 1.73 316 1.73 3,310 1.73 U/G Workings 111 0.20 115 0.20 115 0.20 36 0.20 376 0.20 Distribution Cost 386 0.69 400 0.69 400 0.69 125 0.69 1,311 0.69

Total 6,522 11.59 6,751 11.59 6.751 11.59 2,115 11.59 22,140 11.59

The mining costs include stope mining costs, stope development costs, labour costs, general expenses, security, consultants, compressed air costs, pumping costs, ventilation and a credit for project distribution. The stope and development costs include consumables and installed services (i.e. pipe, explosives, etc.).The mining costs are estimated to average US$44.21/t, LOM. Details of the mine OPEX are presented in Table 21.8.


TABLE 21.8 MINE OPERATING COST - TOTALS IN US$000’S


Item Year

LOM 2014 2015 2016 2017

Total US$/t Total US$/t Total US$/t Total US$/t Total US$/t Mining 3,053 5.43 3,160 5.43 3,160 5.43 990 5.43 10,363 5.43 Hor. Devel. 818 1.45 1,261 2.16 1,251 2.15 3,330 1.74 Vert. Devel. 66 0.12 101 0.17 100 0.17 267 0.14 Realces 95 0.17 147 0.25 146 0.25 388 0.20 Incl. Devel. 775 1.38 1,194 2.05 1,185 2.03 3,154 1.65 Buzones 338 0.60 350 0.60 350 0.60 110 0.60 1,147 0.60 Maint. labour 228 0.41 236 0.41 236 0.41 74 0.41 774 0.41 Gen. Expenses 35,601 63.27 36,854 63.27 36,854 63.27 11,548 63.27 120,855 63.27 Security 66 0.12 68 0.12 68 0.12 21 0.12 223 0.12 Consultants 22 0.04 22 0.04 22 0.04 7 0.04 73 0.04 Proj. Dist. (17,527) (31.15) (18,144) (31.15) (18,144) (31.15) (5,685) (31.15) (59,500) (31.15) Comp. Air 141 0.25 146 0.25 146 0.25 46 0.25 480 0.25 Pumping 716 1.27 742 1.27 742 1.27 232 1.27 2,432 1.27 Ventilation 136 0.24 141 0.24 141 0.24 44 0.24 462 0.24

Total 24,527 43.59 26,278 45.12 26,256 45.08 7,387 40.48 84,448 44.21

Provincial royalties are based on 3.0% of doré and concentrate revenues, less export duties, smelter and transport selling expenses, less a deductible cost estimated based on the ratio of transport costs over geology, mining, plant, general services and mind administration total costs. The cost of provincial royalties is estimated to average US$10.98/t, LOM. Details of royalty OPEX are presented in Table 21.9.

TABLE 21.9 ROYALTY COST - TOTALS IN US$000’S


Item Year

LOM 2014 2015 2016 2017

Total US$/t Total US$/t Total US$/t Total US$/t Total US$/t

Total 4,870 8.65 6,952 11.94 6,953 11.94 2,193 12.02 20,967 10.98

Direct plan operating costs under mill control include labour and reagents/supplies. Other costs that are distributed monthly to the various cost centres including the plant are primarily maintenance, labour and power. Plant costs (2013) are estimated to average US$39.44/t, LOM. Details of the plant OPEX are presented in Table 21.10.

TABLE 21.10 PLANT OPERATING COSTS - TOTALS IN US$000’S


Item Year

LOM 2014 2015 2016 2017

Total US$/t Total US$/t Total US$/t Total US$/t Total US$/t General Expenses 12,959 23.03 13,415 23.03 13,415 23.03 12,959 23.03 13,415 23.03 Reagents 7,688 13.66 7,959 13.66 7,959 13.66 7,688 13.66 7,959 13.66 Ball Mills 1,417 2.52 1,467 2.52 1,467 2.52 1,417 2.52 1,467 2.52


Other Materials 130 0.23 134 0.23 134 0.23 130 0.23 134 0.23

Total 22,194 39.44 22,975 39.44 22,975 39.44 22,194 39.44 22,975 39.44 General services costs include the cost of energy (electric power); equipment and shop consumables and maintenance; mine services; miscellaneous services and a credit for project distribution. General services costs are estimated to average US$42.56/t, LOM. Details of the general services OPEX are presented in Table 21.11.

TABLE 21.11 GENERAL SERVICES OPERATING COST - TOTALS IN US$000'S


Item 2014 2015 2016 2017 LOM

Total US$/t Total US$/t Total US$/t Total US$/t Total US$/t Energy 5,313 9.44 5,500 9.44 5,500 9.44 1,723 9.44 18,037 9.44 Equip. & Shops 10,621 18.88 10,994 18.88 10,994 18.88 3,445 18.88 36,055 18.88 Equip. Maint. 4,795 8.52 4,964 8.52 4,964 8.52 1,555 8.52 16,278 8.52 Mine Equip. 8,101 14.40 8,386 14.40 8,386 14.40 2,628 14.40 27,499 14.40 Capex Dist. (4,882) (8.68) (5,054) (8.68) (5,054) (8.68) (1,584) (8.68) (16,574) (8.68)

Total 23,947 42.56 24,790 42.56 24,790 42.56 7,768 42.56 81,294 42.56

Mine administration costs include wages, the cost of other services, supply costs and other costs. Mine administration costs are estimated to average US$60.09/t, LOM. Details of the mine administration OPEX are presented in Table 21.12.

TABLE 21.12 MINE ADMINISTRATION OPERATING COST - TOTALS IN US$000'S


Item 2014 2015 2016 2017 LOM

Total US$/t Total US$/t Total US$/t Total US$/t Total US$/t Wages 7,356 13.07 7,615 13.07 7,615 13.07 2,386 13.07 24,973 13.07 Services Staff 7,156 12.72 7,408 12.72 7,408 12.72 2,321 12.72 24,293 12.72 Management Support 3,315 5.89 3,432 5.89 3,432 5.89 1,075 5.89 11,254 5.89 Other Services 15,980 28.40 16,542 28.40 16,542 28.40 5,183 28.40 54,248 28.40

Total 33,808 60.09 34,998 60.09 34,998 60.09 10,966 60.09 114,769 60.09

A summary of San José’s mine operating costs is presented in Table 21.13.

TABLE 21.13 OPERATING COST SUMMARY San José Mining Operation

Item 2014 2015 2016 2017 LOM

$/t $ 000's $/t $ 000's $/t $ 000's $/t $ 000's $/t $ 000's Geology 11.59 6,522 11.59 6,751 11.59 6,751 11.59 2,115 11.59 22,140


Mine 43.59 24,527 45.12 26,278 45.08 26,256 40.48 7,387 44.21 84,448 Royalties 8.65 4,870 11.94 6,952 11.94 6,953 12.02 2,193 10.98 20,967 Plant 39.44 22,194 39.44 22,975 39.44 22,975 39.44 7,199 39.44 75,342 Admin 60.09 33,808 60.09 34,998 60.09 34,998 60.09 10,966 60.09 114,769 Gen. Services 42.56 23,947 42.56 24,790 42.56 24,790 42.56 7,768 42.56 81,294

Totals 205.93 115,867 210.74 122,744 210.70 122,722 206.18 37,628 208.87 398,961

21.3 SELLING EXPENSES All selling expense cost estimates, information and data were supplied by MSC. A summary of LOM selling expense is presented in Table 21.14.

TABLE 21.14 LIFE OF MINE SELLING EXPENSES


Item Year LOM

Units Rate 2,014 2,015 2,016 2,017 Total

Third Party Services / Total Conc. dmt US$ k 110 3,868 4,004 4,004 1,255 13,132

Warehouse / Concentrate dmt US$ k 200 3,856 4,104 4,104 1,286 13,349

Commission / AgEq Oz in Dore US$ k 4.5% 4,314 5,558 5,558 1,742 17,173

Commission / AgEq Oz in Concentrate US$ k 10.0% 12,723 17,444 17,444 5,466 53,076

Refining

- Basis charge US$ k 489.28 489 489 489 489 1,957

- Per kg Dore Payable US$ k 17.86 1,630 2,095 2,095 656 6,476

- Per Oz Au fines US$ k 0.75 29 37 37 12 115

- Per Oz Dore Payable US$ k 0.26 763 981 981 307 3,031

Total Refining US$ k 2,911 3,602 3,602 1,465 11,580

Total Selling Expenses US$ k 27,673 34,712 34,712 11,213 108,310


22.0 ECONOMIC ANALYSIS The data used to prepare the economic assessment were supplied by MSC. The economic analysis contained in this Report is based on Proven and Probable mineral reserves. The mineral reserves in this Report although initially estimated using the standards set out in the JORC Code, also meet the CIM Standards and US SEC Guide 7 requirements. The following information represents 100 % of the Property. McEwen has a 49 % attributable interest in the San José Mine. 22.1 ECONOMIC CRITERIA Physicals Mine life: Jan 2014 to 2nd quarter 2017: decommissioning – 2017 to 2019. Mill production capacity: 1,650 tonnes per day Total mine production: 1,813,300 tonnes ore at 7.03 g/t Au and 515 g/t Ag Total mill production (includes reserves & stockpile): 1,910,100 tonnes ore at 688 g/t Au and 503 g/t Ag Flotation recovery: 90.0% Au, 89.7% Ag Leaching CCD recovery: 91.9% Au, 91.4% Ag Precipitate production capacity: 45 mt/day Total payable metal: 358,000 oz Au, 26.1 million oz Ag Assumptions LOM revenue metal prices: US$1,200/oz Au, US$20.00/oz Ag (Please note that the assumed metal prices are the same as those

used to estimate Resources and Reserves.) Costs Average LOM operating costs: US$208.87 per tonne milled Life-of-mine operating costs: US$399.0 million Life-of-mine selling expenses: US$108.3 million Life-of-mine capital costs: US$122.0 million Analysis P&E’s estimate of the cumulative undiscounted life-of-mine cash flow is presented in Table 22.1 below. Based on this analysis P&E concludes the estimated cumulative undiscounted life-of-mine cash flow at San José will be US$288.2 million.


TABLE 22.1 CASH FLOW SUMMARY IN US$000,000'S

SAN JOSÉ MINING OPERATION

Description Units Year LOM

2014 2015 2016 2017 2018 2019 Total

Treated Tonnage t k 563.7 582.5 582.5 182,503 1,910,053

Ag Eq Production (Ag eq koz) AgEq koz 11,949 15,894 15,894 4,980 48,718

Au Grades g/t 5.74 7.35 7.35 7.35 6.88

Ag Grades g/t 419.09 538.74 538.74 538.74 503

Ag eq Grades AgEq g/t 763.47 979.71 979.71 979.71 916

Revenues M$ 223.1 298.0 298.0 93.4 912.4

Production Cost M$ (115.9) (122.7) (122.7) (32.6) (393.9)

SG&A Expenses M$ (27.7) (34.7) (34.7) (11.2) (108.3)

EBITDA (excluding Expl.Exp.) M$ 79.6 140.5 140.5 49.6 410.1

Capex M$ (40.3) (27.4) (26.6) (4.7) (98.9)

Mine Closure M$ 0.0 0.0 0.0 (12.7) (9.5) (0.8) (23.0)

Cash Flow M$ 39.3 113.1 113.9 32.2 (9.5) (0.8) 288.2

NPV @ 5% M$ 256.8

San José’s NPV is most sensitive to OPEX followed by Ag price, Au price and CAPEX.


23.0 ADJACENT PROPERTIES Immediately adjacent to the San José Property boundary is the Cerro Negro Project held 100% by Goldcorp Inc. (“Goldcorp”). It should be noted that the following information has been taken from the last available technical report for the Cerro Negro Project titled “Cerro Negro Gold Project, Santa Cruz Province, Argentina, NI 43-101 Technical Report on Updated Feasibility Study” dated with an effective date of April 5, 2011 and Goldcorp’s website. The data contained in the technical report and website has not been originally sourced or verified by P&E. The main vein deposits of the Cerro Negro Project are located approximately 20 km to the south of San José Mine. Project mineral tenure consists of approximately 25,000 ha adjoining the concessions of the San José Mine. Tenure is held in the name of Oroplata SA, an indirectly, wholly-owned subsidiary of Goldcorp. The Project currently contains six known major mineralized zones, including Bajo Negro, the Eureka Vein, Mariana Central and Mariana Norte, San Marcos, and the Vein Zone. The deposits within the Cerro Negro Project are low-sulphidation, epithermal gold–silver deposits. The known deposits and prospects at Cerro Negro are distributed within and east of a volcanic–subvolcanic complex which is flanked and overlain by a series of rhyolite domes. The eruptive products of the rhyolite domes form an ignimbrite apron, which post-dates the mineralization and forms extensive outcrops north and south of the volcanic–subvolcanic complex. These post-mineralization ignimbrites have preserved the epithermal systems, as well as lacustrine sediments, travertine, and sinter deposited at the Late Jurassic paleo-surface. It is expected that commercial production will commence in the fourth quarter of 2014. Total capital expenditures are estimated at US$1.35 billion, up from $750 million included in the 2011 feasibility study due to cost inflation in Argentina, country factors and overall cost escalation.

TABLE 23.1 CERRO NEGRO RESERVES

Proven Probable Proven & Probable Tonnage Grade Contained Tonnage Grade Contained Tonnage Grade Contained

Gold Mt g Au/t M oz Mt g Au/t M oz Mt g Au/t M oz 0.04 11.08 0.01 18.87 9.43 5.72 18.91 9.43 5.74 Silver Mt g Ag/t M oz Mt g Ag/t M oz Mt g Ag/t M oz 0.04 204.00 0.26 18.87 80.94 49.10 18.91 81.20 49.36

Note: Reserves as of December 31, 2013. (Source: www.goldcorp.com) The reader is cautioned that the above information is not necessarily indicative of the mineralization on McEwen Mining’s San José Property.

___________________________________________________________________________________________________________________________ P&E Mining Consultants Inc. Page 108 McEwen Mining Inc., San José Property - Report No. 289

TABLE 23.2

CERRO NEGRO RESOURCES(1,2)

Measured Indicated Measured & Indicated Inferred Tonnage Grade Contained Tonnage Grade Contained Tonnage Grade Contained Tonnage Grade Contained

Gold Mt g Au/t M oz Mt g Au/t M oz Mt g Au/t M oz Mt g Au/t M oz - - - 5.12 3.12 0.51 5.12 3.12 0.51 5.32 4.81 0.82 Silver Mt g Ag/t M oz Mt g Ag/t M oz Mt g Ag/t M oz Mt g Ag/t M oz - - - 5.12 22.95 3.78 5.12 22.95 3.78 5.32 34.35 5.87 (1) Reported exclusive of Reserves (2) Resources as of December 31, 2013. (Source: www.goldcorp.com)


24.0 OTHER RELEVANT DATA AND INFORMATION There are no other data considered relevant to this Report that have not previously been included.


25.0 INTERPRETATIONS AND CONCLUSIONS P&E presents the following conclusions: QA/QC Procedures P&E considers the estimation criteria and classification scheme implemented by MSC to be suitable for mineral resource estimation, but notes that Hochschild uses a single pass for estimating Measured and Indicated resources and a separate pass for estimating Inferred resources. The strategy as implemented may lead to the occasional mis-classification of resource blocks, however, is not considered to have any material effect. Mineral Resources P&E considers the estimation criteria and classification scheme implemented by Hochschild to be suitable for mineral resource estimation, but notes that the strategy as implemented may lead to the occasional misclassification of resource blocks. Mineral Reserves P&E considers the mine dilution and extraction quantities are reasonable based on historical geomechanical data and the types of mining methods utilized. Economic Analysis P&E considers operating costs to be reasonable based on historical information. The economic analysis is based only on the ore reserves and stockpiles, as at December 31, 2013. No attempt has been made to capture the value of remaining resources. P&E concludes the estimated cumulative undiscounted life-of-mine cash flow at San José will be US$288.2 million and the estimated NPV @ 5% is US$256.8 million. San José’s NPV is most sensitive to OPEX followed by Ag price, Au price and CAPEX.


26.0 RECOMMENDATIONS P&E presents the following recommendations: Mineral Resources Independent sampling by P&E suggests that the bulk density factor may be slightly understated. P&E collected a total of 25 drill hole core samples from mineralized vein material, returning a median of 2.77 t/m3 and a mean of 2.68 t/m3. P&E recommends that McEwen re-examine the bulk density factors in current use. The practical effect of understating the bulk density factors is that the resource and reserve tonnages may be slightly understated. Mineral Reserves P&E recommends that additional attributes be added to the block model to introduce geomechanical dilution, mineability and extraction components which will facilitate the introduction of a more automated mineral reserve determination process from predefined polygons. During the mineral reserve determination process, the tonnes, grade and contained metal (Au and Ag) should be reconciled at each step of the process in order to flag any potential procedural errors. Mineral Processing In recent years, the proportion of flotation concentrate subjected to leaching has been less than 50% and this proportion has been declining. P&E has estimated that a significant economic margin exists favouring concentrate leaching versus concentrate sales. Optimising the operation of the leaching, EW and foundry operations to consistently process 50% of available flotation concentrate would provide economic benefits. A consistent 50/50 split of concentrate leaching/sales would also offer the potential for operating two parallel, separate grinding and flotation circuits and eliminate the imprecise slurry flow splitting at 3 locations in the present plant circuit. The procedure for slurry sample handling in the laboratory should be improved with the volume of sample wash water measured and assayed, rather than calculation using imprecise slurry densities. Cyanide solution handling should be improved with clearly identified stainless steel lines and valves. Emergency equipment (e.g. showers) must be operational at all times.


27.0 REFERENCES Belanger, M., Bergeron, S. (2011) Cerro Negro Gold Project, Santa Cruz Province, Argentina. NI 43-101 Technical Report on Updated Feasibility Study. NI 43-101 report prepared by Goldcorp Inc., dated April 5, 2011. Cinits, R., Ansell, S. and Blower, S. (2002): Resource Estimate for the El Pluma / Cerro Saavedra Property, Santa Cruz Province, Argentina. NI 43-101 report prepared for Minera Andes Inc. by Snowden Mining Industry Consultants, July 26, 2002. Cinits, R., Taylor, G., Colquhoun, W., Brisebois, K. and Elfin, S. (2005): Technical Report on the San José Property, Santa Cruz Province, Argentina. NI 43-101 report prepared for Minera Andes Inc. by AMEC Americas Limited, November 11, 2005. Cinits R., Rocque, P., Colquhoun, W. and Marinho, R. (2007): San José Property, Santa Cruz Province, Argentina, NI 43-101 Technical Report. NI 43-101 report prepared for Minera Andes Inc. by AMEC Americas Limited, June 30, 2007. Colquhoun, W., Henry, E., Simon, A and Rocque, P. (2007): NI 43-101 Technical Report Update on the San José Property, Santa Cruz Province, Argentina. NI 43-101 report prepared for Minera Andes Inc. by AMEC Americas Limited, October 1, 2007. Corbett, G.J. (2002): Epithermal gold for explorationists. Australian Institute of Geoscientists, AIG Online Journal, April 2002. Corbett, G.J. (2007): Controls to low sulphidation epithermal Au-Ag mineralisation. Unpublished paper on www.corbettgeology.com. Dietrich, A., Nelson, E., Gutierrez, R. and Layer, P. (2005): Structural Control of Vein Formation and Mineralization at the Epithermal Huevos Verdes Ag-Au Vein System, San José District, Deseado Massif, Patagonia, Argentina. Salt Lake City Annual Meeting. Geological Society of America, Abstracts with Programs 37 (7): pg 96. Godoy, B. (2007): Argentina: Mining Prospecting and Exploration Legal Framework – Guidelines for Foreign Investors, dated January 02, 2007. Mondaq environmental & energy website: http://www.mondaq.com/article.asp?articleid=45028&login=true&nogo=1. Mach, L. and Elliott, C. (2009): NI 43-101 Technical Report, Minera Andes Inc. San José Silver-Gold Project, Santa Cruz, Argentina. NI 43-101 report prepared for Minera Andes Inc. by SRK Consulting, dated May 29, 2009. Minera Andes Inc. (2007): Annual Report 2007. Minera Andes Inc. (2008): Annual Report 2008. Panteleyev, A. (1996): Epithermal Au-Ag: Low Sulphidation. In: Lefebure, D.V. and Hoy, T. (eds) Selected British Columbia Mineral Deposit Profiles, Volume 2 – Metallic Deposits, British Columbia Ministry of Employment and Investment, Open File 1996-13, pp 41-44. Pitard, F.F. (2009): Review of Sampling Practices at Minera Santa Cruz Operations. Review prepared by Francis Pitard Sampling Consultants for Hochschild Mining PLC, December 29, 2009, 26p.


Puritch, E., Hayden, A., Pearson, J., Yassa, A., Brown, F.H. and Malloch, K. (2009): Technical Report on the San José Silver-Gold Mine, Santa Cruz, Argentina. NI 43-101 report prepared by P&E Mining Consultants Inc. for Minera Andes Inc., dated July 29, 2009. Puritch, E., Malloch, K., Armstrong, T.,Hayden, A., Pearson, J., Brown, F.H. and Burga, D. (2010): Technical Report on the San José Silver-Gold Mine, Santa Cruz, Argentina. NI 43-101 report prepared by P&E Mining Consultants Inc. for Minera Andes Inc., dated December 22, 2010. Puritch, E., Hayden, A., Pearson, J., Brown, F.H. and Burga, D. (2012): Technical Report on the San José Silver-Gold Mine, Santa Cruz, Argentina. NI 43-101 report prepared by P&E Mining Consultants Inc. for McEwen Mining Inc., dated August 15, 2012. Puritch, E., Hayden, A., Pearson, J., Brown, F.H. and Burga, D. (2013): Technical Report on the San José Silver-Gold Mine, Santa Cruz, Argentina. NI 43-101 report prepared by P&E Mining Consultants Inc. for McEwen Mining Inc., dated August 15, 2013. Simón, A. (2010): Auditoria al Laboratorio de la Mina San José (Laboratory Audit of the San José Mine). Memo to Hochschild Mining PLC from Amec Americas Limited, Memo No. 164366-Memo-01, February 10, 2010, 32p. Taylor, B.E. (2007): Epithermal Gold Deposits. In: Goodfellow, W.D. (ed) Mineral Deposits of Canada: A Synthesis of Major Deposit-Types, District Metallogeny, the Evolution of Geological Provinces, and Exploration Methods. Geological Association of Canada, Mineral Deposits Division, Special Publication No. 5, pp 113-139. Wallier, S., Tosdal, R. and Escalante, E. (2006): Geology of the vein-hosted low-sulfidation epithermal Ag-Au deposit of Manantial Espejo, Argentina. 2006 Round-Up Poster, Vancouver, Canada.


28.0 CERTIFICATES CERTIFICATE OF QUALIFIED PERSON EUGENE J. PURITCH, P.ENG. I, Eugene J. Puritch, P. Eng., residing at 44 Turtlecreek Blvd., Brampton, Ontario, L6W 3X7, do hereby certify that:

1. I am an independent mining consultant and President of P & E Mining Consultants Inc.

2. This certificate applies to the technical report titled “Technical Report on the San José Silver-Gold Mine Santa Cruz, Argentina” (the “Technical Report”), with an effective date of December 31, 2013.

3. I am a graduate of The Haileybury School of Mines, with a Technologist Diploma in Mining, as well as obtaining an additional year of undergraduate education in Mine Engineering at Queen’s University. In addition I have also met the Professional Engineers of Ontario Academic Requirement Committee’s Examination requirement for Bachelor’s Degree in Engineering Equivalency. I am a mining consultant currently licensed by the Professional Engineers of Ontario (License No. 100014010) and registered with the Ontario Association of Certified Engineering Technicians and Technologists as a Senior Engineering Technologist. I am also a member of the National and Toronto Canadian Institute of Mining and Metallurgy.

I have read the definition of “qualified person” set out in National Instrument 43-101 (“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.

I have practiced my profession continuously since 1978. My summarized career experience is as follows:

Mining Technologist - H.B.M.& S. and Inco Ltd., ............................................................................. 1978-1980 Open Pit Mine Engineer – Cassiar Asbestos/Brinco Ltd., .................................................................. 1981-1983 Pit Engineer/Drill & Blast Supervisor – Detour Lake Mine, .............................................................. 1984-1986 Self-Employed Mining Consultant – Timmins Area, .......................................................................... 1987-1988 Mine Designer/Resource Estimator – Dynatec/CMD/Bharti, ............................................................. 1989-1995 Self-Employed Mining Consultant/Resource-Reserve Estimator, ...................................................... 1995-2004 President – P & E Mining Consultants Inc., .................................................................................... 2004-Present

4. I have visited the Property that is the subject of this report on February 4, 2009, January 27-29, 2010, January 24-25, 2011, January 23-24, 2012, February 23-24, 2013 and February 20-21, 2014.

5. I am responsible for co-authoring Section 12 of the Technical Report.

6. I am independent of McEwen Mining applying the test in Section 1.5 of NI 43-101.

7. I have had prior involvement with the Project that is the subject of this Technical Report. The nature of my involvement is as a co-author of several technical reports, the most recent of which is titled “Technical Report on the San José Silver-Gold Mine Santa Cruz, Argentina” and dated August 15, 2013.

8. I have read NI 43-101 including Form 43-101F1, 43-101CP and the Technical Report. This Technical Report has been prepared in compliance therewith.

9. As of the Effective Date of the Technical Report, 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 the Technical Report not misleading.

Effective Date: December 31, 2013 Signed Date: August 15, 2014 {SIGNED AND SEALED} [Eugene Puritch] Eugene J. Puritch, P.Eng.


CERTIFICATE OF QUALIFIED PERSON DAVID BURGA, P.GEO. I, David Burga, P. Geo., residing at 3884 Freeman Terrace, Mississauga, Ontario, do hereby certify that: 1. I am an independent geological consultant contracted by P&E Mining Consultants Inc.


3. I am a graduate of the University of Toronto with a Bachelor of Science degree in Geological Sciences (1997). I have worked as a geologist for a total of 12 years since obtaining my B.Sc. degree. I am a geological consultant currently licensed by the Association of Professional Geoscientists of Ontario (License No 1836).

I have read the definition of “qualified person” set out in National Instrument 43-101 (“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.

My relevant experience for the purpose of the Technical Report is:

Exploration Geologist, Cameco Gold ............................................................................................... 1997-1998 Field Geophysicist, Quantec Geoscience ......................................................................................... 1998-1999 Geological Consultant, Andeburg Consulting Ltd. .......................................................................... 1999-2003 Geologist, Aeon Egmond Ltd. .......................................................................................................... 2003-2005 Project Manager, Jacques Whitford .................................................................................................. 2005-2008 Exploration Manager – Chile, Red Metal Resources ....................................................................... 2008-2009 Consulting Geologist .................................................................................................................... 2009-Present

4. I have visited the Property that is the subject of this report on May 10, 2010.

5. I am responsible for authoring Sections 2, 3, 11, and 24 co-authoring Sections 4 and 12 of the Technical Report.



8. I have read NI 43-101 including Form 43-101F1, 43-101CP and this Technical Report. This Technical Report has been prepared in compliance therewith.

9. As of the Effective Date of the Tehcnical Report, 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 the Technical Report not misleading.

Effective Date: December 31, 2013 Signed Date: August 15, 2014 {SIGNED AND SEALED} [David Burga] David Burga, P.Geo.


CERTIFICATE OF QUALIFIED PERSON ALFRED S. HAYDEN, P.ENG I, Alfred S. Hayden, P. Eng., residing at 284 Rushbrook Drive, Ontario, L3X 2C9, do hereby certify that: 1. I am currently President of:

EHA Engineering Ltd., Consulting Metallurgical Engineers Box 2711, Postal Stn. B. Richmond Hill, Ontario, L4E 1A7


3. I graduated from the University of British Columbia, Vancouver, B.C. in 1967 with a Bachelor of Applied Science in Metallurgical Engineering. I am a member of the Canadian Institute of Mining, Metallurgy and Petroleum and a Professional Engineer and Designated Consulting Engineer registered with Professional Engineers Ontario. I have worked as a metallurgical engineer for a total of 46 years since my graduation from university.

I have read the definition of “qualified person” set out in National Instrument 43-101 (“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.

4. I have visited the Property that is the subject of this report on February 4, 2009.

5. I am responsible for authoring Sections 13, 17 and 20 and co-authoring section 21, 25, and 26 of the Technical Report





Effective Date: December 31, 2013 Signed Date: August 15, 2014 {SIGNED AND SEALED} [Alfred Hayden] __________________________ Alfred S. Hayden, P.Eng.


CERTIFICATE OF QUALIFIED PERSON JAMES L. PEARSON, P.ENG. I, James L. Pearson, P.Eng., residing at 105 Stornwood Court, Brampton, Ontario, Canada, L6W 4H6, do hereby certify that: 1. I am an independent Mining Engineering Consultant, contracted by P& E Mining Consultants Inc. 2. This certificate applies to the technical report entitled “Technical Report on the San José Silver-Gold Mine

Santa Cruz, Argentina” (the “Technical Report”), with an effective date of December 31, 2013.

3. I am a graduate of Queen’s University, Kingston, Ontario, Canada, in 1973 with a Bachelor of Science degree in Mining Engineering. I am registered as a Professional Engineer in the Province of Ontario (Reg. No. 36043016). I have worked as a mining engineer for a total of 40 years since my graduation. I have read the definition of "qualified person" set out in National Instrument 43-101 (“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. My relevant experience for the purpose of the Technical Report is:

• Review and report as a consultant on numerous exploration and mining projects around the world

for due diligence and regulatory requirements; • Project Manager and Superintendent of Engineering and Projects at several underground

operations in South America; • Senior Mining Engineer with a large Canadian mining company responsible for development of

engineering concepts, mine design and maintenance; • Mining analyst at several Canadian brokerage firms

4. I have visited the Property on February 4, 2009, January 27 to 29, 2010, January 24 to 25, 2011, January 23 to

24, 2012 and February 23-24, 2013 and February 20-21, 2014.

5. I am responsible for authoring Sections 15, 16 and 22 as well as co-authoring Sections 1, 21, 25 and 26 of the Technical Report;


7. I am independent of McEwen Mining applying all of the tests in Section 1.5 of NI 43-101. 8. I have read NI 43-101 including Form 43-101F1, 43-101CP and the Technical Report. This Technical Report

has been prepared in compliance with that Instrument and Form. 9. As of the Effective Date of the Technical Report, 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 the Technical Report not misleading.

Effective Date: December 31, 2013 Signed Date: August 15, 2014 {SIGNED AND SEALED} [James L. Pearson] James L. Pearson, P.Eng.


CERTIFICATE OF QUALIFIED PERSON FRED H. BROWN, P.Geo. I, Fred H. Brown, residing at Suite B-10, 1610 Grover St., Lynden WA, 98264 USA, do hereby certify that: 1. I am an independent geological consultant and have worked as a geologist continuously since my graduation

from university in 1987.

2. This certificate applies to the technical report titled “Technical Report on the San José Silver-Gold Mine Santa Cruz, Argentina” (the “Technical Report”), with an effective date of December 31, 2013

3. I graduated with a Bachelor of Science degree in Geology from New Mexico State University in 1987. I obtained a Graduate Diploma in Engineering (Mining) in 1997 from the University of the Witwatersrand and a Master of Science in Engineering (Civil) from the University of the Witwatersrand in 2005. I am registered as a Professional Geoscientist in the province of British Columbia, Canada (APEGBC #170162).

I have read the definition of “qualified person” set out in National Instrument 43-101 (“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

My relevant experience for the purpose of the Technical Report is:

Underground Mine Geologist, Freegold Mine, AAC ....................................................................... 1987-1995 Mineral Resource Manager, Vaal Reefs Mine, Anglogold .............................................................. 1995-1997 Resident Geologist, Venetia Mine, De Beers .................................................................................. 1997-2000 Chief Geologist, De Beers Consolidated Mines ............................................................................... 2000-2004 Consulting Geologist ........................................................................................................................ 2004-2008

4. I have not visited the Property that is the subject of this Technical Report.

5. I am responsible for authoring Section 14 of this Technical Report.





Effective Date: December 31, 2013 Signed Date: August 15, 2014 {SIGNED AND SEALED} [Fred H. Brown] _______________________________ Fred H. Brown P.Geo.


CERTIFICATE OF QUALIFIED PERSON James K. Duff, P.Geo. I, James K. Duff, residing at 3882 N Player Dr., Coeur d’Alene, Idaho, 83815, USA, do hereby certify that:

1. I am a part time consultant to McEwen Mining Inc.

2. This certificate applies to the technical report titled “Technical Report on the San José Silver-Gold Mine Santa Cruz, Argentina” (the “Technical Report”), with an effective date of December 31, 2013

3. I graduated with a Bachelor of Science degree in Geology from University of Nevada (Reno) in 1968, and I received a Master’s of Science degree in Geology from the University of Idaho (Moscow) in 1978.

I am a Licensed Professional Geologist in the State of Idaho (No. PGL-1411) and a Registered Member of the Society of Mining, Metallurgy and Exploration (No. 859022). I have read the definition of “qualified person” set out in National Instrument 43-101 (“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.

I have practiced my profession for 45 years since my graduation from the University of Nevada. I was employed by exploration and operating companies including Pan-Nevada Mining Co., Bear Creek Mining Co. (Kennecott Copper Co.), Idarado Mining Co. (Newmont Mining Co.), Cyprus Mining Corp., White Pine Copper Co., The Bunker Hill Co., St. Joe Minerals/St. Joe Gold, Bond International Gold, Coeur d’Alene Mines Corp. and Minera Andes Inc. (now McEwen Mining Inc.) in a series of positions with increasing levels of responsibility culminating in senior management positions. I have worked as a consultant since I retired from Minera Andes Inc. on January 31, 2012.

4. I have visited the Property that is the subject of this Technical Report numerous times per year during the 2008 to 2012 time period. My last visit to the Property was on January 21-23, 2013.

5. I am responsible for authoring Sections 5, 6, 7, 8, 9, 10, 18, 19 and 23 as well as co-authoring Sections 1 and 4 of this Technical Report.

6. I was the Chief Operating Officer of Minera Andes Inc. from March 2009 through January 2012, during which time I was responsible for reviewing all of the mining and exploration activities at the Property.

7. I am currently employed as a part time consultant by McEwen Mining Inc. I was also an officer of the Company within the last three years. I do not believe I meet the criteria of being “Independent” as set out in Section 1.5 of National Instrument 43-101.



Effective Date: December 31, 2013 Signed Date: August 15, 2014 {SIGNED AND SEALED} [James K. Duff] _______________________________ James K. Duff P.Geo.

Documents

TECHNICAL REPORT ON THE SAN JOSÉ SILVER-GOLD ...TECHNICAL REPORT ON THE SAN JOSÉ SILVER-GOLD MINE SANTA CRUZ, ARGENTINA LATITUDE 46 41’S, LONGITUDE 70 17’W For McEwen Mining