VM HOLDING S.A. TECHNICAL REPORT ON THE …Report Control Form Document Title Technical Report on the Preliminary Economic Assessment of the Aripuanã Zinc Project, State of Mato Grosso,

July 31, 2017

VM HOLDING S.A.

TECHNICAL REPORT ON THEPRELIMINARY ECONOMIC ASSESSMENTOF THE ARIPUANÃ ZINC PROJECT,STATE OF MATO GROSSO, BRAZIL

NI 43-101 Report

Qualified Persons:Jason J. Cox, P.Eng.Sean D. Horan P.Geo.,Brenna J.Y. Scholey, P.Eng.Stephan Theben, Dipl.-Ing., SLR Consulting (Canada) Ltd.

RPA T55 University Ave. Suite 501 I Toronto, ON, Canada M5J 2H7 I + 1 (416) 947 0907 www.rpacan.com

Report Control Form

Document Title Technical Report on the Preliminary Economic Assessment of the Aripuanã Zinc Project, State of Mato Grosso, Brazil

Client Name & Address VM Holdings S.A. 43 ave John Fitzgerald Kennedy, 3rd floor Luxembourg L1855

Document Reference Project #2779

Status & Issue No.

FINAL Version

Issue Date July 31, 2017

Lead Author Jason J. Cox Sean Horan Brenna J.Y. Scholey Stephan Theben

(Signed) (Signed) (Signed) (Signed)

Peer Reviewer David J F Smith (Signed)

Project Manager Approval Jason J. Cox (Signed)

Project Director Approval Deborah A. McCombe (Signed)

Report Distribution Name No. of Copies

Client

RPA Filing 1 (project box)

Roscoe Postle Associates Inc. 55 University Avenue, Suite 501

Toronto, ON M5J 2H7 Canada

Tel: +1 416 947 0907 Fax: +1 416 947 0395

[email protected]

mailto:[email protected]

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VM Holding S.A. – Aripuanã Zinc Project, Project #2779

Technical Report NI 43-101 – July 31, 2017 Page i

TABLE OF CONTENTS PAGE

1 SUMMARY ...................................................................................................................... 1-1 Executive Summary ....................................................................................................... 1-1 Economic Analysis ......................................................................................................... 1-5 Technical Summary ..................................................................................................... 1-11

2 INTRODUCTION ............................................................................................................. 2-1

3 RELIANCE ON OTHER EXPERTS ................................................................................. 3-1

4 PROPERTY DESCRIPTION AND LOCATION ................................................................ 4-1

5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ............................................................................................................... 5-1

6 HISTORY ........................................................................................................................ 6-1

7 GEOLOGICAL SETTING AND MINERALIZATION .......................................................... 7-1 Regional Geology .......................................................................................................... 7-1 Local Geology ................................................................................................................ 7-4 Property Geology ........................................................................................................... 7-4 Mineralization ................................................................................................................ 7-7

8 DEPOSIT TYPES ............................................................................................................ 8-1

9 EXPLORATION ............................................................................................................... 9-1 1999-2002 Exploration ................................................................................................... 9-1 VMH Exploration ............................................................................................................ 9-2 Exploration Potential ...................................................................................................... 9-4

10 DRILLING .................................................................................................................... 10-1 Previous Drilling ........................................................................................................... 10-1 Recent Drilling ............................................................................................................. 10-2

11 SAMPLE PREPARATION, ANALYSES AND SECURITY ............................................ 11-1 Sampling Method and Approach .................................................................................. 11-1 Density Analysis .......................................................................................................... 11-1 Sample Preparation ..................................................................................................... 11-2 Sample Analysis .......................................................................................................... 11-2 Database Management ................................................................................................ 11-3 Sample Chain of Custody and Storage ........................................................................ 11-4 Quality Assurance/Quality Control ............................................................................... 11-4

12 DATA VERIFICATION ................................................................................................. 12-1 VMH ............................................................................................................................ 12-1 RPA Audit of Drill Hole Database ................................................................................. 12-2

13 MINERAL PROCESSING AND METALLURGICAL TESTING ..................................... 13-1 Introduction .................................................................................................................. 13-1

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Technical Report NI 43-101 – July 31, 2017 Page ii

Metallurgical Sampling ................................................................................................. 13-1 Metallurgical Testing .................................................................................................... 13-5 Summary ................................................................................................................... 13-30

14 MINERAL RESOURCE ESTIMATE ............................................................................. 14-1 Comparison with Previous Estimate ............................................................................. 14-3 Resource Database ..................................................................................................... 14-6 Topography ................................................................................................................. 14-6 Geological Interpretation .............................................................................................. 14-6 Capping of High Grades ............................................................................................ 14-12 Compositing ............................................................................................................... 14-16 Exploratory Data Analysis .......................................................................................... 14-18 Variography ............................................................................................................... 14-22 Block Model ............................................................................................................... 14-28 Interpolation STrategy ................................................................................................ 14-30 Net Smelter Return Cut-Off Value .............................................................................. 14-33 Classification ............................................................................................................. 14-37 Validation ................................................................................................................... 14-41

15 MINERAL RESERVE ESTIMATE ................................................................................ 15-1

16 MINING METHODS ..................................................................................................... 16-1 Introduction .................................................................................................................. 16-1 Mine Design ................................................................................................................. 16-1 Mining Method ............................................................................................................. 16-7 Geomechanics and Ground Support ............................................................................ 16-8 Mine Infrastructure ..................................................................................................... 16-10 Mine Equipment ......................................................................................................... 16-13 Life of Mine Plan ........................................................................................................ 16-14

17 RECOVERY METHODS .............................................................................................. 17-1 Process Description ..................................................................................................... 17-1

18 PROJECT INFRASTRUCTURE .................................................................................. 18-1 Waste Production ........................................................................................................ 18-1 Power Supply .............................................................................................................. 18-5 Water Supply ............................................................................................................... 18-5

19 MARKET STUDIES AND CONTRACTS ...................................................................... 19-1 Markets ........................................................................................................................ 19-1 Contracts ..................................................................................................................... 19-1

20 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT ......................................................................................................................................... 20-1

Environmental and Social Setting ................................................................................ 20-1 Environmental Studies ................................................................................................. 20-2 Project Permitting ........................................................................................................ 20-5 Social or Community Requirements ............................................................................. 20-5 Mine Closure Requirements ......................................................................................... 20-6 Key Issues and Recommendations for Future Work .................................................... 20-6

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Technical Report NI 43-101 – July 31, 2017 Page iii

21 CAPITAL AND OPERATING COSTS .......................................................................... 21-1 Capital Costs ............................................................................................................... 21-1 Operating Costs ........................................................................................................... 21-2

22 ECONOMIC ANALYSIS............................................................................................... 22-1

23 ADJACENT PROPERTIES .......................................................................................... 23-1

24 OTHER RELEVANT DATA AND INFORMATION ........................................................ 24-1

25 INTERPRETATION AND CONCLUSIONS .................................................................. 25-1

26 RECOMMENDATIONS................................................................................................ 26-1

27 REFERENCES ............................................................................................................ 27-1

28 DATE AND SIGNATURE PAGE .................................................................................. 28-1

29 CERTIFICATE OF QUALIFIED PERSON .................................................................... 29-1

LIST OF TABLES PAGE

Table 1-1 2018 Project Advancement Budget ................................................................... 1-5 Table 1-2 After-Tax Cash Flow Summary ......................................................................... 1-7 Table 1-3 Sensitivity AnalyseS ....................................................................................... 1-10 Table 1-4 Mineral Resource Statement, December 23, 2016 .......................................... 1-14 Table 1-5 Pre-Production Capital Cost Estimate ............................................................. 1-18 Table 1-6 Operating Cost Estimate ................................................................................. 1-19 Table 4-1 Exploration Authorization Permits ..................................................................... 4-2 Table 4-2 Royalty Data ..................................................................................................... 4-6 Table 9-1 Anglo American and Karmin Exploration – 1999-2002 ...................................... 9-1 Table 10-1 Drill Hole Database ....................................................................................... 10-1 Table 11-1 Expected Values and Ranges of Standards .................................................. 11-7 Table 11-2 Expected Values and Ranges of Standards ................................................ 11-11 Table 11-3 Expected Values and Ranges of Standards ................................................ 11-11 Table 11-4 List of Reference Standards Used .............................................................. 11-15 Table 12-1 Summary of Re-analysis ............................................................................... 12-1 Table 13-1 Phase 1 - LCT 2 Results ............................................................................... 13-6 Table 13-2 CWi Results .................................................................................................. 13-8 Table 13-3 SMC Results ................................................................................................. 13-8 Table 13-4 SPI Results ................................................................................................... 13-9 Table 13-5 BWi Results ................................................................................................ 13-10 Table 13-6 Ai Results ................................................................................................... 13-11 Table 13-7 RWi Results ................................................................................................ 13-11 Table 13-8 Summary of Key Optimization LCT Results ................................................ 13-14 Table 13-9 LCT 028 Conditions and Results– Arex Stratabound Master Composite..... 13-16 Table 13-10 LCT 011 Conditions and Results– Arex Stringer Master Composite ......... 13-17 Table 13-11 LCT 025 Conditions and Results– Arex Stringer Master Composite ......... 13-18 Table 13-12 LCT 030 Conditions and Results– Arex Mix (75% Stratabound, 25% Stringer) ....................................................................................................................................... 13-19

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Technical Report NI 43-101 – July 31, 2017 Page iv

Table 13-13 LCT 009 Conditions and Results– Ambrex Stratabound Master Composite ....... ....................................................................................................................................... 13-20 Table 13-14 LCT 029 Conditions and Results– Ambrex Stratabound Master Composite ....... ....................................................................................................................................... 13-21 Table 13-15 Comparison of Metallurgical Data ............................................................. 13-23 Table 13-16 Summary of Settling Tests Using Magnafloc 10 Flocculant (3 g/t) ............. 13-26 Table 13-17 Summary of Filtration Test Work Conducted by ANDRITZ ........................ 13-30 Table 14-1 Mineral Resource Statement, December 23, 2016 ........................................ 14-2 Table 14-2 Mineral Resources by Type and Area, December 23, 2016 .......................... 14-3 Table 14-3 Comparison Between Current and October 20, 2016 Estimates ................... 14-5 Table 14-4 Grade Capping Levels ................................................................................ 14-13 Table 14-5 Uncapped versus Capped Assay Statistics ................................................. 14-14 Table 14-6 Composite Statistics ................................................................................... 14-17 Table 14-7 Wireframe Grouping for Variography and Search Parameters .................... 14-19 Table 14-8 Block Model Setup ...................................................................................... 14-28 Table 14-9 Block Model Attribute Descriptions .............................................................. 14-29 Table 14-10 Sample Selection Strategy ........................................................................ 14-30 Table 14-11 NSR Factors ............................................................................................. 14-35 Table 14-12 Sensitivity to Cut-off Grade - Stratabound ................................................. 14-36 Table 14-13 Sensitivity to Cut-off Grade - Stringer ........................................................ 14-36 Table 14-14 VMH Search Ellipse Ranges for Classification Criteria .............................. 14-38 Table 14-15 Comparison Between OK, NN and Composite Means (Zn and Cu) .......... 14-41 Table 16-1 Development Dimensions ............................................................................. 16-6 Table 16-2 LOM Total Development ............................................................................... 16-6 Table 16-3 Equipment Fleet .......................................................................................... 16-13 Table 16-4 Advance Rates ........................................................................................... 16-14 Table 16-5 Summary Mine Schedule ............................................................................ 16-16 Table 21-1 Pre-Production Capital Cost Estimate ........................................................... 21-1 Table 21-2 Sustaining Capital Cost Estimate .................................................................. 21-2 Table 21-3 Operating Cost Estimate ............................................................................... 21-3 Table 22-1 After-Tax Cash Flow Summary ..................................................................... 22-3 Table 22-2 Sensitivity Analyses ...................................................................................... 22-6 Table 26-1 2018 Project Advancement Budget ............................................................... 26-2

LIST OF FIGURES PAGE

Figure 1-1 Sensitivity Analysis ........................................................................................ 1-10 Figure 4-1 Location Map ................................................................................................... 4-3 Figure 4-2 Property Map ................................................................................................... 4-4 Figure 4-3 Surface Rights Map ......................................................................................... 4-7 Figure 7-1 Regional Geology ............................................................................................ 7-2 Figure 7-2 Geological Map of the Amazonian Shield ........................................................ 7-3 Figure 7-3 Property Geology ............................................................................................. 7-6 Figure 8-1 Target Model ................................................................................................... 8-2 Figure 10-1 Drill Hole Collar Map .................................................................................... 10-4 Figure 11-1 Blank Results for Zinc, Lead and Copper ..................................................... 11-6 Figure 11-2 Control Chart for CRM AP0002: Lead .......................................................... 11-8 Figure 11-3 Control Chart for CRM AP0001: Zinc ........................................................... 11-8

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Technical Report NI 43-101 – July 31, 2017 Page v

Figure 11-4 Percent Relative Difference Plot: Zinc Duplicate Samples ........................... 11-9 Figure 11-5 Blank Results for Zinc, Lead and Copper ................................................... 11-10 Figure 11-6 Control Chart for CRM AP0002: Lead ........................................................ 11-12 Figure 11-7 Control Chart for CRM AP0001: Lead ........................................................ 11-13 Figure 11-8 Control Chart for CRM AP0001: Zinc ......................................................... 11-13 Figure 11-9 Percent Relative Difference Plot: Zinc Duplicate Samples ......................... 11-14 Figure 11-10 Control Chart for CRM G312-4: Gold ....................................................... 11-17 Figure 11-11 Control Chart for Internal Standard APPD0003: Zinc ............................... 11-17 Figure 11-12 Control Chart for Internal Standard APPD0004: Lead .............................. 11-18 Figure 11-13 Control Chart for Internal Standard APPD0003: Copper .......................... 11-18 Figure 11-14 Percent Relative Difference Plot: Zinc Duplicate Samples ....................... 11-19 Figure 12-1 Density Measurements at Ambrex by Rock Unit .......................................... 12-4 Figure 12-2 Density Measurements at Arex by Rock Unit ............................................... 12-5 Figure 13-1 Location of Arex Metallurgical Samples ....................................................... 13-3 Figure 13-2 Location of Ambrex Metallurgical Samples .................................................. 13-4 Figure 13-3 Simplified Sequential Flotation Circuit ........................................................ 13-13 Figure 13-4 Variation of Metal Assays in Flotation Products ......................................... 13-27 Figure 13-5 Variation of Metal Assays in Flotation Products ......................................... 13-28 Figure 13-6 Yield Stress vs. Solids Percentage ............................................................ 13-29 Figure 13-7 Viscosity vs. Solids Percentage ................................................................. 13-29 Figure 14-1 3D Isometric View of Geological Wireframes ............................................... 14-9 Figure 14-2 Ambrex Geological Model .......................................................................... 14-10 Figure 14-3 Arex Geological Model ............................................................................... 14-11 Figure 14-4 Capping Analysis for Body=4 (Ambrex StrataBound) ................................. 14-15 Figure 14-5 Cu Capping Analysis for Body=116 (Arex Stringer) ................................... 14-16 Figure 14-6 Histograms for Assay (left) and Composite (right) Lengths ........................ 14-18 Figure 14-7 Arex Stratabound Contact Analysis ........................................................... 14-20 Figure 14-8 Correlation Matrices for Ambrex and Arex (STB=Stratabound, STR=Stringer) ....................................................................................................................................... 14-21 Figure 14-9 Zn and Cu Statistics by Body and Group ................................................... 14-22 Figure 14-10 Arex Stratabound, Group 21 Zn Directional Variograms .......................... 14-23 Figure 14-11 Ambrex Link Zone Stratabound, Group 3 Zn Directional Variograms ....... 14-24 Figure 14-12 Arex Stringer, Group 36 Zn Directional Variograms ................................. 14-25 Figure 14-13 Relative Nugget Effect Stratabound ......................................................... 14-26 Figure 14-14 RElative Nugget Effect Stratabound ........................................................ 14-26 Figure 14-15 Variogram Ranges Stratabound ............................................................... 14-27 Figure 14-16 Variogram Ranges Stringer ..................................................................... 14-27 Figure 14-17 Search Ranges for Zn Stratabound ......................................................... 14-32 Figure 14-18 Search Ranges for Cu Stringer ................................................................ 14-33 Figure 14-19 Global Variograms Used for Classification Criteria................................... 14-39 Figure 14-20 Final Classification Designation ............................................................... 14-40 Figure 14-21 Comparison Between OK and NN Means (Zn Stratabound) .................... 14-42 Figure 14-22 Comparison Between OK and NN Means (Cu Stringer) ........................... 14-42 Figure 14-23 Arex Zn Swath Plot – Easting .................................................................. 14-43 Figure 14-24 Arex Cu Swath Plot – Easting .................................................................. 14-43 Figure 14-25 Ambrex Zn Swath Plot – Easting ............................................................. 14-44 Figure 14-26 Ambrex Cu Swath Plot – Easting ............................................................. 14-44 Figure 14-27 Arex Vertical Section Showing Zn Block Versus Composite Grades ....... 14-45 Figure 14-28 Arex Vertical Section Showing Cu Block Versus Composite Grades ...... 14-46 Figure 14-29 Ambrex Vertical Section Showing Zn Block Versus Composite Grades .. 14-47 Figure 14-30 Ambrex Vertical Section Showing Cu Block Versus Composite Grades .. 14-48 Figure 14-31 Global Change of Support Check for Bodies 53, 54 and 80 ..................... 14-50

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Technical Report NI 43-101 – July 31, 2017 Page vi

Figure 16-1 Mine Layout of Both Deposits ...................................................................... 16-3 Figure 16-2 Layout of Ambrex ........................................................................................ 16-4 Figure 16-3 Layout of Arex ............................................................................................. 16-5 Figure 17-1 Simplified Process Flow Sheet .................................................................... 17-2 Figure 18-1 General Site Plan and Proposed TMF Sites for Option 10A ......................... 18-3 Figure 18-2 TMF Conceptual Design .............................................................................. 18-4 Figure 22-1 Sensitivity Analysis ...................................................................................... 22-6

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Technical Report NI 43-101 – July 31, 2017 Page 1-1

1 SUMMARY EXECUTIVE SUMMARY Roscoe Postle Associates Inc. (RPA) was retained by VM Holding S.A. (VMH) to prepare an

independent Technical Report on the Aripuanã Zinc Project (the Project), located in the state

of Mato Grosso, Brazil. The purpose of this report is to audit a Mineral Resource estimate and

to disclose the results of a Preliminary Economic Assessment (PEA) of the Project. This

Technical Report conforms to NI 43-101 Standards of Disclosure for Mineral Projects. RPA

visited the property on June 2 and 5, 2017 and January 30 to February 2, 2017.

The Aripuanã Zinc property is owned by Mineração Dardanelos Ltda. (Dardanelos), a joint

venture between Votorantim Metais Zinco SA (VMZ, a subsidiary of VMH, 62.3%), Compañía

Minera - Milpo S.A.A. (Milpo, 7.7%), and Mineração Rio Aripuanã (a subsidiary of Karmin

Exploration Inc. (Karmin, 30%)), with VMH acting as the operator through VMZ.

To date, the focus of exploration activities on the property has been the Ambrex and Arex

deposits, which are the only two deposits that contain current Mineral Resources. As a result

of drilling between 2014 and 2016, a zone connecting the two deposits, the Link Zone, was

delineated. The Link Zone is considered to be a westward extension of Ambrex and is

therefore included in the Mineral Resources of that deposit.

In March 2017, RPA completed a NI 43-101 Technical Report on the Project dated March 1,

2017 for VMH’s joint venture partner Karmin. Additional drilling and a resource model update

have been carried out since the effective date of the Mineral Resource summarized in that

report.

This report is considered by RPA to meet the requirements of a Preliminary Economic

Assessment as defined in Canadian NI 43-101 regulations. The economic analysis contained

in this report is based, in part, on Inferred Resources, and is preliminary in nature. Inferred

Resources are considered too geologically speculative to have mining and economic

considerations applied to them and to be categorized as Mineral Reserves. There is no

certainty that economic forecasts on which this PEA is based will be realized.

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CONCLUSIONS The Project merits further work to improve economic outcomes, including completion of an

advanced engineering study.

RPA offers the following conclusions for each area:

GEOLOGY AND MINERAL RESOURCES

• The Aripuanã Zinc deposits are located within the central-southern portion of the Amazonian Craton, in which Paleoproterozoic and Mesoproterozoic lithostratigraphic units of the Rio Negro-Juruena province (1.80 Ga to 1.55 Ga) predominate.

• The Aripuanã Zinc polymetallic deposits are typical Volcanogenic Massive Sulphide (VMS) deposits associated with felsic bimodal volcanism. Three main elongate mineralized zones, Arex, Link, and Ambrex, have been defined in the central portion of the Project. A smaller, deeper zone, Babaçú, lies to the south of Ambrex.

• The drilling, sampling, sample preparation, analysis, and data verification procedures are appropriate for the estimation of Mineral Resources.

• As prepared by VMH and adopted by RPA, the Aripuanã Measured and Indicated Mineral Resources comprise 21.8 million tonnes (Mt) at 4.8% Zn, 1.8% Pb, 0.3% Cu, 0.4 g/t Au, and 45 g/t Ag for 2.3 billion pounds of Zn, 852 million pounds of Pb, 158 million pounds of Cu, 279,000 ounces of Au, and 31 million ounces of Ag. The Aripuanã Inferred Mineral Resources comprise 24.6 Mt at 3.9% Zn, 1.5% Pb, 0.42% Cu, 0.93 g/t Au, and 38 g/t Ag for 2.1 billion pounds of Zn, 829 million pounds of Pb, 226 million pounds of Cu, 732,000 ounces of Au, and 30 million ounces of Ag.

• The Mineral Resource estimate is consistent with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards for Mineral Resources and Mineral Reserves dated May 10, 2014 (CIM definitions) as incorporated by reference into NI 43-101.

• Limited exploration has identified additional, possible mineralized bodies including Massaranduba, Boroca, and Mocoto to the south and Arpa to the north.

MINING

• The deposits support a production rate of 1.8 million tonnes per annum (Mtpa), however, several years are required to advance ramps and development sufficiently to access the required number of workplaces.

• The large resource base provides a long mine life (24 years). There may be opportunities to be more selective in the mining of high-grade areas in the early years of the Life of Mine (LOM), to improve capital payback.

• Deposit geometry and geomechanical properties are amenable to bulk longhole mining methods, with some cut and fill mining in narrower areas.

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• Dilution and extraction estimates appear reasonable, ranging from 5% to 12% (dilution) and 90% to 95% (extraction). There is a risk of poorer recovery and additional dilution in flat-dipping stopes (below 50°).

• Arex and Ambrex deposits are not connected until later in the mine life, making it difficult to share the mobile equipment fleet efficiently. More units may be required in the early years.

• The issues identified above can be addressed in the next stage of study. PROCESS

• The results from recent SGS GEOSOL metallurgical testing form the current basis for engineering design of the sequential Cu/Pb/Zn flotation circuit.

• Separation of material types is necessary to improve copper recovery and to reduce costs, particularly when processing Copper Stringer material. Since Copper Stringer mineralization does not have significant zinc and lead grades, copper processing should be separate for flotation and filtration and it is expected that the lead and zinc circuits will be bypassed.

• To process Arex and Ambrex Stratabound mineralization, talc removal by flotation is required prior to sequential flotation of Cu, Pb, and Zn.

• Data for the final concentrate grades and recoveries for Arex and Ambrex mineralization in the Aripuanã LOM financial model did not rely consistently on metallurgical test data. The assumptions for the concentrate grades and recoveries for Ambrex Stringer and Ambrex Mixed materials were based on identical LOM assumed data for Arex mineralization and not on any metallurgical test results.

• The presence or absence of any deleterious elements that could impact extraction have not yet been clearly identified through metallurgical testing.

ENVIRONMENTAL CONSIDERATIONS

• The Environmental Impact Assessment (EIA), currently being finalized by VMH, is compliant with Brazilian standards and regulation needs for the current stage of the Project. As the Project is advanced, more detailed EIA submissions will be required with regard to the following: o Establishing existing environmental and socio-economic conditions in the Project

area and the influence on the Project. o Predicting Project effects. o Specifying and detailing mitigation measures to prevent any significant impacts. o Detailing future monitoring and management activities of the Project. o Continuing baseline data collection. This will also include community and

stakeholder consultation and impact generated by the Project in each area. o Testing to determine geochemistry baseline data. o Confirming that there are no fauna or flora species of importance or any

endangered or threatened species affected by the Project. o An ecological and human health risk assessment should be carried out, with the

aim of identifying if water quality, air quality, and noise combined with local uses of

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the areas have the potential of affecting the health of local wildlife, feedstock, and/or the local population.

o Completing plans for site closure and reclamation.

COSTS AND ECONOMICS

• Pre-production capital costs total US$355 million.

• In RPA’s opinion, the capital cost estimate can be classified as Class 4, per American Association of Cost Engineers (AACE) guidelines, which generally corresponds to pre-feasibility studies.

• Contingency comprises 7% of direct and indirect capital costs, which RPA considers to be low for the current stage of the Project.

• Operating costs average US$38.43 per tonne over the LOM, with higher unit costs at the start and end when full production is not achievable.

• Economic results are adversely affected by a relatively long ramp-up to full production. Optimization of the mine design and schedule will help to improve the Project economics.

RECOMMENDATIONS RPA offers the following recommendations for each area:

GEOLOGY AND MINERAL RESOURCES

• Increase the wireframe modelling cut-off grade to limit the amount of sub-economic material not related to massive or disseminated sulphides in the stratabound zone in the wireframes.

• Substitute zeroes for unsampled intervals.

• Model correlograms to avoid fitting long second and third variogram model structures when an apparent zonal anisotropy is observed.

• Perform a visual review of the classification of all blocks with a minimum distance to the closest drill hole greater than 25 m, and consider downgrading blocks where appropriate to Inferred.

MINING

• Use only Measured and Indicated Resources at the next stage of study.

• Optimizing the ramp-up to full production will help improve economic outcomes. PROCESS

• Reference the metallurgical test data for the final concentrate grades and recoveries and report the assays of any penalty elements for Arex and Ambrex mineralization.

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• Further examine any deleterious elements (e.g., potential tremolite material) that could have a significant effect on potential economic extraction.

• Carry out additional test work to develop and optimize Zn/Pb recovery circuits on Ambrex mineralization, to conduct additional mineralogical analysis, to extend the variability analysis to a full geometallurgical program using samples from different locations in the deposits, and to conduct pilot plant test work to confirm the performance of the circuit selected.

INFRASTRUCTURE

• Complete a review of the acid base accounting (ABA) program test results for both the tailings and waste rock and assess the conceptual design of the Tailings Management Facility (TMF) sites based on the ABA test results.

• The next stage of design of the TMF should assess slope stability and geotechnical parameters based on current laboratory test results on grind size and talc content.

ENVIRONMENTAL AND SOCIAL CONSIDERATIONS

• Update the EIA in parallel with the next stage of study on the Project.

• Continue collection of baseline data. RECOMMENDED BUDGET A 2018 budget for field work, testing, and a Feasibility Study is summarized in Table 1-1.

TABLE 1-1 2018 PROJECT ADVANCEMENT BUDGET VM Holding S.A. – Aripuanã Zinc Project

Item Units Cost

Exploration Drilling US$ millions 5.0 Metallurgical Testwork US$ millions 1.0 VMH Project Team US$ millions 3.0 Feasibility Study US$ millions 2.0 Total US$ millions 11.0

ECONOMIC ANALYSIS The economic analysis contained in this report is based, in part, on Inferred Resources, and

is preliminary in nature. Inferred Resources are considered too geologically speculative to

have mining and economic considerations applied to them and to be categorized as Mineral

Reserves. There is no certainty that economic forecasts on which this Preliminary Economic

Assessment is based will be realized.

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RPA has generated a Cash Flow Projection from the LOM production schedule and capital

and operating cost estimates, and this is summarized in Table 1-2. A summary of the key

criteria is provided below.

ECONOMIC CRITERIA REVENUE

• LOM processing of 37 Mt, grading 4.06% Zn, 1.59% Pb, 0.33% Cu, 39 g/t Ag, and 0.61 g/t Au.

• LOM average metallurgical recovery of 82% Zn, 82% Pb, 86% Cu, 66% Ag, and 82% Au.

• LOM average metal payable of 84% Zn, 95% Pb, 96% Cu, 77% Ag, and 87% Au.

• LOM payable metal of 1,028 kt Zn, 459 kt Pb, 101 kt Cu, 23,638 koz Ag, and 529 koz Au.

• LOM metal prices based on forward-looking independent forecasts, averaging US$1.06/lb Zn, US$0.88/lb Pb, US$2.74/lb Cu, US$18.95/oz Ag, and US$1,278/oz Au.

• All revenues are received in US$.

• Total gross revenue of US$5,024 million.

• Total offsite treatment, transportation, and refining charges of US$1,383 million.

• Total royalties of US$192 million.

• Net revenue of US$3,449 million.

• Average unit net revenue of US$93/t processed.

• Revenue is recognized at the time of production.

COSTS

• Pre-production period: 24 months.

• Mine life: 24 years.

• Life of Mine production plan as summarized in Section 16.

• Pre-production capital totals US$354.3 million.

• Sustaining capital over the LOM totals US$229.0 million.

• Average operating cost over the mine life is US$38.43 per tonne processed.

Date:INPUTS UNITS TOTAL 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044

MININGUnderground

Operating Days 350 days 8,400 350 350 350 350 350 350 350 350 350 350 350 350 350 350 350 350 350 350 350 350 350 350 350 350 Tonnes milled per day tonnes / day 765 1,639 2,581 3,912 5,090 5,139 5,132 5,162 5,199 5,187 5,206 5,070 5,147 5,126 5,182 5,161 5,187 5,177 5,191 5,206 4,437 4,664 3,738 1,451 598

Production '000 tonnes 36,953 574 903 1,369 1,781 1,798 1,796 1,807 1,819 1,815 1,822 1,774 1,802 1,794 1,814 1,806 1,815 1,812 1,817 1,822 1,553 1,632 1,308 508 209 Zn Grade % 4.06% 4.98% 3.73% 3.96% 4.03% 4.36% 3.97% 3.59% 2.31% 3.55% 2.87% 4.63% 3.95% 7.84% 6.59% 5.09% 3.61% 3.81% 3.85% 2.89% 3.34% 3.25% 3.49% 3.48% 3.24%Pb Grade % 1.59% 1.71% 1.24% 1.38% 1.70% 1.76% 1.76% 1.40% 0.81% 1.24% 1.02% 2.19% 1.69% 3.44% 3.13% 2.01% 1.36% 1.31% 1.35% 1.05% 1.14% 1.01% 1.03% 1.22% 1.12%Cu Grade % 0.33% 0.60% 0.71% 0.35% 0.26% 0.16% 0.19% 0.27% 0.49% 0.37% 0.61% 0.52% 0.35% 0.17% 0.23% 0.31% 0.27% 0.26% 0.41% 0.41% 0.27% 0.27% 0.10% 0.05% 0.02%Ag Grade g/t 39 53 44 38 46 50 47 39 23 32 29 50 39 76 66 53 36 33 29 27 26 20 22 25 27Au Grade g/t 0.61 0.42 0.52 0.38 0.35 0.22 0.25 0.36 0.60 0.55 0.69 0.62 0.75 0.79 0.89 0.64 1.73 0.74 0.62 0.72 0.53 0.62 0.20 0.22 0.21

PROCESSING

Mill Feed '000 tonnes 36,953 574 903 1,369 1,781 1,798 1,796 1,807 1,819 1,815 1,822 1,774 1,802 1,794 1,814 1,806 1,815 1,812 1,817 1,822 1,553 1,632 1,308 508 209Zn Grade % 4.06% 4.98% 3.73% 3.96% 4.03% 4.36% 3.97% 3.59% 2.31% 3.55% 2.87% 4.63% 3.95% 7.84% 6.59% 5.09% 3.61% 3.81% 3.85% 2.89% 3.34% 3.25% 3.49% 3.48% 3.24%Pb Grade % 1.59% 1.71% 1.24% 1.38% 1.70% 1.76% 1.76% 1.40% 0.81% 1.24% 1.02% 2.19% 1.69% 3.44% 3.13% 2.01% 1.36% 1.31% 1.35% 1.05% 1.14% 1.01% 1.03% 1.22% 1.12%Cu Grade % 0.33% 0.60% 0.71% 0.35% 0.26% 0.16% 0.19% 0.27% 0.49% 0.37% 0.61% 0.52% 0.35% 0.17% 0.23% 0.31% 0.27% 0.26% 0.41% 0.41% 0.27% 0.27% 0.10% 0.05% 0.02%Ag Grade g/t 39 53 44 38 46 50 47 39 23 32 29 50 39 76 66 53 36 33 29 27 26 20 22 25 27Au Grade g/t 0.61 0.42 0.52 0.38 0.35 0.22 0.25 0.36 0.60 0.55 0.69 0.62 0.75 0.79 0.89 0.64 1.73 0.74 0.62 0.72 0.53 0.62 0.20 0.22 0.21 Contained Zn '000 tonnes 1,500 29 34 54 72 78 71 65 42 64 52 82 71 141 120 92 66 69 70 53 52 53 46 18 7Contained Pb '000 tonnes 587 10 11 19 30 32 32 25 15 23 19 39 30 62 57 36 25 24 24 19 18 17 13 6 2Contained Cu '000 tonnes 120 3 6 5 5 3 3 5 9 7 11 9 6 3 4 6 5 5 8 7 4 4 1 0 0Contained Ag koz 46,852 971 1,285 1,685 2,628 2,865 2,727 2,243 1,328 1,840 1,723 2,847 2,273 4,386 3,836 3,060 2,077 1,924 1,691 1,601 1,294 1,060 917 406 183 Contained Au koz 725 8 15 17 20 13 14 21 35 32 41 35 44 46 52 37 101 43 36 42 27 33 9 4 1

Net RecoveryZn 82% 82% 81% 82% 82% 82% 82% 82% 81% 82% 81% 82% 82% 82% 82% 82% 82% 82% 81% 82% 82% 82% 82% 82% 82%Pb 82% 82% 82% 83% 83% 83% 82% 82% 80% 81% 82% 83% 82% 83% 83% 83% 82% 82% 82% 82% 82% 83% 83% 83% 83%Cu 86% 79% 83% 81% 86% 83% 86% 86% 92% 89% 93% 93% 90% 85% 90% 83% 80% 87% 83% 87% 85% 84% 81% 79% 68%Ag 66% 87% 81% 71% 62% 62% 62% 64% 66% 64% 66% 62% 64% 61% 61% 65% 68% 68% 79% 72% 67% 64% 60% 60% 60%Au 82% 78% 83% 81% 80% 73% 75% 81% 89% 83% 87% 82% 86% 79% 83% 81% 89% 86% 83% 87% 82% 83% 71% 69% 64%

Concentrate ProductionZn Concentrate '000 tonnes 2,499 47 55 90 120 131 119 108 69 107 87 138 119 236 201 153 109 115 115 87 87 89 77 30 11

Zn % 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49%Ag g/t 61 55 65 60 75 76 80 70 53 55 57 66 61 65 66 67 62 52 41 53 47 39 42 49 58

Pb Concentrate '000 tonnes 774 13 15 25 40 42 42 34 19 29 25 51 40 82 75 48 33 31 32 25 23 22 18 8 3Pb % 62% 62% 62% 62% 63% 63% 63% 62% 62% 63% 62% 63% 62% 63% 63% 62% 62% 63% 62% 62% 62% 62% 63% 63% 63%Ag g/t 723 1,137 1,235 888 784 826 774 803 702 711 739 595 641 639 595 781 797 744 708 769 660 552 610 585 705 Au g/t 2.75 1.99 3.12 2.71 2.15 2.05 2.03 2.68 2.29 3.45 3.42 2.35 2.32 2.44 2.10 3.12 3.63 2.70 3.29 3.06 3.74 5.35 3.52 3.35 4.31

Cu Concentrate '000 tonnes 379 10 19 13 14 9 11 15 30 22 38 31 21 10 14 17 14 15 22 23 13 13 4 1 0Cu % 27.6% 27.8% 28.4% 28.5% 27.6% 27.7% 27.6% 27.8% 27.4% 27.4% 27.4% 27.3% 27.5% 27.2% 27.2% 28.3% 28.3% 27.3% 27.7% 27.5% 27.4% 27.8% 27.2% 27.0% 26.8%Ag g/t 636 903 576 704 722 1,244 972 676 340 453 330 486 606 1,601 1,024 809 774 784 621 510 556 413 826 1,828 5,605 Au g/t 44.29 16.65 18.60 26.02 28.26 23.54 23.35 28.70 30.51 33.92 26.80 25.20 52.02 94.14 84.58 47.57 192.25 71.57 36.75 45.83 45.53 54.53 33.05 70.65 151.17

Concentrate Moisture 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10%

Total RecoveredZn '000 tonnes 1,228 23 27 44 59 64 58 53 34 53 43 67 58 116 98 75 54 57 57 43 43 44 38 15 6Pb '000 tonnes 483 8 9 16 25 26 26 21 12 18 15 32 25 51 47 30 20 19 20 16 15 14 11 5 2Cu '000 tonnes 105 3 5 4 4 2 3 4 8 6 10 9 6 3 4 5 4 4 6 6 4 4 1 0 0Ag koz 30,643 840 1,044 1,197 1,631 1,780 1,679 1,434 879 1,171 1,144 1,760 1,462 2,677 2,322 1,975 1,402 1,313 1,335 1,156 864 675 552 243 109 Au koz 608 6 13 13 16 9 11 17 31 27 35 29 38 36 43 30 91 37 30 37 22 27 6 3 1

REVENUEMetal Prices

Zn 2,338 US$/lb 1.06$ 1.09$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ Pb 1,933 US$/lb 0.88$ 0.89$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ Cu 6,042 US$/lb 2.74$ 2.73$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ Ag 18.91 US$/oz 18.95$ 19.31$ 19.45$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ Au 1,276 US$/oz 1,278$ 1,294$ 1,297$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$

Exchange Rate $3.30 R$/US$ $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30

Concentrate Payable %Zn % 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84%Pb % 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95%Cu % 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96%Ag % 77% 84% 82% 79% 76% 76% 76% 77% 78% 77% 78% 76% 77% 75% 74% 77% 78% 79% 81% 80% 77% 76% 74% 74% 74%Au % 87% 85% 87% 86% 84% 79% 80% 85% 88% 88% 89% 86% 87% 85% 86% 86% 89% 88% 88% 88% 88% 89% 84% 83% 84%

Payable MetalZn '000 tonnes 1,028 19.5 22.9 37.2 49.3 53.9 48.8 44.5 28.4 44.0 35.7 56.4 48.8 96.9 82.3 63.1 45.0 47.3 47.7 36.0 35.7 36.5 31.5 12.2 4.7Pb '000 tonnes 459 7.6 8.7 14.9 23.7 24.9 24.8 19.8 11.3 17.4 14.6 30.4 23.7 48.6 44.5 28.5 19.2 18.5 18.9 14.9 13.9 12.9 10.6 4.9 1.8Cu '000 tonnes 101 2.6 5.1 3.7 3.8 2.3 2.8 4.0 8.0 5.7 9.9 8.2 5.5 2.6 3.7 4.5 3.8 3.9 6.0 6.2 3.4 3.6 1.0 0.2 0.0Ag koz 23,638 702 859 947 1,237 1,356 1,272 1,102 689 897 892 1,330 1,125 1,999 1,724 1,518 1,098 1,033 1,085 925 669 510 409 179 81Au koz 529 5.1 11.0 11.5 13.3 7.3 8.6 14.3 27.5 23.5 31.2 25.1 33.0 30.6 37.1 26.2 80.8 32.8 26.3 32.7 19.3 24.1 5.1 2.1 0.8

Gross RevenueZn US$ '000 $2,405,464 $47,047 $53,536 $87,085 $115,179 $126,085 $114,170 $103,971 $66,376 $102,791 $83,403 $131,926 $114,129 $226,655 $192,528 $147,436 $105,153 $110,618 $111,510 $84,245 $83,394 $85,259 $73,559 $28,499 $10,911Pb US$ '000 $887,469 $14,962 $16,738 $28,731 $45,839 $48,042 $47,988 $38,346 $21,757 $33,572 $28,126 $58,838 $45,861 $93,858 $86,104 $55,020 $37,119 $35,792 $36,583 $28,860 $26,878 $25,017 $20,431 $9,440 $3,569Cu US$ '000 $607,550 $15,729 $30,642 $22,237 $23,222 $14,004 $17,213 $24,208 $48,119 $34,401 $60,013 $49,592 $33,170 $15,531 $22,249 $27,385 $23,040 $23,729 $36,131 $37,345 $20,778 $21,565 $5,972 $1,121 $153Ag US$ '000 $447,746 $13,561 $16,706 $17,917 $23,390 $25,642 $24,055 $20,838 $13,027 $16,953 $16,875 $25,159 $21,270 $37,794 $32,604 $28,714 $20,763 $19,531 $20,516 $17,492 $12,651 $9,651 $7,725 $3,378 $1,534Au US$ '000 $675,626 $6,629 $14,281 $14,676 $16,991 $9,360 $11,026 $18,200 $35,112 $29,991 $39,802 $31,980 $42,068 $38,995 $47,369 $33,446 $103,134 $41,835 $33,500 $41,732 $24,623 $30,796 $6,451 $2,655 $971

Total Gross Revenue US$ '000 $5,023,854 $97,928 $131,903 $170,646 $224,622 $223,132 $214,452 $205,562 $184,391 $217,708 $228,219 $297,495 $256,498 $412,831 $380,854 $292,002 $289,211 $231,504 $238,241 $209,674 $168,325 $172,289 $114,137 $45,094 $17,138

Concentrate ChargesTotal Charges US$ '000 $1,382,981 $26,799 $33,614 $48,931 $66,251 $69,362 $65,276 $59,350 $44,008 $59,427 $55,467 $82,698 $67,780 $124,719 $110,004 $82,892 $59,547 $61,189 $64,183 $51,219 $46,493 $46,503 $37,081 $14,639 $5,551

Net Smelter Return US$ '000 $3,640,873 $71,130 $98,289 $121,715 $158,370 $153,770 $149,175 $146,212 $140,383 $158,282 $172,752 $214,796 $188,719 $288,113 $270,850 $209,110 $229,664 $170,316 $174,058 $158,455 $121,831 $125,786 $77,057 $30,455 $11,586

Royalty NSRArex Royalties 4.90% US$ '000 $48,154 $3,476 $4,257 $3,292 $1,610 $839 $712 $676 $840 $1,063 $1,071 $655 $1,115 $1,125 $395 $3,040 $7,168 $4,196 $5,871 $4,043 $1,821 $888 $0 $0 $0Ambrex Royalties 5.40% US$ '000 $143,540 $10 $616 $2,945 $6,778 $7,379 $7,271 $7,150 $6,654 $7,376 $8,148 $10,877 $8,962 $14,318 $14,190 $7,942 $4,503 $4,573 $2,929 $4,101 $4,572 $5,814 $4,161 $1,645 $626Total Royalties US$ '000 $191,693 $3,486 $4,873 $6,237 $8,388 $8,218 $7,983 $7,826 $7,495 $8,439 $9,219 $11,532 $10,077 $15,443 $14,586 $10,982 $11,670 $8,769 $8,800 $8,144 $6,393 $6,702 $4,161 $1,645 $626

Net Revenue US$ '000 $3,449,179 $67,643 $93,416 $115,478 $149,983 $145,552 $141,192 $138,385 $132,888 $149,843 $163,533 $203,264 $178,642 $272,669 $256,265 $198,128 $217,994 $161,547 $165,258 $150,311 $115,438 $119,084 $72,896 $28,810 $10,961Unit NSR US$ / t proc $93 $118 $103 $84 $84 $81 $79 $77 $73 $83 $90 $115 $99 $152 $141 $110 $120 $89 $91 $82 $74 $73 $56 $57 $52

Net Revenue by MetalZn % 41% 42% 34% 44% 45% 51% 47% 44% 29% 40% 30% 38% 37% 49% 44% 44% 28% 40% 40% 33% 42% 42% 59% 58% 58%Pb % 17% 14% 12% 16% 20% 21% 22% 18% 11% 14% 11% 19% 16% 22% 22% 18% 11% 14% 14% 12% 15% 13% 18% 21% 21%Cu % 13% 17% 25% 15% 12% 7% 9% 13% 27% 17% 27% 18% 14% 4% 6% 10% 8% 11% 16% 19% 13% 14% 6% 3% 1%Ag % 11% 18% 16% 14% 14% 15% 15% 13% 9% 10% 9% 11% 10% 12% 11% 13% 8% 11% 11% 10% 10% 7% 9% 10% 12%Au % 18% 9% 14% 12% 11% 6% 7% 12% 25% 19% 23% 15% 22% 13% 17% 16% 45% 24% 19% 26% 20% 24% 8% 9% 8%

OPERATING COST

Mining (Underground) US$ / t proc $20.65 $35.41 $24.23 $20.77 $18.70 $18.16 $18.28 $18.18 $18.41 $18.88 $18.83 $19.00 $19.33 $19.52 $19.06 $19.22 $19.23 $19.96 $21.21 $23.50 $23.66 $19.29 $23.26 $42.44 $62.43Processing+Tailings US$ / t proc $15.47 $17.21 $16.83 $15.07 $14.99 $15.64 $14.92 $15.06 $14.28 $14.46 $13.80 $14.05 $14.08 $15.09 $14.51 $15.00 $14.93 $14.94 $14.50 $14.13 $15.27 $16.07 $23.27 $26.73 $40.96G&A US$ / t proc $2.31 $5.16 $3.97 $2.62 $2.01 $2.00 $2.00 $1.99 $1.97 $1.98 $1.97 $2.02 $1.99 $2.00 $1.98 $1.99 $1.98 $1.98 $1.98 $1.97 $2.31 $2.20 $2.74 $7.07 $17.15Total Operating Cost US$ / t proc $38.43 $57.78 $45.03 $38.46 $35.70 $35.79 $35.20 $35.23 $34.66 $35.31 $34.60 $35.07 $35.40 $36.61 $35.55 $36.21 $36.14 $36.88 $37.69 $39.60 $41.25 $37.57 $49.27 $76.24 $120.55

Mining (Underground) US$ '000 $762,941 $20,313 $21,892 $28,436 $33,315 $32,661 $32,829 $32,838 $33,491 $34,265 $34,311 $33,722 $34,833 $35,021 $34,575 $34,718 $34,919 $36,160 $38,537 $42,824 $36,750 $31,497 $30,428 $21,545 $13,059Processing US$ '000 $571,541 $9,870 $15,202 $20,635 $26,695 $28,121 $26,808 $27,218 $25,984 $26,249 $25,149 $24,927 $25,358 $27,076 $26,312 $27,102 $27,108 $27,079 $26,346 $25,750 $23,719 $26,241 $30,451 $13,572 $8,568G&A US$ '000 $85,494 $2,961 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588Total Operating Cost US$ '000 $1,419,976 $33,144 $40,682 $52,659 $63,599 $64,370 $63,225 $63,645 $63,063 $64,102 $63,049 $62,237 $63,780 $65,685 $64,475 $65,409 $65,615 $66,828 $68,471 $72,162 $64,058 $61,327 $64,468 $38,705 $25,216

Operating Cashflow US$ '000 $2,029,204 $34,499 $52,733 $62,819 $86,384 $81,182 $77,967 $74,740 $69,824 $85,741 $100,485 $141,027 $114,862 $206,985 $191,789 $132,719 $152,378 $94,719 $96,786 $78,148 $51,381 $57,757 $8,428 -$9,895 -$14,255

TABLE 1-2 CASH FLOW SUMMARY VM Holding S.A. - Aripuana Zinc Project

www.rpacan.com

VM

Ho

ldin

g S

.A. – A

ripu

anã Z

inc P

roject, P

roject #2779

Tech

nical R

epo

rt NI 43-101 – Ju

ly 31, 2017 P

age 1-7


CAPITAL COSTDirect Cost

Mining US$ '000 55,325$ 14,204$ 24,523$ 16,597$ Plant & Infrastructure US$ '000 197,715$ 29,336$ 83,164$ 85,215$

Total Direct Cost US$ '000 253,040$ 43,541$ 107,687$ 101,812$

EPCM / Owners / Indirect Cost US$ '000 77,803$ 11,544$ 32,726$ 33,533$ Subtotal Costs US$ '000 330,843$ 55,085$ 140,413$ 135,345$

Contingency US$ '000 23,609$ 3,503$ 9,930$ 10,175$ Initial Capital Cost US$ '000 354,452$ 58,588$ 150,344$ 145,521$

Sustaining Capital US$ '000 219,037$ $5,534 $12,715 $11,975 $17,210 $8,784 $17,486 $8,446 $14,947 $9,155 $18,247 $7,004 $12,105 $7,868 $9,329 $9,506 $15,948 $6,703 $14,756 $4,803 $2,606 $1,303 $1,303 $1,303 Reclamation and closure US$ '000 10,000$ $5,000 $5,000

Total Capital Cost US$ '000 583,489$ 58,588$ 150,344$ 145,521$ 5,534$ 12,715$ 11,975$ 17,210$ 8,784$ 17,486$ 8,446$ 14,947$ 9,155$ 18,247$ 7,004$ 12,105$ 7,868$ 9,329$ 9,506$ 15,948$ 6,703$ 14,756$ 4,803$ 2,606$ 1,303$ 1,303$ 6,303$ 5,000$

CASH FLOWNet Pre-Tax Cashflow US$ '000 1,445,715$ (58,588)$ (150,344)$ (111,021)$ 47,199$ 50,104$ 74,408$ 63,972$ 69,183$ 57,254$ 61,379$ 70,794$ 91,329$ 122,780$ 107,858$ 194,879$ 183,921$ 123,391$ 142,872$ 78,771$ 90,083$ 63,393$ 46,577$ 55,151$ 7,124$ (11,198)$ (20,558)$ (5,000)$ Cumulative Pre-Tax Cashflow US$ '000 (58,588)$ (208,931)$ (319,953)$ (272,753)$ (222,649)$ (148,241)$ (84,269)$ (15,086)$ 42,168$ 103,547$ 174,341$ 265,670$ 388,450$ 496,308$ 691,188$ 875,109$ 998,499$ 1,141,371$ 1,220,143$ 1,310,226$ 1,373,619$ 1,420,196$ 1,475,346$ 1,482,471$ 1,471,273$ 1,450,715$ 1,445,715$

Taxes (net of Working Capital credit) US$ '000 389,827$ 961$ (2,096)$ (976)$ 3,380$ 6,303$ 5,376$ 4,633$ 3,273$ 8,616$ 9,774$ 23,377$ 32,118$ 76,610$ 59,411$ 35,549$ 48,969$ 23,673$ 29,699$ 20,995$ (7,334)$ 16,993$ 86$ (2,830)$ (6,733)$

After-Tax Cashflow US$ '000 1,055,888$ (58,588)$ (150,344)$ (111,983)$ 49,295$ 51,080$ 71,028$ 57,669$ 63,807$ 52,621$ 58,106$ 62,178$ 81,556$ 99,403$ 75,740$ 118,269$ 124,510$ 87,841$ 93,903$ 55,098$ 60,384$ 42,397$ 53,912$ 38,158$ 7,039$ (8,368)$ (13,825)$ (5,000)$ Cumulative After-Tax Cashflow US$ '000 (58,588)$ (208,931)$ (320,914)$ (271,619)$ (220,539)$ (149,510)$ (91,842)$ (28,034)$ 24,587$ 82,692$ 144,870$ 226,426$ 325,829$ 401,569$ 519,839$ 644,348$ 732,189$ 826,092$ 881,191$ 941,575$ 983,972$ 1,037,884$ 1,076,042$ 1,083,081$ 1,074,713$ 1,060,888$ 1,055,888$

PROJECT ECONOMICS 0.5 1.5 2.5 3.5 4.5 5.5 6.5 7.5 8.5 9.5 10.5 11.5 12.5 13.5 14.5 15.5 16.5 17.5 18.5 19.5 20.5 21.5 22.5 23.5 24.5 25.5 26.5Pre-Tax IRR % 18.98%Pre-tax NPV at 7.0% discounting 7.0% US$ '000 $461,147 (56,639)$ (135,834)$ (93,745)$ 37,247$ 36,953$ 51,287$ 41,210$ 41,651$ 32,214$ 32,275$ 34,791$ 41,947$ 52,703$ 43,268$ 73,064$ 64,444$ 40,406$ 43,725$ 22,530$ 24,080$ 15,837$ 10,875$ 12,034$ 1,453$ (2,134)$ (3,662)$ (832)$ Pre-tax NPV at 9% discounting 9.0% US$ '000 $324,172 (56,117)$ (132,113)$ (89,504)$ 34,909$ 33,998$ 46,321$ 36,536$ 36,249$ 27,522$ 27,069$ 28,643$ 33,900$ 41,812$ 33,697$ 55,857$ 48,364$ 29,768$ 31,622$ 15,995$ 16,781$ 10,834$ 7,303$ 7,933$ 940$ (1,356)$ (2,284)$ (510)$ Pre-tax NPV at 11.0% discounting 11.0% US$ '000 $220,912 (55,609)$ (128,558)$ (85,526)$ 32,757$ 31,327$ 41,913$ 32,463$ 31,628$ 23,581$ 22,775$ 23,665$ 27,504$ 33,311$ 26,363$ 42,912$ 36,486$ 22,052$ 23,004$ 11,426$ 11,772$ 7,463$ 4,940$ 5,270$ 613$ (868)$ (1,436)$ (315)$

After-Tax IRR % 16.79%After-Tax NPV at 7.0% discounting 7.0% US$ '000 $320,716 (56,639)$ (135,834)$ (94,557)$ 38,901$ 37,673$ 48,958$ 37,149$ 38,414$ 29,607$ 30,554$ 30,557$ 37,458$ 42,668$ 30,384$ 44,341$ 43,627$ 28,765$ 28,738$ 15,759$ 16,141$ 10,592$ 12,587$ 8,326$ 1,435$ (1,595)$ (2,463)$ (832)$ After-Tax NPV at 9% discounting 9.0% US$ '000 $217,170 (56,117)$ (132,113)$ (90,279)$ 36,460$ 34,660$ 44,217$ 32,936$ 33,433$ 25,295$ 25,625$ 25,157$ 30,273$ 33,851$ 23,663$ 33,899$ 32,741$ 21,191$ 20,783$ 11,188$ 11,249$ 7,246$ 8,453$ 5,489$ 929$ (1,013)$ (1,536)$ (510)$ After-tax NPV at 11.0% discounting 11.0% US$ '000 $138,694 (55,609)$ (128,558)$ (86,267)$ 34,212$ 31,937$ 40,009$ 29,265$ 29,171$ 21,673$ 21,560$ 20,785$ 24,561$ 26,969$ 18,513$ 26,043$ 24,700$ 15,699$ 15,119$ 7,992$ 7,891$ 4,991$ 5,718$ 3,646$ 606$ (649)$ (966)$ (315)$

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VM

Ho

ldin

g S

.A. – A

ripu

anã Z

inc P

roject, P

roject #2779

Tech

nical R

epo

rt NI 43-101 – Ju

ly 31, 2017 P

age 1-8

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TAXATION AND ROYALTIES RPA has relied on a VMH taxation model for calculation of income taxes applicable to the cash

flow.

As discussed in Section 4, the Project is subject to royalties which differ for the two deposits.

In addition, a corporate income tax rate of 34% was applied to taxable income. The calculation

of taxable income takes into consideration the depreciation schedule, assuming a 10 year fixed

rate method. Over the LOM, the Project will pay US$390 million in corporate income taxes

(net of credits for working capital).

CASH FLOW ANALYSIS Considering the Project on a stand-alone basis, the undiscounted after-tax cash flow totals

US$1,055 million over the mine life, and simple payback occurs six years from start of

production.

The after-tax Net Present Value (NPV) at a 9% discount rate is $217 million (based on mid-

period discounting), and the Internal Rate of Return (IRR) is 16.8%.

SENSITIVITY ANALYSIS Project risks can be identified in both economic and non-economic terms. Key economic risks

were examined by running cash flow sensitivities:

• Metal price

• Head grade

• Metallurgical recovery

• Operating costs

• Capital costs

IRR sensitivity over the base case has been calculated for a variety of ranges depending on

the variable. The sensitivities are shown in Figure 1-1 and Table 1-3.

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FIGURE 1-1 SENSITIVITY ANALYSIS

TABLE 1-3 SENSITIVITY ANALYSES VM Holding S.A. – Aripuanã Zinc Project

Description Units Low Case

Mid-Low Case

Base Case

Mid-High Case

High Case

Head Grade (Zn) % Zn 3.25 3.65 4.06 4.46 4.87 Overall Recovery (Zn) % 79 80 82 83 85 Metal Prices (Zn) US$/lb Zn 0.85 0.96 1.06 1.17 1.27 Operating Costs US$/t 31 35 38 42 46 Capital Cost US$ millions 284 319 355 390 426

Adjustment Factor

Head Grade (ZnEq) % 80 90 100 110 120 Overall Recovery % 96 98 100 102 104 Metal Prices (Zn) % 80 90 100 110 120 Operating Costs % 80 90 100 110 120 Capital Cost % 80 90 100 110 120

Post-Tax NPV @ 9%

Head Grade (ZnEq) US$ millions -114 51 217 382 547 Overall Recovery US$ millions 151 184 217 250 283 Metal Prices (Zn) US$ millions -114 51 217 382 547 Operating Costs US$ millions 315 266 217 168 119 Capital Cost US$ millions 278 247 217 186 155

($200)

($100)

$0

$100

$200

$300

$400

$500

$600

0.7 0.8 0.9 1 1.1 1.2 1.3

Afte

r-Ta

x N

PV a

t 9%

Dis

coun

t Rat

e (U

S$

mill

ions

)

Percent Change From Base Case

Head Grade

Recovery

Metal Price

Operating Cost

Capital Cost

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Factors were applied to all metals in the various categories, however, in the table, zinc is shown

because it provides the most revenue.

The Project is most sensitive to changes in metal prices and head grade, and least sensitive

to capital costs.

TECHNICAL SUMMARY

PROPERTY DESCRIPTION AND LOCATION The Project is located in Mato Grosso State, western Brazil, 1,200 km northwest of Brasilia,

the capital city. The property is located at approximately 226,000 mE and 8,888,000 mN UTM

21L zone (South American 1969 datum).

LAND TENURE The Aripuanã Zinc property contains 23 contiguous Exploration Authorization permits (EP),

mining concessions and EPs in application, covering an area approximately 871 km2. The EPs

are owned by Dardanelos, a joint venture between VMZ 62.3%), Milpo, (7.7%), and Mineração

Rio Aripuanã (a subsidiary of Karmin (30%)), with VMH acting as the operator through VMZ.

Karmin is not required to contribute financially to the Project until the completion of a bankable

feasibility study, and meanwhile VMH is fully funding the Project development. One year after

the completion of a bankable feasibility study, Karmin will contribute on a pro-rata basis

towards bringing Aripuanã Zinc into production.

EXISTING INFRASTRUCTURE The only permanent infrastructure on the Project is a series of exploration drill roads used to

access drill sites.

HISTORY Gold mineralization was discovered in the area during the 1700s by prospectors. Although no

formal records exist, the area was likely prospected sporadically over the years.

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Anglo American Brasil Ltda (Anglo American) began exploration over the property in 1995. At

the time, a small area including Expedito’s Pit, now part of the Project, was held by Madison

do Brasil (now Thistle Mining Inc.) and optioned to Ambrex Mining Corporation (now Karmin).

Dardanelos was created in 2000 to represent a joint venture, or “contract of association”,

between Karmin and Anglo American, with the intent of exploring for base and precious metals

in areas adjacent to the town of Aripuanã. Anglo American and Karmin held 70% and 28.5%

of Dardanelos, respectively, with remaining interest (1.5%) owned by SGV Merchant Bank.

In 2004, the initial agreement between Karmin and Anglo American was amended to allow

VMH’s participation. VMH subsequently acquired 100% of Anglo American’s interest in the

Project. In 2007, Karmin purchased SGV Merchant Bank’s interests, raising its participation to

30%.

GEOLOGY AND MINERALIZATION The Aripuanã Zinc deposits are located within the central-southern portion of the Amazonian

Craton, in which Paleoproterozoic and Mesoproterozoic lithostratigraphic units of the Rio

Negro-Juruena province (1.80 Ga to 1.55 Ga) predominate.

The lithological assemblage strikes northwest-southeast and dips between 35° and near

vertical to the northeast.

The Aripuanã Zinc polymetallic deposits are typical VMS deposits associated with felsic

bimodal volcanism. Three main elongate mineralized zones, Arex, Link, and Ambrex, have

been defined in the central portion of the Aripuanã Project. A smaller, deeper zone, Babaçú,

lies to the south of Ambrex. Limited exploration has identified additional, possible mineralized

bodies including Massaranduba, Boroca, and Mocoto to the south and Arpa to the north.

The individual mineralized bodies have complex shapes due to intense tectonic activity.

Stratabound mineralized bodies tend to follow the local folds, however, local-scale, tight

isoclinal folds are frequently observed, usually with axes parallel to major reverse faults,

causing rapid variations in the dips.

Massive, stratabound sulphide mineralization as well as vein and stockwork-type discordant

mineralization have been described on the property. The stratabound bodies, consisting of

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disseminated to massive pyrite and pyrrhotite, with well-developed sphalerite and galena

mineralization, are commonly associated with the contact between the middle volcanic and the

upper sedimentary units. Discordant stringer bodies of pyrrhotite-pyrite-chalcopyrite

mineralization are usually located in the underlying volcanic units or intersect the massive

sulphide lenses, and have been interpreted as representing feeder zones.

EXPLORATION Between 2004 and 2007, VMH carried out geological, geochemical, and geophysical surveys

over the Project area to allow a more complete interpretation of the regional and local geology

and identification of local exploration targets.

Drilling on the property was carried out from 2004 to 2008, in 2012, and from 2014 to present.

The purpose of the drill program in 2004 to 2008 was to explore and delineate mineralization

on the property, and in 2012, to improve confidence and classification of the Mineral Resources

of the Arex and Ambrex deposits. The Link Zone, a zone of mineralization connecting the Arex

and Ambrex deposits, and included in the Mineral Resource summary for Ambrex, was

discovered in 2014 and delineated in 2015.

A total of 497 diamond drill holes totalling approximately 145,000 m have been completed at

the Project since 2004.

MINERAL RESOURCES The Mineral Resource estimate, dated December 23, 2016 was completed by VMH personnel

using Datamine Studio 3, Leapfrog Geo, and Isatis softwares. Wireframes for geology and

mineralization were constructed in Leapfrog Geo based on geology sections, assay results,

lithological information, and structural data. Assays were capped to various levels based on

exploratory data analysis and then composited to one metre lengths. Wireframes were filled

with blocks measuring 5 m by 10 m by 5 m with sub-celling at wireframe boundaries. Blocks

were interpolated with grade using Ordinary Kriging (OK) and Inverse Distance Squared (ID2).

Blocks estimates were validated using industry standard validation techniques. Classification

of blocks was based on distance based criteria.

A summary of the Mineral Resources is provided in Table 1-4.

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TABLE 1-4 MINERAL RESOURCE STATEMENT, DECEMBER 23, 2016 VM Holding S.A. – Aripuanã Zinc Project

Grade Contained Metal

Stratabound Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (Mlb) Pb (Mlb) Cu (Mlb) Au (koz) Ag (Moz)

Measured 8.6 5.88 2.16 0.19 0.23 52.65 1,109.0 407.1 36.0 64.2 14.5

Indicated 9.8 5.38 2.03 0.09 0.25 47.83 1,160.8 437.2 18.7 79.5 15.0 Measured and Indicated 18.3 5.61 2.09 0.14 0.24 50.08 2,269.9 844.3 54.7 143.7 29.5

Inferred 13.2 7.20 2.80 0.10 0.38 62.50 2,099.7 815.4 29.4 162.7 26.6

Stringer Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (Mlb) Pb (Mlb) Cu (Mlb) Au (koz) Ag (Moz)

Measured 2.3 0.28 0.12 1.54 1.18 17.61 14.4 6.3 78.5 87.8 1.3

Indicated 1.2 0.11 0.05 0.97 1.28 11.21 2.7 1.4 24.5 47.5 0.4 Measured and Indicated 3.5 0.22 0.10 1.35 1.21 15.49 17.2 7.7 103.1 135.3 1.7

Inferred 11.4 0.08 0.05 0.78 1.55 9.31 19.3 13.5 197.0 569.7 3.4

Total Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (Mlb) Pb (Mlb) Cu (Mlb) Au (koz) Ag (Moz)

Measured 10.9 4.68 1.72 0.48 0.43 45.18 1,123.5 413.5 114.6 152.0 15.8


Inferred 24.6 3.90 1.53 0.42 0.93 37.88 2,119.0 829.0 226.4 732.4 30.0 Notes:

1. CIM definitions were followed for Mineral Resources. 2. Mineral Resources are reported using a US$46/t Net Smelter Return (NSR) block cut-off value for

stratabound material and a US$42/t NSR block cut-off value for stringer material. 3. The NSR is calculated based on metal prices of US$1.26 per lb Zn, US$1.01 per lb Pb, US$3.08 per lb

Cu, US$1,471 per troy ounce Au, and US$21.8 per troy ounce Ag. 4. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. 5. Numbers may not add due to rounding.

RPA is not aware of any environmental, permitting, legal, title, taxation, socio-economic,

marketing, political, or other relevant factors that could materially affect the Mineral Resource

estimate.

MINERAL RESERVES No Mineral Reserves have been estimated for the Project.

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MINING METHOD The current Project targets three main elongated mineralized zones, Arex, Link, and Ambrex

that have been defined in the central portion of the Aripuanã Project.

The Arex and Ambrex deposits are separate VMS deposits with differing mineralized

compositions in stratabound and stringer forms and complex geometric shapes.

The Arex deposit extends over a strike length of approximately 1,400 m. Upper portions of the

deposit are near-vertical, reducing at depth to a dip of approximately 60° to the northeast.

Mineralization occurs in discrete stratabound and stringer lenses of stratabound, ranging from

less than one metre to 15 m thick in width interspersed with some zones between 100 m to

150 m wide. Mineralization extends from close to surface to about 500 m below surface (mbs).

The Ambrex deposit is located approximately 1,300 m southeast of Arex and represents the

largest of the known mineralized zones on the Project. The deposit has a strike extent of

approximately 1,050 m, based on current drilling. The dip varies from near vertical to 70° to

the northeast. Mineralization thicknesses typically range between 10 m and 50 m, with a

maximum of 150 m. The deposit extends vertically from 60 mbs to approximately 700 mbs.

Mining will be undertaken using conventional mechanized underground mobile mining

equipment via a network of declines, access drifts and ore drives. Access to the Arex and

Ambrex deposits will be from separate portals, which will access the deposits from the most

favorable topographic locations.

The deposit geometry is amenable to a number of underground mechanized mining techniques

including cut-and-fill and bulk stoping methods. A nominal production target of 5,000 tpd has

been used as the basis for the mine production schedule.

The two deposits will be accessed from two independent surface cut and cover portals and the

ramps are designed at a gradient of 14% to be driven with an arched profile and a cross-

sectional area (CSA) of 27 m2 to accommodate the selected major equipment. The main

loading and hauling equipment will be 12.5 t class load haul dump (LHD) combined with 35.5 t

class haul trucks.

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The selected method for the conceptual mine design and mine plan, is a combination of

longitudinal longhole retreat stoping (bench stoping) for the narrower zones of the deposits

with Vertical Retreat Mining (VRM) applied for the thicker zones. To increase the extraction

ratio, a primary and secondary stoping sequence will be used in the VRM areas with cemented

paste and rock fill used to backfill primary stopes and uncemented rock fill placed in the

secondary stopes. Finished longhole retreat stopes will also be backfilled with rock fill.

The majority of the production from the Arex deposit is based on longitudinal longhole retreat

mining, however, in areas where the deposit is wider (greater than 15 m), Vertical Retreat

Mining (VRM) longhole mining with primary and secondary stopes will be used. The method

applied in the Ambrex deposit will be predominantly the VRM method.

Main mining sublevels are spaced 75 m apart, with stope sublevels currently placed at 25 m

spacing.

Stope sizes are nominally 15 m long x 25 m high with varying widths from hanging wall (HW)

to footwall (FW). A minimum mining width of 4 m is applied.

For the narrow vein stopes 10% dilution was added, which RPA considers to be acceptable

for the steeper dipping stopes. However, for stopes flatter than 50° to 55°, RPA’s opinion is

that dilution could be between 15% and 20%.

A mining recovery of 95% has been applied to primary and vein stopes with 90% applied to

the secondary stopes.

MINERAL PROCESSING Concentrate grades and recoveries for the Stringer and Stratabound mineralization from the

Arex and Ambrex deposits were obtained based on metallurgical tests. The process circuit

proposed consists of comminution through a traditional SAB circuit (Semi-Autogenous

Grinding, or SAG) with Ball mill) and sulphide flotation by sequential methods in the following

order: talc (when required), copper, lead, and zinc.

Separation of material types is necessary to improve copper recovery and to reduce costs,

particularly when processing Copper Stringer material.

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The final copper and zinc concentrates produced will be filtered and trucked to customers,

while the lead concentrate will be bagged after filtration.

Tailings generated in the process will be used as mine backfill and will also be filtered and

disposed of in a lined surface dump.

INFRASTRUCTURE Electrical power will be provided by means of a short connection to the national grid.

Water supply will be obtained by constructing a water dam and filling a valley adjacent to the

Project site.

MARKET STUDIES The principal commodities at the Project are freely traded, at prices and terms that are widely

known, so that prospects for sale of any production are virtually assured. RPA reviewed the

concentrate terms provided by VMH and found them to be consistent with current industry

norms.

Metal prices are based on long-term consensus forecasts by independent banks and financial

institutions. A year-by-year price curve was used to cash flow modelling.

ENVIRONMENTAL, PERMITTING AND SOCIAL CONSIDERATIONS The environmental licensing process for the Aripuanã Zinc Project started in 2008 following

the Terms of Reference (ToR) issued by Mato Grosso environmental agency (SEMA/MT). For

strategic reasons, the process was put on hold and the field activities performed in 2008 were

consolidated into a document in the format of a “Diagnosis of an EIA – Environmental Impact

Assessment of the Project” (EIA). In 2012, a new ToR was requested, and many of the studies

performed as a result were consolidated into a comprehensive EIA. The EIA was completed

in 2012, however, was not filed with the authorities, due to low commodity prices at that time.

In 2014, with zinc prices increasing, the EIA was filed. Taking into account further exploration

on the property, increased production levels were presented in 2015 with productions

increasing from 1.2 Mtpa to 1.8 Mtpa. SEMA performed many inspections and the Public

Hearing was held on August 26, 2015. During 2015 and 2016, the permitting process was

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analyzed by SEMA/MT, however, due to changes in the engineering process, the analyses

were put on hold until all changes were performed.

At the time of report writing, VMH was in the process of finalizing an updated EIA for submittal,

covering the current design for the Project.

CAPITAL AND OPERATING COST ESTIMATES VMH has completed engineering studies on the Project, involving detailed cost estimates built

up from first principles. Costs were estimated as of Q2 2017, in Brazilian currency. RPA

reviewed the estimates and converted to US$ using an exchange rate of US$1.00 = R$3.30.

Capital costs are estimated at a +/- 20% confidence level.

Pre-production capital costs totalling US$354 million are summarized in Table 1-5.

TABLE 1-5 PRE-PRODUCTION CAPITAL COST ESTIMATE VM Holding S.A. – Aripuanã Zinc Project

Area Category Units Initial Costs

Mine Development US$ millions 23.9 Mobile Equipment US$ millions 31.4 Plant & Infrastructure Site Prep & Earthworks US$ millions 22.8 Civil & Roadwork US$ millions 24.2 Steelwork US$ millions 16.7 Electrical US$ millions 36.1 Instrumentation US$ millions 9.6 Mechanical Equipment US$ millions 75.3 Piping US$ millions 14.8 Communications US$ millions 6.0 Subtotal Direct Costs US$ millions 260.9 Indirect Costs EPCM US$ millions 18.9 Temporary Services US$ millions 10.4 Owner’s Team US$ millions 19.2 Other US$ millions 13.4 Subtotal Indirects US$ millions 69.7 Contingency US$ millions 23.6 Total Capital Cost US$ millions 354.3

Sustaining capital costs total US$229 million over the operating life of the mine, consisting of

mine equipment replacement, capital development, plant equipment, and tailings facility

expansions.

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RPA added an allowance of US$10 million for Closure and Reclamation to the estimate

provided by VMH.

OPERATING COSTS Operating costs, averaging US$64 million per year at full production, were estimated for

mining, processing, and general and administration (G&A). Operating cost inputs such as

labour rates, consumables, and supplies were based on VMH operating data. A summary of

operating costs is shown in Table 1-6.

TABLE 1-6 OPERATING COST ESTIMATE VM Holding S.A. – Aripuanã Zinc Project

Parameter Total LOM

(US$ millions) Average Year

(US$ millions / yr) LOM Unit Cost

(US$ / t) Mining 763 35.0 20.65

Processing 572 26.4 15.47

G&A 85 3.6 2.31

Total 1,420 64.0 38.43

LOM average unit costs are influenced by three higher-cost years during ramp-up to full

production and by five years of lower production at the end of the mine life.

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2 INTRODUCTION Roscoe Postle Associates Inc. (RPA) was retained by VM Holdings S.A. (VMH) to prepare an

independent Technical Report on the Aripuanã Zinc Project (the Project), located in the state

of Mato Grosso, Brazil. The purpose of this report is to audit a Mineral Resource estimate and

to disclose the results of a Preliminary Economic Assessment (PEA) of the Project. This

Technical Report conforms to NI 43-101 Standards of Disclosure for Mineral Projects.

VMH is one of the largest producers of zinc in the world. It has a diversified portfolio of

polymetallic mines (zinc, lead, copper, silver, and gold) and also greenfield projects at various

stages of development in Brazil and Peru. In Brazil, VMH owns and operates two underground

mines, Vazante (Zn and Pb) and Morro Agudo (Zn and Pb) and two development projects,

Aripuanã and Caçapava do Sul. It also operates two zinc smelters in Brazil (Três Marias and

Juiz de Fora). In Peru, VMH owns a controlling interest in Lima Stock Exchange-listed

Compañía Minera - Milpo S.A.A. (Milpo). Milpo currently operates the El Porvenir (Zn-Pb-Cu-

Ag-Au), Cerro Lindo (Zn-Cu-Pb-Ag), and Atacocha (Zn-Cu-Pb-Au-Ag) underground mines in

Peru. The development projects in Peru include Magistral, Shalipayco, Florida Canyon (JV

with Solitario), Hilarión, and Pukaqaqa. It also operates one zinc smelter in Peru

(Cajamarquilla).

In 2000, a joint venture between Anglo American Brasil Ltda. (Anglo American) and Karmin

Exploration Inc. (Karmin) was formed to explore for base and precious metals in the area

adjacent to the town of Aripuanã. Initially, Anglo American and Karmin held interests of 70%

and 28.5% in the joint venture, respectively, with the remaining 1.5% held by SGV Merchant

Bank (SGV). In 2004, the joint venture agreement was amended to allow VMH’s participation.

VMH subsequently acquired 100% of Anglo American’s interest in the Project. In 2007, Karmin

purchased SGV’s interests, raising its participation to 30%.

The exploration permits are owned by Mineração Dardanelos Ltda. (Dardanelos), a joint

venture between Votorantim Metais Zinco SA (VMZ, a subsidiary of VMH, 62.3%), Milpo

(7.7%), and Mineração Rio Aripuanã (a subsidiary of Karmin, 30%), with VMH acting as the

operator through VMZ.

This report is considered by RPA to meet the requirements of a Preliminary Economic

Assessment as defined in Canadian NI 43-101 regulations. The economic analysis contained

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in this report is based, in part, on Inferred Resources, and is preliminary in nature. Inferred

Resources are considered too geologically speculative to have mining and economic

considerations applied to them and to be categorized as Mineral Reserves. There is no

certainty that economic forecasts on which this PEA is based will be realized.

SOURCES OF INFORMATION Mr. Jason Cox, P.Eng., RPA Principal Mining Engineer, visited the property between June 2

and 5, 2017.

Mr. Horan visited the Project site on January 30 to February 3, 2017. During the site visit, Mr.

Horan reviewed logging and sampling methods, inspected core from drill holes, and held

discussions with VMH personnel.

Technical documents and reports on the deposit were reviewed and obtained from project

personnel while at the site. The updated Mineral Resource files were transferred via a File

Transfer Protocol (FTP) or by email. The principal technical documents related to RPA’s

review are listed in the Sources of Information. Discussions were held with the following

technical personnel:

• Mr. Alex Jose Mattos Fortunato, Mining Engineer and Aripuanã Zinc Project Manager, VMH

• Mr. Julio Souza Santos, Senior Geologist and Aripuanã Zinc Field Manager, VMH

• Mr. Jose Antonio Lopes, Resource Manager, VMH

• Ms. Talita Cristina De Oliveira Ferreira, Senior Resource Geologist, VMH

This report was prepared by Jason Cox, P. Eng., Sean Horan, P. Geo., Brenna Scholey,

P.Eng., and Stephen Theben, Dipl-Ing. Mr. Cox prepared Sections 15, 16, 19, 21, and 22 and

contributed to Sections 1, 2, 3, 18, 25, and 26. Mr. Horan prepared Sections 4 to 12 and14

and contributed to Sections 1, 2, 3, 25, and 26. Ms. Scholey prepared Sections 13 and 17 and

contributed to Sections 1, 2, 3, 18, 25, and 26. Mr. Theben prepared Sections 20, and

contributed to Sections 1, 2, 3, 25, and 26.

RPA would like to acknowledge the excellent cooperation in the transmittal of data and

information by Messrs. Souza Santos, Fortunato, and Lopes, and Ms. Ferreira of VMH.

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The documentation reviewed, and other sources of information, are listed at the end of this

report in Section 27 References.

LIST OF ABBREVIATIONS Units of measurement used in this report conform to the metric system. All currency in this

report is US dollars (US$) unless otherwise noted.

a annum kWh kilowatt-hour A ampere L litre bbl barrels lb pound btu British thermal units L/s litres per second °C degree Celsius m metre C$ Canadian dollars M mega (million); molar cal calorie m2 square metre cfm cubic feet per minute m3 cubic metre cm centimetre µ micron cm2 square centimetre MASL metres above sea level d day µg microgram dia diameter m3/h cubic metres per hour dmt dry metric tonne mi mile dwt dead-weight ton min minute °F degree Fahrenheit µm micrometre ft foot mm millimetre ft2 square foot mph miles per hour ft3 cubic foot MVA megavolt-amperes ft/s foot per second MW megawatt g gram MWh megawatt-hour G giga (billion) oz Troy ounce (31.1035g) Gal Imperial gallon oz/st, opt ounce per short ton g/L gram per litre ppb part per billion Gpm Imperial gallons per minute ppm part per million g/t gram per tonne psia pound per square inch absolute gr/ft3 grain per cubic foot psig pound per square inch gauge gr/m3 grain per cubic metre RL relative elevation ha hectare s second hp horsepower st short ton hr hour stpa short ton per year Hz hertz stpd short ton per day in. inch t metric tonne in2 square inch tpa metric tonne per year J joule tpd metric tonne per day k kilo (thousand) US$ United States dollar kcal kilocalorie USg United States gallon kg kilogram USgpm US gallon per minute km kilometre V volt km2 square kilometre W watt km/h kilometre per hour wmt wet metric tonne kPa kilopascal wt% weight percent kVA kilovolt-amperes yd3 cubic yard kW kilowatt yr year

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3 RELIANCE ON OTHER EXPERTS This report has been prepared by RPA for VMH. The information, conclusions, opinions, and

estimates contained herein are based on:

• Information available to RPA at the time of preparation of this report, • Assumptions, conditions, and qualifications as set forth in this report, and • Data, reports, and other information supplied by VMH and other third party sources.

For the purpose of this report, RPA has relied on ownership information provided by VMH.

The client has relied on an opinion by Azevedo Sette Advogados dated June 14, 2017 entitled

Title Opinion – Projects Aripuanã and Caçapava Do Sul, and this opinion is relied on in Section

4 and the Summary of this report. RPA has not researched property title or mineral rights for

the Aripuanã Zinc Project and expresses no opinion as to the ownership status of the property.

RPA has relied on VMH for guidance on applicable taxes, royalties, and other government

levies or interests, applicable to revenue or income from the Aripuanã Zinc Project.

Except for the purposes legislated under provincial securities laws, any use of this report by

any third party is at that party’s sole risk.

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4 PROPERTY DESCRIPTION AND LOCATION The Project is located in west-central Brazil, in the state of Mato Grosso, approximately 700

km northwest of Cuiabá and approximately 1,200 km northwest of Brasilia. The centre of the

property is located at approximately 10°05’00”S Latitude and 59°25’00”W Longitude (Figure 4-

1). The approximate Universal Transverse Mercator (UTM) co-ordinates of the centre of the

currently defined mineralization are 226,000 mE and 8,888,000 mN, UTM zone 21L (South

American 1969 datum), within the Aripuanã 1:250,000 topographic sheet (SC.21-Y-A).

LAND TENURE The property consists of a contiguous block comprising six mining applications, ten exploration

permits, and seven exploration claims covering a total area of 87,063 ha (Figure 4-2).

Table 4-1 lists all the subject concessions and relevant tenure information including concession

names, tenement numbers, areas, titleholders, and expiry dates.

In 2000, a joint venture between Anglo American Brasil Ltda. (Anglo American) and Karmin

Exploration Inc. (Karmin) was formed to explore for base and precious metals in the area

adjacent to the town of Aripuanã. Initially, Anglo American and Karmin held interests of 70%

and 28.5% in the joint venture, respectively, with the remaining 1.5% held by SGV Merchant

Bank (SGV). In 2004, the joint venture agreement was amended to allow VMH’s participation.

VMH subsequently acquired 100% of Anglo American’s interest in the Project. In 2007, Karmin

purchased SGV’s interests, raising its participation to 30%.

The exploration permits are owned by Mineração Dardanelos Ltda. (Dardanelos), a joint

venture between VMZ (a subsidiary of VMH, 62.3%), Milpo (7.7%), and Mineração Rio

Aripuanã (a subsidiary of Karmin, 30%), with VMH acting as the operator through VMZ. Karmin

is not required to contribute financially to the Project until the completion of a bankable

feasibility study. In the meanwhile, VMH is fully funding the Project development. One year

after the completion of a bankable feasibility study, Karmin will contribute on a pro-rata basis

towards bringing Aripuanã into production.

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TABLE 4-1 EXPLORATION AUTHORIZATION PERMITS VM Holding S.A. – Aripuanã Zinc Project

Map Ref. Tenement Area

(ha) Owner Status Expiry Date

1 866570/1992 1,000.00 MDL1 Mining Application2 *

2 866569/1992 639.91 MDL1 Mining Application2 *



5 866817/2016 4,647.58 MDL1 Claim/Application *

6 866208/2013 415.61 MDL1 Claim/Application *

7 866236/2007 7,448.24 MDL1 Exploration Permit - Replaced by 866230/2017 March 17, 2017






13 866292/2015 839.18 MDL1 Exploration Permit - 1st Period August 21, 2018




17 867381/1991 1,000.00 MDL1 Mining Application Postponed *


19 866812/2008 5,462.30 VMZ1 Exploration Permit - 1st Period Assignment of rights to MDL Submitted November 29, 2019

20 866235/2007 9,829.78 MDL1 Exploration Permit - Replaced by 866229/2017 March 17, 2017

21 866729/2015 9,186.52 MDL1 Exploration Permit - 1st Period July 19, 2019

22 866730/2015 9,445.85 MDL1 Exploration Permit - 1st Period July 19, 2019

23 866342/2016 9,876.04 MDL1 Exploration Permit - 1st Period October 21, 2019 Notes:

1. MDL: Mineração Dardanelos Ltda; VMZ: Votorantim Metais Zinco SA. 2. Mining application submitted September 16, 2011. Awaiting decision.

RioOrinoco

Amazon

Amazon

Rio

Mam

ore

Rio Negro

Rio

Pur

us

Rio

Beni

Rio

Uca

yali

Rio

Tap

ajos

Rio

Xin

gu

Rio

Ara

guaia

Rio Paranaiba

Rio

Para

guay

Par

ana

Rio

Para

na

Rio Grande

Rio

Sao

Fra

nci

sco

Rio

Tocanti

ns

RioM

adeira

Rio

TelesP

ires

Rio

Juru

ena

Rio

SOUTH

PACIFIC

OCEAN

SOUTH

ATLANTIC

OCEAN

NORTH

ATLANTIC

OCEAN

Equator

Lago

Titacaca

SantaMarta Maracaibo

San Cristobal

Bucaramango

ValenciaBarcelona

Maturin

New Amsterdam

Oiapoque

Careiro

Itaituba

Santarem

Altamira

Cachimbo

Humaita

Boca doAcre

Iquitos

Cruzeiro do Sul

QuillabambaCusco

Guajara-Mirim

Cochabamba

Santa Cruz

CaceresRondonopolis

Barreiras

Vitoria daConquista

Ilheus

Juazeiro

Uberlandia

Santos

Sao Francisco do Sul

Foz do Iguacu

PontaPora

Corumba

Potosi

San Miguelde Tucuman

Mendoza

Colonia

Rio Grande

Mar del Plata

Bahia Bianca

Concepcion

Valparaiso

CordobaSanta Fe

Rosario

La Plata

Resistencia

Ciudaddel Este

Pedro Juan Caballero

Salta

Antofagasta

IquiquePanorama

Santa Fedo Sul

Puerto SuarezSucreOruro

Matarani

Arequipa

IloTacna

Arica

Inapari Guayaramerin

Salgueiro

Picos

Leticia

Puerto Carreno

CucutaCiudad Bolivar

Santa Elenade Uairen

Barquisimeto

BenjaminConstant

Assis Brasil

SantaMaria

Sao Luis

Teresina

Palmas

Goiania

BeloHorizonte

Vitoria

Rio de Janeiro

Curitiba

Florianopolis

Porto Alegre

SaoPaulo

Cuiaba

CampoGrande

Fortaleza

Natal

Recife

Maceio

Aracaju

Salvador

JoaoPessoa

Belem

Macapa

Manaus

PortoVelhoRio Branco

Boa Vista

Parnaiba

Maraba

Carajas

Araguaina

Bogota

CaracasPort-of-Spain

Paramaribo

Georgetown

Cayenne

Brasilia

La Paz

Asuncion

Santiago Buenos Aires

Montevideo

COLOMBIA

VENEZUELAGUYANA

SURINAMEFrenchGuiana(FRANCE)

PERU

BOLIVIA

PARAGUAY

ARGENTINACHILE

URUGUAY

TRINIDAD AND

TOBAGO

B R A Z I L

AMAZONAS

ACRE

RONDONIA

AMAPA

PARA

MARANHAO

CEARARIO GRANDE

DO NORTE

PARAIBA

ALAGOAS

PERNAMBUCO

SERGIPEBAHIA

ESPIRITO

SANTO

RIO DE

JANEIRO

PIAUI

TOCANTINS

MATOGROSSO

MATO

GROSSO

DO SUL

SANTA

CATARINA

RIO GRANDE

DO SUL

MINAS

GERAIS

SAO

PAULO

GOIAS

DISTRITO

FEDERAL

PARANA

The islands of Trinidade, Martin Vaz,

Arquipelago de Fernando de Noronha,

Atol das Rocas, and Penedos de Sao

Pedro a Sao Paulo are not shown.

Trinidade and Martin Vaz are administered by

Espirito Santo; Arquipelago de Fernando de

Noronha by Pernambuco.

70° 60° 50° 40°

10°

0°

10°

20°

30°

30°40°50°60°70°

30°

20°

10°

10°

0°

ARIPUANÃ ZINC PROJECT

International Boundary

Legend:

National Capital

State Boundary

Road

Railway

State Capital

0

0

200

200

400 Kilometres

400 Miles

N

July 2017

Location Map

Aripuanã Zinc Project

VM Holding S.A.

State of Mato Grosso, Brazil

Figure 4-1

4-3

www.rpacan.com

Municipalities

Mining Application

Deposit

Legend

216,000 220,000 224,000 228,000

8,88

0,00

08,

884,

000

8,88

8,00

08,

832,

000

8,83

6,00

0 216,000 220,000 224,000 228,000 232,000 236,000 8,896,0008,892,000

8,888,0008,884,000

0 4

Kilometres

321

N

July 2017 Source: Votorantim Metais, 2017.

Property Map

Aripuanã Zinc ProjectState of Mato Grosso, Brazil

VM Holding S.A.

Figure 4-2

4-4

ww

w.rp

acan

.co

m

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MINERAL RIGHTS Exploration and exploitation of mineral deposits in Brazil are defined and regulated in the 1967

Mining Code and overseen by the National Department of Mineral Production (DNPM). There

are two main legal regimes under the Mining Code regulating Exploration and Mining in Brazil:

Exploration Permit (“Autorização de Pesquisa”) and Mining Concession (“Concessão de

Lavra”).

Applications for an Exploration Permit (EP) are made to the DNPM and are available to any

company incorporated under Brazilian law and maintaining a main office and administration in

Brazil. EPs are granted following submission of required documentation by a legally qualified

Geologist or Mining Engineer, including an exploration plan and evidence of funds or financing

for the investment forecast in the exploration plan. An annual fee per hectare ranging from

US$0.35 to US$0.70, is paid by the holder of the EP to the DNPM, and reports of exploration

work performed must be submitted. During the period where a formal EP application has been

submitted by a company for an area, but not yet granted, with the exception of drilling,

exploration works are permitted. In this document, these areas are referred to as Exploration

Claims.

EPs are valid for a maximum of three years, with a maximum extension equal to the initial

period, issued at the discretion of the DNPM. The annual fee per hectare increases by 50%

during the extension period. After submission of a Final Exploration Report, the EP holder

may request a mining concession. Mining concessions are granted by the Brazilian Ministry of

Mines and Energy, are renewable annually, and have no set expiry date. The concessions

remain in good standing subject to submission of annual production reports and payments of

royalties to the federal government.

Areas where the maximum extension of an EP has been reached, and a positive Final

Exploration Report and mining concession request have not been submitted by the company,

are designated with a status of “Available”. Following expiry, the DNPM will receive EP

applications from the public, including the first owner, for a period of 60 days. If any valid,

external EP applications are submitted during this period in addition to the first owner’s

application, the DNPM will review, with consideration of the work completed, and decide to

whom it will issue the permit. Before a decision is reached, claim status is set to “In Dispute”.

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SURFACE RIGHTS Surface rights can be applied for if the land is not owned by a third party. The owner of an EP

is guaranteed, by law, access to perform exploration field work, provided adequate

compensation is paid to third party landowners and the owner accepts all environmental

liabilities resulting from the exploration work.

VMH has purchased additional surface rights directly overlying the Arex, Ambrex, and Babaçú

deposits since 2012. Surface rights adjacent to the properties and necessary for mine

development are currently being negotiated by VMH. Figure 4-3 displays a map of surface

rights currently held by VMH in relation to the mineral deposits.

ROYALTIES AND OTHER ENCUMBRANCES Royalties applicable to the Project are detailed in Table 4-2.

TABLE 4-2 ROYALTY DATA VM Holding S.A. – Aripuanã Zinc Project

Receiver of Royalty Arex Ambrex Other Deposits

Gar

impe

iros

Expedito 42.5%

2% NSR from the start of the first sale of concentrate

Divino 21.25% Joaquim 21.25% Neder 5% Zadir 5% Max 5%

Luiz de Almeida 1.5% of net sales from the first sale of the mineral product

Anglo American1 2% NSR of 70% mining product of Zn, Pb, Cu, Au and Ag from the first of the beginning of the marketing of concentrates or June 13, 2013.

1.5% NSR of 70% of the mining product of Zn, Pb, Cu, Au and Ag

Notes:

1. Anglo American royalty is owed by VMH only.

PERMITTING RPA is not aware of any environmental liabilities on the property. VMH has all required permits

to conduct the proposed work on the property. RPA is not aware of any other significant factors

and risks that may affect access, title, or the right or ability to perform the proposed work

program on the property.

225,000

8,8

88

,00

0

228,000227,000224,000 226,000

8,8

89

,00

08

,88

7,0

00

8,8

86

,00

0

8,8

88

,00

08

,88

9,0

00

8,8

87

,00

08

,88

6,0

00

225,000 228,000227,000224,000 226,000

AMBREX

BABAÇU

AREX

LINK

8,8

8,0

00

5

8,8

8,0

00

5

Mineralization Projected to Surface

Legend:

Outline of Surface Rights

Transmission Line

0 500

Metres

1000 1500 2000

N

July 2017 Source: Karmin Exploration Inc., 2012.

Surface Rights Map


VM Holding S.A.

Figure 4-3

4-7

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5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ACCESSIBILITY The Aripuanã Zinc property is located in the northwest corner of the state of Mato Grosso,

western Brazil. It can be accessed from the town of Aripuanã by a 25 km unpaved road, which

is well maintained in the dry season. Aripuanã can be accessed from the Mato Grosso capital

of Cuiabá by a 16 hour drive (935 km) on paved and unpaved roads BR-163/BR364, MT-160,

MT-220, MT-170, MT-208, MT-418, and MT-206. The final 250 km between Cuiabá and

Aripuanã are on unpaved roads, which are in poor condition and require substantial upgrades

to ensure road access to site. Aripuanã is also serviced by an unpaved airstrip suitable for

light aircraft. At the time of both site visits, no commercial flights were travelling between

Cuiabá and Aripuanã and access to site was accomplished via a three-hour chartered flight.

On the property, temporary roads link drill hole site locations, with the main access gravel road

from Aripuanã.

CLIMATE The climate in the area is hot and humid, with distinct dry (April to September) and wet (October

to March) seasons. It is classified as a “Tropical Savanna Climate” in the Koppen Climate

Classification due to its high mean temperature and marked wet and dry seasons. The mean

annual temperature is 24°C, with monthly average temperatures ranging between 20°C and

30°C. Average annual rainfall is 2,750 mm and annual average evaporation is 1,216 mm.

LOCAL RESOURCES The economic base in Aripuanã is rooted in the extractive industries, predominantly timber,

agriculture, and tourism. Although located in the Amazon district, deforestation has occurred

and the area is defined mostly by plantations of rubber and soy beans, as well as artisanal

mining operations. No skilled mining workforce exists in the district. Aripuanã has a hospital

and related medical facilities as well as primary and secondary schools.

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INFRASTRUCTURE Infrastructure is limited at, and adjacent to, the property. Infrastructure includes a core handling

facility located in the town of Aripuanã. Multi-purpose storage sheds are located at the facility

and a nursery for drill site and road reclamation is located on site. There are 270 km of

unpaved roads on site, which are difficult to traverse during the rainy season (November to

April). The gas price is very elevated in the region and there is a very high cost associated

with maintenance of the roads.

Services to the property are provided by the town of Aripuanã, which includes accommodation,

restaurants, and stores.

The Dardanelos Hydropower dam (261 MW) was completed at Aripuanã in 2011,

approximately 20 km from the Project. A thermal power plant next to the Aripuanã airport

(Guaçu Power Plant), which uses woodchips and waste as fuel, has a generation capacity of

30 MW.

Numerous rivers occur close to the Project and water supply is not expected to be an issue.

PHYSIOGRAPHY The Project lies between 250 MASL and 350 MASL, and comprises seven occurrences of

mineralization: Arex, Ambrex, Babaçú, Massaranduba, Boroca, Arpa, and Mocoto, over a 25

km strike length. The Arex, Ambrex, and Babaçú deposits are visible as three tree covered

mounds on a steep ridge surrounded by flat ground. Vegetation is dense on the ridge but has

been largely cleared in surrounding areas which are used primarily for agricultural purposes.

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6 HISTORY PRIOR OWNERSHIP The following information is summarized from AMEC International (Chile) S.A. (AMEC, 2007).

Gold mineralization was discovered in the area during the 1700s by prospectors and a small

fort was constructed to protect the portage at Aripuanã’s Cachoeira de Andorinhas (Swallow

Falls). No details of the extent of extraction of gold on the property during this time are

available. Between 1979 and 1990, artisanal gold miners extracted gold from the Aripuanã

area, mostly through gold panning and small excavations. It is thought that at one time up to

2,000 artisanal gold miners were active in the district. One large pit, named Expedito’s pit, was

excavated during this time and is approximately 200 m deep.

Western Mining Corporation (WMC) held an exploration licence on the property between 1992

and 1994. No details of exploration work completed during this time are available.

Anglo American began exploration over the property in 1995. At the time, a small area

including Expedito’s Pit, now part of the Project, was held by Madison do Brasil (now Thistle

Mining Inc.). This claim was optioned to Ambrex Mining Corporation (now Karmin). Between

1997 and 1999, Karmin optioned its property to Noranda, which withdrew from the option

without earning an interest after completing 24 drill holes on the property.

Dardanelos was created in 2000 to represent a joint venture, or “contract of association”,

between Karmin and Anglo American, with the intent of exploring for base and precious metals

in areas adjacent to the town of Aripuanã. Anglo American and Karmin held 70% and 28.5%

of Dardanelos, respectively, with the remaining interest (1.5%) owned by SGV.

In 2004, the initial agreement between Karmin and Anglo American was amended to allow

VMH’s participation. Through exploration expenditures of US$1.6 million between May 2004

and December 2005, VMH acquired 70% of Anglo American’s interest in the Project (70%).

The remaining 30% of the interest was acquired over the following year. In 2007, Karmin

purchased SGV’s interests, raising its interest to 30%.

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Currently, Aripuanã is a jointly held property by VMH (70%) and Karmin (30%). Karmin is not

required to contribute financially to the Project until the completion of a bankable feasibility

study. In the meantime, VMH is fully funding the Project development. Upon completion of a

bankable feasibility study, Karmin will contribute on a pro-rata basis towards bringing Aripuanã

into production.

EXPLORATION AND DEVELOPMENT HISTORY Excluding drilling, the following exploration activities have been undertaken on the Aripuanã

Zinc Project:

1. A SPECTREM airborne geophysical survey

2. Geological mapping

3. Ground geophysics

4. LiDAR airborne survey

5. Soil geochemistry

This work was carried out by Anglo American and Karmin in 1999-2002. Since 2004,

exploration has been conducted by VMH, and is described in more detail in Section 9

Exploration.

HISTORICAL RESOURCE ESTIMATES Previous Mineral Resource estimates have been completed on the property by AMEC in 2007

and by RPA in 2012 and 2017 for Karmin, which are superseded by the Mineral Resource

estimate presented in Section 14 of this report.

PAST PRODUCTION Approximately 350,000 ounces of gold are thought to have been extracted by artisanal miners

during the 1979 and 1990 gold rush. There has not been any formal production to date on the

property.

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7 GEOLOGICAL SETTING AND MINERALIZATION REGIONAL GEOLOGY The South American Platform is mainly composed of metamorphic and igneous complexes of

Archean/Proterozoic age and makes up the continental interior of South America. The

Platform consolidated during Late Proterozoic to Early Paleozoic times in the course of the

Brasiliano/Pan-African orogenic cycle during which the amalgamation of different continents

and micro continents with closure of several ocean basins led to the formation of the

Supercontinent Gondwana. Archean and Proterozoic rocks are exposed in three major shield

areas within the framework of Neoproterozoic fold belts (Guiana, Central Brazil, and Atlantic

shields). The western continental margin of the South American Plate developed from at least

Neoproterozoic to Early Paleozoic times and constitutes a convergent margin, along which

eastward subduction of Pacific oceanic plates beneath the South American Plate takes place.

Through this process, the Andean Chain, the highest non-collisional mountain range in the

world, developed. The eastern margin of the South American Plate forms a more than 10,000

km long divergent margin, which has developed as a result of the separation of the South

American Plate and the African Plate since the Mesozoic through the opening of the South

Atlantic and the break-up of Gondwana. The northern and southern margins of the South

American Plate developed along transform faults in transcurrent tectonic regimes due to the

collision of the South American Plate with the Caribbean and the Scotia plates. The South

American Plate reveals a long and complex geologic history (Engler, 2009). Figure 7-1 is a

simplified geological map of Brazil.

The Project is underlain by Paleoproterozoic and Mesoproterozoic-aged (1.80 Ga to 1.55 Ga)

lithologies belonging to the Río Negro-Juruena Province, one of six major geochronological

provinces comprising the Amazonian Craton. The Río Negro-Juruena Province occupies a

large portion of the western part of the Amazonian Craton (Figure 7-2) and includes volcano-

sedimentary sequences, felsic plutonic-gneiss, and granitoids. Rift basins within the province

are filled with continental platform molasse and marine sediments of Mesoproterozoic,

Paleozoic, and Mesozoic age (Engler, 2009). It is a zone of complex granitization and

migmatization. Regional metamorphism, in general, occurred in the upper amphibolite facies

(Tassinari et al., 2010).

ARIPUANÃ ZINC PROJECT

Sedimentary Rocks

Igneous and Metamorphic Rocks

Quaternary

Cretaceous-Tertiary Volcanics

Mesozoic Volcanics

Paleozoic-Mesozoic Intrusives

Precambrian Undifferentiated

Tertiary

Cretaceous

Jurassic-Cretaceous

Triassic

Permian

Carboniferous-Permian

Carboniferous

Devonian

Silurian

Cambrian-Ordovician

Paleozoic

66° 60° 5 °4 4 °8

28°

20°

1 °2

0°

7 °2 40° 36°

8°

4°

1 °6

2 °4

4°

28°

20°

1 °2

0°

8°

4°

1 °6

2 °4

66° 60° 5 °4 4 °87 °2 40° 36°


Regional Geology


VM Holding S.A.


Figure 7-1

7-2

www.rpacan.com

0°0'0

"

!(

60°0'0"W 50°0'0"W

10°0'0

"S

Bacia doAmazonas

Iquitos

Purus

Manaus Monte Alegre

Iricoume

Serra dosCarajás

Porto Velho

Bele

mGupupá

Xingu

Romaima

Imataca

Aripuanã

Legend:

Neoproterozoic Faults

Basement Structure

Strutures

Amazônia Central Province

( > 2.5 Ga )

Maroni-Itacaiúnas Province

Geocronological Provinces

Venturi-Tajapós Province

( 1,99 – 1,8 Ga)

Rio Negro-Juruena Province

(1,8 – 1,5 Ga)

Rondoniana-San Ignácio Province

( 1,55 – 1,3 Ga )

Sunsás Province

( 1,25 – 1,0 Ga)

Geological Units

Phanerozoic Cover

Granitoid

Precambrian Sedimentary Cover

Intermediate Acid Volcanic

Mafic Volcanics

Greenstone Belt

Granulitic Complex

Neoproterozoic Period

( 2,2 – 1,9 Ga)

0 2 00 1000

Kilometres

400 600 800

N

Source: Karmin Exploration Inc., 2012.July 2017

Geological Map of theAmazonian Shield


VM Holding S.A.


Figure 27-

7-3

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LOCAL GEOLOGY The following is taken from Simon, Marinho and Lacroix (2007).

The Project area is underlain by a meta-volcano-sedimentary sequence known as the

Aripuanã Sequence or the Roosevelt Group (RG), which is interpreted as a back-arc setting

of the Tapajós arc. The sequence exhibits greenschist facies grade regional metamorphism,

and has been intruded by late-stage A-Type Granites. The sequence is associated with a

major intracontinental suture, which defines the margin of the Caiabís graben in the south. The

Aripuanã Sequence is bounded by granites and gneisses of the Xingu Complex in the north

through interrupted tectonic contacts.

The Aripuanã Sequence comprises three major meta-volcano-sedimentary units:

• a basal unit, represented by felsic and intermediate flows with tuffaceous layers

• an intermediate, transitional felsic volcanic unit

• an upper sequence, represented by inter-layered meta-argillites, meta-tuffs and meta-cherts

These units form a broad semicircular shape surrounding the Rio Branco granite. The

mineralized zones are located in the northeastern portion of the arc (Figure 7-3). Post-

mineralization aged overthrust faults, dipping to the north and northeast, form complex

imbricated sheets, which represent the most characteristic structural feature of the area.

Typically, these sheets include portions of the volcanic units, and the upper meta-sedimentary

unit, although often the contact relationships are obscured by extreme deformation.

The lithological assemblage generally strikes northwest-southeast and dips between 35° and

70° to the northeast. Stratigraphic features have been offset by younger sinistral, east-west

wrench faults that are traced by mapping and magnetic interpretation.

PROPERTY GEOLOGY The following has been summarized from VMH (2016).

Stratigraphy over the property consists of meta-sediments; meta-volcanic and meta-

pyroclastic rocks; and hydrothermally altered rocks at the interface between the meta-

sediments and meta-volcanics. The meta-sediments comprise meta-mudstones, meta-

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siltstones, and carbonaceous meta-siltstone, while the meta-volcanics and meta-pyroclastics

grade from rhyolite to dacite in composition. The hydrothermal zone occurs as stratabound

when related to exhalative rocks or pipe like when related to the feeder zone. The stratabound

portion of the hydrothermal zone has three main types of alteration; carbonate, tremolite, and

sericitic. The feeder or stringer zone has three types of alteration; sericitic, phyllic (sericite +

chlorite), and chloritic (+silicification). On surface, the hydrothermal alteration zone is strongly

masked by tropical weathering, usually associated with gossans. Portions of the property have

Phanerozoic alluvial cover.

Figure 7-3 shows the property geology.

BASELINE

AREX

AMBREX

AR

PA

BA

SE

LIN

E

55

85

35

70

60

65

70

8080

75

6565

65

45

55

50

EXRP01

EX RP02

EXRP03 EXRP04

EXR

P05EXR

P06

EXRP07EXRP08

EXRP09E XRP10

EXRP11

EXRP12

EX RP13

EXRP14EXRP15

EXRP16

EXRP17

E XRP18EX RP19

FD056

FD057

FD057A

FD059

FD060

FD061

FD062

FEX01

FEX02

FEX03

FEX04

FEX05

FEX06

FEX07

FEX08

FEX09

FEX10

FEX11

FEX 12

FEX13

FEX14

FEX15

FEX16

FEX17

FEX18

FEX19

FEX20

FEX21

FEX22

FEX23FEX24

FEX25

FEX26

FEX27

FEX28

FEX29

FEX30

FEX31

FEX32

FEX33

FEX34

FEX35

FEX36

FEX37

FEX38

FEX39

FEX40

FEX41

FEX42

FEX43

FEX44

FEX45

FEX 46

FEX47

FEX48

FEX49

FEX50

FEX51

FEX 52

FEX53

FEX54

FEX55

FEX56

FEX57

F001

F002

F003

F004

F005

F006

F007

F008

F009

F010

F011

F012

F013

F014

F015F016

F017

F018

F019

F020

F021

F022

F023

F024

F025F026

F027

F028

F029

F0 30

F031

F032

F033

F034

F035

F036

F037

F038

F039

F040

F041

F042

F043

F044

F045

F046

F047

F048

F049

F050F051

F052

F053

F054

F054A

F055

FPAR001

FPAR002

FPAR003

FPAR003A

FPAR004

FPAR004A

FPAR005

FPAR005A

FPAR006

FPAR006A

FPAR008

FPAR009

FPAR010

FPAR011

FPAR012

FPAR013

FPA R014

FPAR015FPAR016

FPA R017

FPAR018

FPAR019

FPAR020FPA R021

FPAR022

FPAR023

FPA R024

FPAR025

FPAR026

FPA R027

FPAR028FPAR029

FPAR032

FPAR036

FPAR037

FPAR038

FPAR

039

FPAR042

FPA R044

FPAR047

FPAR048

FPAR049

FPAR050

FPA R051

FPA R052

FPAR053

FPAR054

FPAR055

FPAR056

FPAR058

FPAR059

FPAR060

FPAR061

FPAR062

FPAR063

FPAR065

FPAR066

FPAR068

FPAR069

FPAR070

FPAR071

FPAR072

FPAR073

F PAR074

FPAR076

BA

SE

LIN

E

888

4000

,,

88

86

00

0,

,8

885

00

0,

,

BASELINE

MASSARANDUBA

3300SSE

2.90

0NW

500NNW

1000

SE

3.90

0NW

00

888

7000

,,

889

0000

,,

230 000,229 000,228 000,227 000,226 000,225 000,224 000,

88

88

000

,,

88

89

000

,,

BABACU

888

4000

,,

88

86

00

0,

,8

885

00

0,

,8

88

7000

,,

889

0000

,,

88

88

000

,,

88

89

000

,,

888

000

,3

,

888

000

,3

,

230 000,229 000,228 000,227 000,226 000,225 000,224 000,

Alluvial

Lithology:

Siltites, Argilites, Carbonatic Philytes

Quartz Veins

Hydrothermal Zone

Volcanics

SA

GS

AS

QV

ZH

FV

Gossan

Falha Transcorrente Dextral

Falha Transcorrente Sinistral

Thrust Fault

Banding S1/S0 with dip

Foliation S2 with dip

Fault

0 0.5

Kilometres

1 1.5 2

N

Source: Amec, 2007 (Edited from Petrus, 2006).July 2017

Property Geology


VM Holding S.A.

Figure 7-3

7-6

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MINERALIZATION Three main elongate mineralized zones, Arex, Link, and Ambrex, have been defined in the

central portion of the Aripuanã Project. A smaller, deeper zone, Babaçú, lies to the south

(stratigraphic footwall) of Ambrex. Limited exploration has identified additional, possible

mineralized bodies including Massaranduba, Boroca, and Mocoto to the south and Arpa to the

north.

Where outcropping, sulphide mineralization has been oxidized forming gossanous bodies

which frequently mark the position of overthrust faults. These gossans are generally small,

and contain low levels of gold. They do not appear to be economic at this time.

The individual mineralized bodies have complex shapes due to intense tectonic activity.

Stratabound mineralized bodies tend to follow the local folds, however, local-scale, tight

isoclinal folds are frequently observed, usually with fold axes that are parallel to major reverse

faults, causing rapid variations in the dips. The Ambrex, Arex, Link, and, to a limited extent,

Babaçú deposits, represent the best understood zones and are described below.

Hydrothermal alteration is commonly directly adjacent to the Arex, Ambrex, and Babaçú zones,

and according to Leite et al. (2005, as cited in AMEC, 2007) presents a zonal and symmetrical

standard:

• External zone: Sericite and muscovite in a fine-grained matrix with minor chlorite content. Where present, the low sulphide content is dominated by pyrrhotite.

• Intermediate zone: Transition of sericite to chlorite halo on stringer zones. Tremolite and chlorite alteration with minor carbonatization and silicification.

• Internal zone: Stringer zones are characterized by pervasive chlorite alteration accompanied by quartz veins. Sulphide content is dominated by chalcopyrite and pyrrhotite. Porphyroblastic magnetite and biotite locally substitutes within the sulphide matrix. The stratabound zones are dominated by tremolite, talc and carbonate alteration, accompanied by sphalerite, galena and pyrite, with minor magnetite and fluorite. The stratabound zone may be brecciated.

AREX Mineralization at the Arex deposit strikes at approximately 110° azimuth, extending over a

1,400 m strike length. Upper portions of the deposit tend to be near-vertical, while lower

portions dip at 60° to the northeast. The deposit is characterized by well-defined stringer and

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stratabound zones. Discrete lenses of stratabound and stringer mineralization, ranging from

less than one metre to 15 m thick, interplay within a 100 m to 150 m wide zone, separated by

barren, hydrothermally altered rocks. Mineralization comes close to outcropping at surface,

and extends to almost 500 m below surface. Discrete lenses may be continuous for up to 300

m down dip. The Arex deformation pattern is made of tight, foliation-parallel folds, and reverse

faults which overthrust in the same direction. The deposit presents strong dip variations that

are often parallel to foliation and faults. In some areas, this may cause the stratabound and

stringer mineralization to be parallel, despite its original perpendicular position.

AMBREX The Ambrex deposit represents the largest of the known mineralized zones on the Project.

The Ambrex deposit is located approximately 1,300 m southeast of Arex. Mineralization strikes

at approximately azimuth 125° and has a strike extent of approximately 1,050 m, based on

current drilling. The dip varies from near vertical to 70° to the northeast. Mineralization

thicknesses typically range between 10 m and 50 m, with a maximum of 150 m. The Ambrex

deposit has an upper depth of 60 m below surface, with a lower depth of approximately 700

m. The degree of folding is gentler than at Arex and hosts well marked overthrust faults, which

are parallel to metamorphic foliation. The orientation of the stratabound mineralization is

generally parallel to the original bedding, while the stringer zone is often approximately

perpendicular to the stratabound zone.

LINK ZONE The Link Zone target, first discovered in 2014, is interpreted to be the westward extension of

the Ambrex deposit towards the Arex deposit. It is located approximately 300 m southeast of

Arex and exhibits shape, mineralization, and alteration features similar to Ambrex. Based on

current drilling, the Link Zone has a strike extent of approximately 400 m.

BABAÇÚ Located southeast of Ambrex, the Babaçú deposit is 600 m long and also dips to the northeast.

Similar to Ambrex, the stringer zone is limited in extent and is understood to occur in discrete,

thin lenses perpendicular to the stratabound mineralization.

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8 DEPOSIT TYPES The following is summarized from VMH (2012c).

The Aripuanã polymetallic deposits are typical Volcanogenic Massive Sulphide (VMS) deposits

associated with felsic bimodal volcanism. Support for this model is based on the geometry of

mineralization, host rocks, hydrothermal alteration, and sulphide paragenesis. The VMS

deposits have been subsequently deformed and metamorphosed under greenschist facies

conditions (Leyte, 2005 and Petrus, 2006, as cited in VMH, 2012c). Details observed at

Aripuanã and consistent with VMS deposits are described below.

1. Host rocks. All mineralized bodies are located on the upper levels of a felsic volcanic unit, in association with finely laminated exhalites, at or close to the contact with an overlying sedimentary unit.

2. Mineralization zonality and predominant textures. Three types of mineralization are found on the property, and are typical of VMS deposits elsewhere: • Stringer facies: Cu-Au bearing stringers in the footwall of the stratabound

mineralization, containing chalcopyrite and pyrrhotite, with stockwork and breccia textures corresponding to hydrothermal feeder zones;

• Proximal sulphide facies: mixed bodies of stratabound massive and disseminated Zn-Pb mineralization, overlying stringer mineralization;

• Distal sulphide facies: horizons of massive sulphide, stratabound Zn-Pb mineralization, often finely banded, with fine-grained pyrite, pyrrhotite, and sphalerite, sometimes associated with galena, corresponding to depositional areas distant from the feeder zones.

3. Geochemical zonality. The Cu/Cu+Zn ratio is higher in the proximity of the Cu-rich feeder zones, and decreases upward from the footwall and towards the distal Zn-rich stratabound mineralization.

Facies associated with the feeder zones are located in the middle of the volcanic unit and are

characterized by pyrrhotite and/or chalcopyrite stockworks in a zone of intense chloritic

hydrothermal alteration. The sulphide association represents a feeder zone at higher

temperature. There is Cu-Au association in these zones. A target model is shown in Figure

8-1.

Sericite-quartz

Chalcopyrite-pyrrhotite-pyrite

Pyrite-sphalerite-chalcopyrite

Pyrite-sphalerite-galena

Pyrite-sphalerite-galenatetrahedrite-Ag-Au

Chlorite-sericite

Quartz-chlorite

Barite (Au)

Carbonate/gypsum

1.3% Cu

6.1% Zn

1.8% Pb

123 g/t Ag

2.2 g/t Au

Average 5.5 Mt

Median 14.2 Mt

100 m

Felsic flow complex

Flows or volcaniclastic strataBIMODAL-FELSIC

Chalcopyrite-pyrite veins

Canadian gradeand tonnage

Ma

ssiv

e

Detrital

July 2017 Source: A.G. Galley et al., 2007.

Target Model


VM Holding S.A.


Figure 8-1

8-2

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9 EXPLORATION 1999-2002 EXPLORATION This section is summarized from VMH (2012a).

Geochemical and geophysical surveys, including a SPECTREM airborne geophysical survey,

were conducted by Anglo American and Karmin between 1999 and 2002. The exploration

program targeted 13 different areas on the property. Limited details are available on the exact

date and operator of the various surveys conducted, however, the following information was

recovered in the Anglo American database (Table 9-1).

TABLE 9-1 ANGLO AMERICAN AND KARMIN EXPLORATION – 1999-2002 VM Holding S.A. – Aripuanã Zinc Project

Target Geological

Mapping Geochemistry Ground Geophysics Stream

Sediment Soil Gravimetry Magnetic IP VLF TDEM

Acampamento Velho x x x x Arex x x x x x x x Ambrex x x x x x x Babaçú x x x x Bigode x x x x x Cafundo x x x x x x Cone x x x x Joao Paulo x x x x Massaranduba x x x x Mocotό-Borόca x x x x x x Vaca II x x x x Valdir x x x x Vale dos Sonhos x x x x Note. IP – Induced Polarization; VLF – Very Low Frequency; TDEM – time-domain electromagnetics

GEOPHYSICS The airborne SPECTREM geophysical survey is an electromagnetic (EM) method developed

by Anglo American. Simultaneous EM, total field magnetic, and radiometric measurements are

taken from sensors inside, or towed behind, an aircraft. The survey was conducted in 2001

over 1,800 km2.

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No specific details are available with respect to ground geophysical methods.

GEOCHEMISTRY No details of sample procedures, quality assurance/quality control (QA/QC), or dates were

available. Historically, 760 stream sediment samples and up to 32,000 soil samples with wide

distribution over 2,000 km2 have been collected. Analyses were conducted by Nomos and

Mineração Morro Velho (MMV) laboratories.

GEOLOGICAL MAPPING Geological mapping was completed to varying levels of detail over the thirteen targets listed in

Table 9-1 between 1999 and 2002.

VMH EXPLORATION The following is taken from AMEC (2007) and VMH (2012b).

In 2004, VMH became Project operator and commenced a detailed geological, geochemical,

and geophysical exploration program, which included additional drilling described in Section

10.

Under contract from VMH in 2005, Geoambiente Sensoriamento Remoto (Geoambiente)

prepared a topographic map based on photogrammetric restitution of two pairs of Ikonos

panchromatic images with one metre spatial resolution (173214-0/173214-3 and 173214-

1/173214-2), and with ground control on geodesic IBGE stations. Internal control points were

surveyed using a differential global positioning system (DGPS). The topographic map has an

area 195 km2 and has 1:10,000 altimetric and 1:5,000 planimetric scales as well as five metre

contour lines (plus additional one metre interpolations).

Integração Geofísica (Intergeo) compiled and integrated in 2004 all previous geological,

geophysical, and geochemical data to allow a more complete interpretation of the regional and

local geology, and the identification of local exploration targets. A digital terrain model was

prepared and integrated with airborne gamma-spectrometric (K-Th-U channels),

magnetometric, and electromagnetic (time domain EM) survey data, soil geochemical surveys,

regional and local geological information, including most of the data previously obtained by

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Anglo American and Karmin. As a result of this study, five groups of targets were identified in

addition to Arex and Ambrex, and additional exploration was recommended.

In 2004, VMH contracted Petrus Consultoria Geológica Limitada (Petrus) to conduct and/or

supervise geological, geochemical, and geophysical exploration at the property. Between

2004 and 2007, additional exploration at the property included relogging of old Anglo

American/Karmin core, geological mapping, and geochemical surveys.

A time domain, airborne EM survey was conducted by Fugro Airborne Surveys in 2007. The

survey covered approximately 1.8 km2, divided in four loops of 700 m x 500 m each, with

readings on a 100 m by 20 m grid. The survey was flown over 14,290 m using a base

frequency of 30 Hz. In addition, 3,860 m were surveyed at 3 Hz in order to detail the anomalies

identified with the 30 Hz survey.

In 2008, exploration efforts consisted of evaluating regional targets. Work included detailed

geological mapping and systematic rock, soil, and stream sediment geochemistry. Mobile

metal ion (MMI) soil geochemical tests were completed on the Ambrex and Babaçú targets.

Core from Arex and Ambrex was re-logged. Exploration drilling at Babaçú and in-fill drilling at

Arex and Ambrex took place.

Extensive drilling took place on Arex and Ambrex in 2012, as well as additional metallurgical

test work.

In 2013, ground magnetic surveying totalling approximately 138 line-km over the Poraquê,

Arpa, Ambrex, Babaçú, Massaranduba, Boroca, and Mocotό targets was completed.

Subsequently, a 12 line-km ground magnetic survey was completed over the Casagrande

target. An extensive program of core re-sampling was completed comprising a total of 11,067

core and pulp analyses from 159 drill holes from Arex, Ambrex, Arpa, and Babaçú. A new

structural model was developed based on LiDAR topography in the Arex-Ambrex area and the

1:25,000 scale geological map was updated.

In 2014, ground magnetic surveying totalling approximately 222.8 line-km over the Flanco W,

Poraquê, Sombra, Mocotό Sul, Jibόia, and Casagrande targets was completed. A total of 991

soil samples were taken over the Somra and Casagrande targets and 25 gold panning samples

were taken at the Flanco W, Mocotό Sul, Jobόia, Sombra, and Vaca-Bigode targets.

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In 2015, a 1,584.2 line-km helicopter-borne, combined magnetic and electromagnetic (VTEM)

survey was flown over four areas, namely Arex-Ambrex, Flanco W, Mocotό, and Casagrande

Jibόia. Soil sampling at Flanco W and geological mapping and rock sampling at the Borόca

and Mocotό target areas was undertaken. In-fill drilling at Arex and Ambrex was also

completed.

EXPLORATION POTENTIAL

BABAÇÚ Based on review of 42 drill holes totalling 19,388 m in the Babaçú mineralized body and other

exploration work on the property such as airborne and ground geophysical surveys, geological

mapping, soil geochemistry, and drill testing of other targets, RPA estimates that the potential

tonnage and grade of mineralization at the Babaçú prospect could be three million to six million

tonnes grading from 3.0% Zn to 5.0% Zn, 1.0% Pb to 2.5% Pb, 0.2% Cu to 0.5% Cu, 0.15 g/t

Au to 0.4 g/t Au, and 10 g/t Ag to 30 g/t Ag. The potential quantity and grade is conceptual in

nature as there has been insufficient exploration to define a Mineral Resource, and it is

uncertain if further exploration will result in the target being delineated as a Mineral Resource.

The upper and lower values of the above grade ranges are based on the existing drill hole

information, with consideration given to the neighbouring bodies, Ambrex and Arex. The

estimated tonnage range is based on the dimensions of the Babaçú mineralized body tested

by 42 diamond drill holes.

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10 DRILLING Drilling on the Aripuanã Zinc property has been conducted in phases by several companies

since 1993. Total drilling at the two main deposits, Ambrex, including the Link Zone, and Arex,

consists of 538 diamond drill holes totalling approximately 151,144 m. Drilling at the other

prospects on the property consists of 77 diamond drill holes totalling 29,244 m.

A drilling summary by deposit up to and including all drilling information available at December

23, 2016, is presented in Table 10-1. A map of drill hole collars is shown in Figure 10-1.

TABLE 10-1 DRILL HOLE DATABASE VM Holdings S. A. – Aripuanã Zinc Project

Historical VMH (2004-2016) Total

Deposit No. DDH Metres No.

Perc. Metres No. DDH Metres No.

Met. Metres No. Holes Metres

Arpa 9 5,359 9 5,359 Arex 76 18,174 19 1,329 231 39,914 21 2,677 307 62,095 Ambrex (incl. Link Zone) 48 17,408 183 75,648 9 3,222 231 96,278 Babaçú 7 2,224 35 17,163 42 19,388 Massaranduba 8 2,184 18 6,343 26 8,527 Total 139 39,991 19 1,329 467 139,069 30 5,899 606 186,287

Notes:

DDH: Diamond drill hole Perc: Percussion drill hole Met: Metallurgical drill hole

PREVIOUS DRILLING This section is summarized from AMEC (2007).

Limited detail on the Anglo American and Karmin drilling campaigns is available. Both RC and

diamond drilling was performed on site. Results of RC drilling have not been maintained in

the current VMH database. Diamond drill core diameter was HQ (63.5 mm) size. The DDI

Reflex Fotobor method was used for downhole survey measurements. Most holes were drilled

with azimuths ranging from 180° to 220° and inclinations ranging from -50° to -70°. Drill core

boxes are stored on site, and are adequately labelled and ordered for efficiently locating and

extracting the samples. Original drill reports are not available on site.

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RECENT DRILLING Drilling was conducted by VMH on the property from 2004 to 2008 and from 2012 to present.

The main purpose of the drill program from 2004 to 2008 was to explore and delineate

mineralization on the property and from 2012 to present, to improve confidence and support

and upgrade the classification of the Mineral Resources at the Arex and Ambrex deposits.

VMH drilled a total of 497 diamond drill holes totalling 150,327 m at Aripuanã Zinc from 2004

to year-end 2016, including 30 metallurgical drill holes totalling 5,899 m. Many drill holes were

pre-collared using RC drill rigs, with diamond drill rigs used for drilling in mineralized zones.

December 23, 2016 is the cut-off date of the Mineral Resource database; all assay results

received before this date have been considered in the Mineral Resource estimate.

Drill hole locations are spotted in the field using a hand-held GPS. Small adjustments to the

drill hole locations are made where necessary based on topographic relief and non-removable

trees. The desired collar position, foresights, and backsights are marked by technicians using

a compass. Collar surveying is performed with a differential GPS upon completion of the drill

hole and the departing collar azimuth is recorded using a total station. Casings are left in

place. Downhole surveying is completed with Deviflex and Maxibor tools by the drilling

company at three metre intervals downhole. Duplicate downhole surveys are performed on

each hole. From 2014 onwards, VMH has implemented core orientation for approximately

25% of the drilling using the Reflex ACT core orientation tool.

Drill core is currently placed in plastic boxes and labelled at the rig site prior to transport.

Previously, wooden core boxes were used. Drill core is transported by pick-up truck to the

VMH logging facility by the drill company employees, Servitec Sondagem Geologica.

Geotechnicians measure drill core runs and note core interval length, core loss, and check

core block runs. This information is then cross referenced to the driller’s notes for

discrepancies and amended where necessary. Rock Quality Designation (RQD) is measured

and a resistance value (R0 to R4) is assigned based on rock hammer tests. No other

geotechnical logging is performed on site. The core is photographed both wet and dry prior to

mark-up by geologists.

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All geological information is manually logged on paper logging sheets, and then hand entered

into formatted Microsoft Excel sheets by the logging geologist. Lithology, rock unit, texture,

alteration associated with the VMS, and regional alteration are recorded in logging sheets as

text fields. The percentage of total sulphides, pyrite, pyrrhotite, chalcopyrite, sphalerite, and

galena are recorded. Observations are noted where relevant. Digital logging sheets are

imported into the database management program GeoExplo by the database manager. For

oriented core, alpha and beta angles are recorded along with structural descriptions. The

alpha and beta angles are converted to dip and dip direction using a Microsoft Excel macro.

RPA is of the opinion that the drilling and logging procedures meet industry standards.

225,000

226,000 227,000

8,8

88,0

00

8,8

88,0

00

226,500

226,000 227,000226,500

8,8

87,5

00

8,8

88,0

00

8,8

87,5

00

8,8

88,5

00

224,500 225,500 226,000

8,8

88,0

00

8,8

88,5

00

225,000224,500 225,500 226,000

A: Arex Deposit

B: Ambrex Deposit and Link Zone

Section

Faults

Section

Faults

Mudstones and Siltstones

Legend:

Hydrothermal Alteration Zone

Gossan

Pyroclastic rocks (chloritization)

Pyroclastic Rocks

AS

GS

ZH

Chl FT

FT

Felsic VolcanicsFV

0 100 200 Metres

0 100 200 Metres

N

N


Drill Hole Collar Map


VM Holding S.A.

Figure 10-1

10-4

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11 SAMPLE PREPARATION, ANALYSES AND SECURITY SAMPLING METHOD AND APPROACH Core is sampled 10 m above and below visible mineralization. Samples respect geological

contacts, and vary from 0.5 m to 1.5 m in length depending on core recovery, length of the

lithological unit, and mineralization. Geologists mark the samples using a felt pen on the core

boxes, and staple a sample tag wrapped in plastic to the box at the start of the sample.

The core is marked with red and blue lines to indicate where the core is to be sampled and

which half is to be assayed. The lines are drawn respecting the geological features such as

layering to help minimize sampling bias. Prior to sampling, sample numbers are recorded in

the GeoExplo data management system and cross-referenced with the interval depth

downhole and the depth recorded in the database.

Sample core is cut into two halves by technicians with a diamond saw, returning half of split

the core to the core box and submitting the other half for sample preparation and analysis.

The geologist responsible for logging the drill hole defines the insertion of QA/QC samples

including blanks, standards, and duplicates.

Each sample booklet contains four tags for each sample. One sample tag is stapled to the

clear plastic sample bag and an additional sample is placed within the bag. One tag is attached

to the core box while the remaining tag is left in the booklet for record keeping.

The samples are separated into batches of up to 250 samples and each from the same drill

hole.

DENSITY ANALYSIS The bulk density is determined by the water displacement method for each sample of drill core.

Samples are dried and then weighed using a tared Adventurer Pro scale accurate to 0.1 g.

The sample is then added to a polyvinyl chloride (PVC) tube containing a fixed amount of

water. The displaced water is removed from the PVC tube into a pre-weighed 1,000 mL

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beaker. The weight and volume of displaced water is recorded by hand and then entered into

a spreadsheet. Density values are auto-calculated using both volume and weight of water.

The technician compares the values to ensure that they are similar. Any discrepancy results

in a repeat of the test. The weighted measurement is used in the final database.

Every tenth sample is also subject to an Archimedes density measurement. The Archimedes

density results are kept on site and used as a QA/QC measure. The results of the Archimedes

method are typically within 10% of the water displacement method.

SAMPLE PREPARATION Sample preparation was performed by the ACME preparation facility in Goiania, Brazil, from

2004 to 2007, and from 2007 on, by ALS Global. Both laboratories followed the same

preparation procedure, described below.

The sample was logged in the tracking system, weighed, dried, and finally crushed to better

than 70% passing a 2 mm screen. A split of up to 250 g was taken and pulverized to better

than 85% passing a 75 micron screen. This sample preparation package was coded PUL-31

by ALS Global. Following preparation, samples were shipped to the sample analysis facility

in Lima, Peru. ALS Global’s preparation facility in Goiania is accredited to the International

Organization for Standardization/International Electrotechnical Commission (ISO/IEC)

9001:2008 standards and ALS Global is accredited to ISO 9001:2008 (expires 2018) and

ISO/IEC 17025:2005 (expires 2018), for all relevant procedures.

Both laboratories are independent of VMH. In RPA’s opinion, the sample preparation methods

are acceptable for the purposes of a Mineral Resource estimate.

SAMPLE ANALYSIS Assays were processed by ACME from 2004 to 2007, and from 2007 on, by ALS Global. ALS

Global’s facilities in Lima are accredited to ISO 9001:2008 (expires 2018) and ISO/IEC

17025:2005 (expires 2018).

The following sample analysis was undertaken at the ACME facilities:

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1. Gold Analysis: Fire assay (50 g) standard fusion method with an atomic absorption spectrometry (AAS) finish. The lower limit of detection is 0.01 g/t Au.

2. Multi Element Analysis: Aqua regia digestion with an AAS finish. Lower limits of detection are 0.001% for lead, zinc, and copper, 1 ppm for silver, and 0.01% for iron.

The following sample analysis is undertaken at the ALS Global facilities in Lima, Peru.

1. Gold Analysis: Au-AA24. A 50 g fire assay standard fusion method with an AAS finish. The lower limit of detection is 0.005 ppm Au and the upper limit of detection is 10 ppm Au.

2. Gold Analysis: Au-AA26. Gold analyses returned from Au-AA24 with a gold value

above 10 ppm are re-assayed using a 50 g fire assay standard fusion method with an AAS finish. Upper limit of detection is 100 ppm.

3. Multi Element Analysis: ME-ICP61. 33 multi element suite using four acid digestion and inductively coupled plasma atomic emission spectroscopy (ICP-AES) finish. The upper detection limit for lead, zinc, and copper is 1% and 100 ppm for silver.

4. Multi Element Analysis: ME-AA62. Samples that return values above the upper limits

in ME-ICP61 are re-assayed using ME-AA62. In ME-AA62, four acid digestion with an AAS finish of a 0.4 g sample is used. Lower limits of detection are 0.001% for lead, zinc, and copper, and 1 ppm for silver.

5. High Grade Zinc Analysis: Zn-VOL70. Zinc analyses returned from ME-AA62 with a zinc content over 30% are re-analyzed by dissolving in hydrochloric acid and titrated with EDTA solution with Xylenol orange as an indicator.

6. High Grade Iron Analysis: Fe-VOL51. Iron analyses returned from ME-ICP61 with

iron content over 50% are re-analyzed by dissolving in hydrochloric acid and titration.

Both laboratories are independent of VMH. In RPA’s opinion, the sample analysis methods

are acceptable for the purposes of a Mineral Resource estimate.

DATABASE MANAGEMENT Database management is performed by a dedicated onsite geologist under the supervision of

the Project Geologist. Digital logging sheets prepared by the geologist are uploaded to the

database management system GeoExplo. Original drill logs, structural logs, geotechnical logs,

details of chain of custody, site reclamation, and drilling are stored on site in a folder, specific

to a single drill hole. Folders are clearly labelled and stored in a cabinet in the office, which is

locked during out of office hours.

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Assay Certificates are mailed to the site by ALS Global and emailed to Julio Souza Santos,

Project Manager, and Thomas Brenner, both VMH employees. Certificates are reviewed by

Julio Souza Santos prior to uploading to GeoExplo.

SAMPLE CHAIN OF CUSTODY AND STORAGE Samples are shipped in rice bags by truck to the independent ALS Global preparation facility

in Goiania, Brazil. ALS Global purchased the facility from ACME Laboratories (ACME) in 2007.

Prior to 2007, all work was performed by ACME.

Drill core is stored at the onsite core storage facility, the grounds of which are locked at night

and surrounded by a high fence. The storage facility is open at the sides and covered with a

corrugated iron roof. Core storage map is maintained by onsite technicians. Pulp and coarse

rejects are shipped back to the onsite facility by the laboratory where they are also stored with

reference to individual sample locations.

QUALITY ASSURANCE/QUALITY CONTROL Samples are grouped into batches of 100. Five standards, two blanks, one field duplicate, one

pulp duplicate, and one reject duplicate are included in each sample batch. Total QA/QC

samples comprise 10% of the data. Blanks are inserted in the sample stream at the end of

visible mineralization, standards are randomly inserted within mineralized intervals, and pulp

and reject duplicates are randomly inserted in both mineralized and unmineralized intervals.

Field duplicates are taken within mineralization. No check assays are performed by an

alternate laboratory.

A QA/QC report is prepared monthly, by the onsite database manager and reviewed by the

Project Geologist. The report is also submitted to the head office for review. Batches of

samples identified by QA/QC as anomalous are repeated by ALS Global at the request of

VMH.

RPA reviewed results from VMH’s QA/QC program undertaken in 2016 and is of the opinion

that the results are sufficient to support Mineral Resource estimation.

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2004–2012 BLANKS Prior to 2012, blank material used was river sand and sandstone sourced from the property.

Subsequent to 2012, only coarsely crushed sandstone was used.

Figure 11-1 plots the blank results for zinc, lead, and copper. The highest failure rate was

observed with zinc, where 6% of samples reported a value greater than 20 times the detection

limit of the sample. All other metals reported less than 3% above a value equal to 20 times

detection limits. No time-based trends were identified. RPA is of the opinion that these results

are reasonable.

It should be noted that normal industry practice for blanks is setting a failure limit to ten times

the detection limit. In the case of the Zn, Pb, and Cu grades of interest, ten times the detection

limit is insignificant. RPA used 20 times the detection limit while VMH considers five times the

practical detection limit of 0.01%. RPA is of the opinion that either threshold is reasonable.

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FIGURE 11-1 BLANK RESULTS FOR ZINC, LEAD AND COPPER

CERTIFIED REFERENCE MATERIAL Results of the regular submission of certified material (standards) are used to identify problems

with specific sample batches and long-term biases associated with the primary assay

laboratory. RPA reviewed the results from seven different standards used from 2004 to 2012.

At the time of the RPA’s 2012 review, four different standards were in use on site, two of which

assess lead and zinc only. During May and June 2012, copper standards were implemented.

No gold standards were used at this time and RPA recommended the incorporation of gold

standards.

From 2004 to 2008, three, commercially sourced, certified reference materials (CRMs),

representing low, medium, and high grade zinc and lead were inserted at a rate of 5%. Copper,

silver, and gold CRMs were not used. In 2012, two CRMs sourced from VMH’s sedex mine,

Morro Agundo (MA), were used on site. In June 2012, two property specific CRMs were

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generated and came into use on site. Standards were inserted in the overall sample stream

of drill core at a rate of five standards in 100 samples. The expected values and standard

deviations (SD) for the various standards are listed in Table 11-1.

TABLE 11-1 EXPECTED VALUES AND RANGES OF STANDARDS VM Holding S.A. – Aripuanã Zinc Project

AP0001 AP0002 MA002 MA004 H1 L1 M1

Date 2012 2012 2012 2012 2004 - 2008 2004 - 2008 2004 - 2008 Source Aripuanã Aripuanã MA MA Number 114 113 50 128 176 290 285 Zn (%) 4.85 9.14 14.22 2.91 7.69 0.75 2.83 SD 0.13 0.28 0.48 0.11 0.18 0.01 0.07 Pb (%) 3.07 6.15 1.613 0.938 4.82 0.47 0.99 SD 0.06 0.09 0.038 0.044 0.145 0.025 0.045 Cu (%) 0.47 1.45 0.000927 0.000650 - - - SD 0.02 0.06 0.000123 0.000097 - - - Ag (g/t) 96 207 1.53 1.18 - - - SD 2 5 0.16 0.22 - - -

A positive bias was identified in the low grade lead and zinc CRM used from 2004 to 2008, L1,

which is not expected to significantly impact the final result. The overall results from the 2004-

2008 submissions and from the 2012 Morro Agudo CRMs MA002 and MA004 are considered

acceptable.

A slight positive bias was identified in lead and zinc results of the newly created CRM AP0002.

Approximately 40% of lead results of AP0002 plotted outside of three standard deviations

(3SD) (Figure 11-2). Nine percent of zinc results from CRM AP0001 plotted above 3SD (Figure

11-3), and consecutive lead samples from AP0001 plotted below 3SD.

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FIGURE 11-2 CONTROL CHART FOR CRM AP0002: LEAD

FIGURE 11-3 CONTROL CHART FOR CRM AP0001: ZINC

DUPLICATES Field, pulp, and reject duplicate samples were analyzed using basic statistics, scatter plots,

quantile-quantile plots, and percent relative difference plots. All field duplicate pairs had a

better than 95% correlation, with the exception of gold, which was 90%. Pulp and reject

duplicates for all metals reported greater than 98% correlation. A graph of percent relative

differences for field, pulp, and reject duplicate zinc samples versus the mean value of the

duplicate pair is shown in Figure 11-4. The graph indicates good representation of zinc grades,

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negligible bias, and good correlation. Similar findings were obtained for copper, lead, gold,

and silver (not shown).

FIGURE 11-4 PERCENT RELATIVE DIFFERENCE PLOT: ZINC DUPLICATE SAMPLES

2013 TO OCTOBER 2016 BLANKS Blank material is sandstone sourced from the property. Figure 11-5 plots the results for zinc,

lead, and copper. The highest failure rate was observed with zinc, where 11% of samples

reported a value greater than 20 times the detection limit of the sample. All other metals

reported less than 3% above a value equal to 20 times detection limits. In RPA’s opinion,

results of blank QA/QC tests are acceptable.

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FIGURE 11-5 BLANK RESULTS FOR ZINC, LEAD AND COPPER

CERTIFIED REFERENCE MATERIAL Results of the regular submission of certified reference material (standards) are used to identify

problems with specific sample batches and long-term biases associated with the primary assay

laboratory. RPA reviewed the results from 11 different standards used from 2012 to 2016. As

per RPA recommendation, two gold standards have been implemented since 2012. The

following summary describes the standards:

• AP series: four certified standards from the Aripuanã Zinc for Zn, Pb, Cu, and Ag

• MA series: two CRMs sourced from VMH’s sedex mine, Morro Agudo (MA) for Zn only and certified by SGS Geosol.

• L1, M1, H1: Low, medium and high grade CRMs for Zn and Pb

• G series: two Geostats CRMs for Au.

Standards were inserted in the overall sample stream of drill core at a rate of approximately

one standard for every 30 drill core samples. The expected values and SDs for the various

standards are listed in Tables 11-2 and 11-3.

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TABLE 11-2 EXPECTED VALUES AND RANGES OF STANDARDS VM Holding S.A. – Aripuanã Zinc Project – AREX

AP0001 AP0002 APPD003 APPD004 MA002 MA004 H1 L1 M1 G909-1 G312-4

Date 2012- 2015

2012- 2015

2012- 2015

2012- 2015

2012- 2015

2012- 2015

2012- 2015

2012- 2015

2012- 2015

2012- 2015

2012- 2015

Source Aripuanã Aripuanã MA MA

Number 264 258 53 51 50 128 25 57 35 112 116

Zn (%) 4.84 9.15 2.89 7.71 14.47 2.91 7.69 0.75 2.83 - -

SD 0.15 0.28 0.07 0.18 0.64 0.09 0.21 0.04 0.08 - -

Pb (%) 3.07 6.15 1.09 4.04 - - 4.90 0.47 1.00 - -

SD 0.07 0.24 0.03 0.56 - - 0.12 0.02 0.02 - -

Cu (%) 0.47 1.44 1.22 0.35 - - - - - - -

SD 0.02 0.04 0.03 0.01 - - - - - - -

Ag (g/t) 96.00 207.00 43.00 127.00 - - - - - - -

SD 2.64 5.80 1.551 3.184 - - - - - - -

Au (g/t) - - - - - - - - - 1.02 5.30

SD - - - - - - - - - 0.06 0.22

TABLE 11-3 EXPECTED VALUES AND RANGES OF STANDARDS VM Holding S.A. – Aripuanã Zinc Project – AMBREX

AP0001 AP0002 APPD003 APPD004 H1 L1 M1 APPD003 APPD004 G909-1 G312-4

Date 2012- 2015

2012- 2015

2012- 2015

2012- 2015

2012- 2015

2012- 2015

2012- 2015 2016 2016 2016 2016

Source Aripuanã Aripuanã

Number 246 259 72 73 58 118 126 187 189 103 97 Zn (%) 4.84 9.15 2.89 7.71 7.69 0.75 2.83 2.89 7.71 - - SD 0.12 0.25 0.08 0.18 0.22 0.03 0.11 0.07 0.18 - - Pb (%) 3.01 6.15 1.09 4.04 - - - 1.09 4.04 - - SD 0.07 0.23 0.03 0.07 - - - 0.03 0.08 - - Cu (%) 0.47 1.44 1.22 0.35 - - - 1.22 0.35 - - SD 0.02 0.03 0.03 0.01 - - - 0.04 0.01 - - Ag (g/t) 96.00 207.00 43.00 127.00 - - - 43.00 127.00 - - SD 2.21 5.46 1.532 3.045 - - - 1.522 3.335 - - Au (g/t) - - - - - - - - - 1.02 5.30 SD - - - - - - - - - 0.06 0.22

No positive bias was observed in any grade lead and zinc CRM used from 2012 to 2016.

Results from the 2012-2015 submissions of the Morro Agudo CRMs MA002 and MA004 are

acceptable.

The Geostats Au CRMs show no significant bias and perform well with no failures detected

based on the certified expected values and standard deviations.

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Slight positive bias was identified in lead and zinc results of CRMs AP0001 and AP002 in 2012,

however, it has subsided since 2013 (Figures 11-6, 11-7, and 11-8). Only less than 2% of zinc

results from CRM AP0001 plotted above 3SD, and consecutive lead samples from AP0001

plotted below 3SD.


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FIGURE 11-8 CONTROL CHART FOR CRM AP0001: ZINC

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DUPLICATES Field, pulp, and reject duplicate samples were analyzed using basic statistics, scatter plots,

quantile-quantile plots, and percent relative difference plots. All field duplicate pairs had a

better than 97% correlation, with the exception of gold, which was 73%. Pulp and reject

duplicates for zinc, lead, and silver reported greater than 99% correlation, while correlation for

reject duplicates for gold and copper was approximately 92%. A graph of percent relative

differences for field, pulp, and reject duplicate zinc samples versus the mean value of the

duplicate pair is shown in Figure 11-9. The graph indicates good representation of zinc grades,

negligible bias, and good correlation. Similar findings were obtained for copper, lead, gold,

and silver (not shown).


OCTOBER 2016 TO PRESENT BLANKS Blank material is sandstone sourced from the property. RPA reviewed the results for zinc,

lead, copper, and gold. The highest failure rate was observed with zinc, where 1.8% of

samples reported a value greater than ten times the detection limit of the sample (five of 280

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samples). All other metals reported no values equal to ten times detection limits. In RPA’s

opinion, results of blank QA/QC tests are acceptable.

VMH uses greater than or equal to 30 times the detection limit of the analytical method to

define a blank sample failure. RPA recommends that VMH lower the failure criteria to 10 times

the detection limit.

STANDARDS Results of the regular submission of CRM standards are used to identify problems with specific

sample batches and long-term biases associated with the primary assay laboratory. RPA

reviewed the results from five different standards, summarized below:

• AP series: three certified standards from the Aripuanã Zinc for Zn, Pb, Cu, and Ag

• G series: two Geostats CRMs for Au

Standards were inserted in the overall sample stream of drill core at a rate of approximately

one standard for every 30 drill core samples. The expected values and SDs for the various

standards are listed in Table 11-4.

TABLE 11-4 LIST OF REFERENCE STANDARDS USED VM Holding S.A. – Aripuanã Zinc Project

Reference Standard Source

Zn Pb Cu Au (g/t) Grade StDev Grade StDev Grade StDev Grade StDev

APPD0003 Internal Standard 2.89 0.08 1.09 0.04 1.22 0.02 - - APPD0004 Internal Standard 7.71 0.18 4.04 0.07 0.346 0.007 - - APPD0005 Internal Standard - - - - 6.83 0.25 - -

G909-1 Geostats CRM - - - - - - 1.02 0.06 G312-4 Geostats CRM - - - - - - 5.30 0.22

RPA notes that the AP series internal standards and the Geostats Au CRM performance has

been evaluated based on population statistics. In RPA’s opinion, the upper and lower limits

applied appear reasonable.

With respect to the 2016 to 2017 standards inserted, RPA offers the following conclusions: GOLD

• Possible negative bias in G312-4 (2-3%, Figure 11-10), G909-1 does not show a bias.

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• Mislabelled CRM – G909-1 labelled as G312-4.

• Using certified expected grades and standard deviations, the gold CRMs performed well, with no failures detected.

ZINC

• Small positive bias observed in both AP standards (Figure 11-11).

• The observed bias was not significant (<2%).

• APPD003 appears to demonstrate a high calibration drift that is corrected to the expected value once analytical results drift near the expected value +2SD.

LEAD

• A small positive bias was observed in the internal standard data for batches analyzed from July to October 2016 (Figure 11-12).

• Conversely, a small negative bias was observed for internal standards analyzed from February to May 2016.

• No failures occurred, and neither bias was significant (<2%). COPPER

• No bias observed and the copper internal standards performed well (Figure 11-13).

• A single value plotted above 3SD in standard APPD0004, and consecutive lead samples from APD0004 plotted below 3SD.

In RPA’s opinion, the CRMs and internal analytical standard performance are acceptable.

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FIGURE 11-10 CONTROL CHART FOR CRM G312-4: GOLD

FIGURE 11-11 CONTROL CHART FOR INTERNAL STANDARD APPD0003: ZINC

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FIGURE 11-12 CONTROL CHART FOR INTERNAL STANDARD APPD0004: LEAD

FIGURE 11-13 CONTROL CHART FOR INTERNAL STANDARD APPD0003: COPPER

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DUPLICATES To evaluate the accuracy or reproducibility of the results by the laboratory, VMH inserted

coarse, pulp, and field duplicates into the sample stream. The order of insertion is random

and corresponds to approximately 4% of the volume of samples sent to the laboratory.

Field, pulp, and reject duplicate samples were analyzed using basic statistics, scatter, quantile-

quantile, and percent relative difference plots. Field duplicate pairs for zinc and lead had

greater than 99% correlation, copper had 96% correlation, and gold was substantially lower at

74%. Pulp and reject duplicates for zinc, lead, and silver reported greater than 99%

correlation, while correlation for reject duplicates for gold and copper was approximately 92%.

A graph of percent relative differences for field, pulp, and reject duplicate zinc samples versus

the mean value of the duplicate pair is shown in Figure 11-14. The graph indicates good

representation of zinc grades, negligible bias, and good correlation. Similar findings were

obtained for copper, lead, and gold (not shown).

In RPA’s opinion, the duplicate sample performance is acceptable.


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12 DATA VERIFICATION VMH

VALIDATION OF ANGLO AMERICAN DATA From 1993 to 1997, assays from 56 FEX series drill holes from the Anglo American drilling

campaigns at Arex were completed by Mineração Morro Velho (MMV) and Nomos

Laboratories (Nomos) without the insertion of QA/QC samples into the sample stream. In

1997, for verification purposes, core was quartered over lengths of mineralized core and

reanalyzed either at the same lab or at a secondary lab (MMV, Nomos, ACME, or ALS

Chemex). It was noted that for Anglo American’s Salobo Project in the Carajás mineral

province, state of Pará, Brazil, Nomos was reporting significantly higher copper grades than

MMV but that MMV was comparable to ACME.

Based on this information, VMH adopted the following strategy:

1. Nomos assays were only used if MMV assays were not completed.

2. If the re-assay was performed at the same laboratory, the lower grade set of results was used.

A summary of the re-analyses is provided in Table 12-1.

TABLE 12-1 SUMMARY OF RE-ANALYSIS VM Holding S.A. – Aripuanã Zinc Project

Laboratory Number of Drill Holes

Original Analysis Nomos 19 MMV 42 ACME 1 Re-analysis Nomos 24 MMV 3 Re-analysis with QA/QC ACME 11 ALS Chemex 18

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SOFTWARE VALIDATION VMH utilized GeoExplo and Leapfrog Geo’s validation features to identify issues including:

• Sample length issues;

• Maximum and minimum;

• Negative values;

• Detection limit / Zero values;

• Borehole deviations;

• Gaps;

• Overlaps;

• Drill hole collar versus topography;

• Datum;

• Laboratory certificate versus database values.

RPA reviewed the error report generated by Datamine Studio RM from the database text files

provided and did not note any significant errors.

RPA AUDIT OF DRILL HOLE DATABASE

LITHOLOGY RPA compared over 5% of lithology logs contained within the digital drill hole database (20

holes) to the original lithology logs stored on site. Many holes logged before 2007 had been

reinterpreted by VMH due to an update of the genetic model. RPA found these updates to be

incorporated into the lithology database. Two holes were identified as having differing

lithologies. Investigation by RPA revealed that the GeoExplo database was not updated

correctly after the lithology log was updated by the geologist. These errors were corrected in

the database by VMH geologists and are not expected to impact the Mineral Resource

estimate.

During the site visit in 2012, RPA compared drill holes FPAR339, FPAR273, and FPAR343

from the start to the end to the lithology logs and the final assay results. During the site visit

in 2017, RPA compared drill holes BRAPDD0055, BRAPDD0137, and BRAPDD0087 from the

start to the end to the lithology logs and the final assay results. Drill hole contacts agreed with

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the logging results, and grades of zinc, lead, and copper were observed to correlate to sulphide

content. Alteration was noted where present.

ASSAY 2012 RPA compared 5% of the sample database to Assay Certificates from ALS. No major

discrepancies were found; however, the following was noted:

1. Over detection limit ICP results prior to 2007 were overwritten in the database with AA results, converted to a blank value in 2008, and recoded as 1.5x detection limit in 2012. Consistent treatment of over detection limit samples was recommended. If possible, these samples should be recorded in the database as received (>100).

2. Many certificates between August 30, 2007 and January 2008 appear to not contain any internal QA/QC data. This is evidenced by sequential sample numbering in the assay database, and cross checks with the QA/QC database provided to RPA. RPA recommended that QA/QC samples be included in every sample batch.

3. Inaccurate tabulation of assay values led to the exclusion of 35% of silver assays within the resource zone of Ambrex. RPA recommended that future updates incorporate these assays and that further QA/QC checks be put in place to prevent future exclusion of valid assay data.

2016 RPA compared 18% of the sample database to Assay Certificates from ALS received from

2013 to 2015. No material discrepancies were found.

RPA also confirmed that the 2012 tabulation error of silver values was resolved. RPA reviewed

the final grade fields and scripts used for combining a series of analytical procedures (over

limit sampling) and found the fields to be correctly tabulated.

2017 RPA compared 6% of the sample database to Assay Certificates from ALS received from 2015

to 2016. No major discrepancies were found.

DENSITY RPA compared measured density values by rock unit at Arex and Ambrex. Density values

less than 2 t/m3 (excluding oxide material) and greater than 5 t/m3 were considered outliers

based on cumulative distributions and removed from the database. Basic statistics of density

data are displayed in Figure 12-1 (Arex) and Figure 12-2 (Ambrex). Samples designated as

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stratabound mineralization by logging geologists were found to have the highest density at

both Arex and Ambrex, followed by stringer mineralization. Little variance exists in any of the

other rock units; however, some mineralized hydrothermal zone samples reported high density

values.

RPA is of the opinion that the drill hole database has been maintained to a high standard and

is suitable to support Mineral Resource and Mineral Reserve estimation.

FIGURE 12-1 DENSITY MEASUREMENTS AT AMBREX BY ROCK UNIT

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FIGURE 12-2 DENSITY MEASUREMENTS AT AREX BY ROCK UNIT

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13 MINERAL PROCESSING AND METALLURGICAL TESTING INTRODUCTION An extensive number of studies were carried out from 2005 to 2013 for the Aripuanã Zinc

Project in order to identify the best processing option. The evolution of the key studies and

the process technologies under consideration were documented (VMH, 2015) and reported

previously (RPA, 2017). The optimum process route was defined through an advanced

metallurgical study and it was determined that sequential flotation (Cu-Pb-Zn) presented better

recoveries and concentrate grades than bulk flotation.

Additional test work on drill core from the Aripuanã Zinc Project was conducted by SGS

GEOSOL from May 2016 to January 2017 to provide experimental data to support engineering

studies. Information on sample validation and additional metallurgical testing has largely been

provided by Validaçao das Amostras Selecionadas para Teste Metalurgico (LCASSIS

Consultoria em Recursos Minerais (LCASSIS), 2017), the SGS GEOSOL Report (SGS

GEOSOL, 2017), and the Metallurgical Testwork Report (Worley Parsons, 2017a).

METALLURGICAL SAMPLING Three master composite samples representing the Arex Stratabound, Arex Stringer, and

Ambrex Stratabound deposits were prepared from original drill core. These samples were

subjected to comminution, flotation, rheology, settling, and filtration bench scale tests, as well

as chemical and mineralogical characterization (SGS GEOSOL, 2017).

Shipments of samples for testing included:

• First shipment (May 2016) – 100 kg sample from the Arex body; material was combined to form a composite sample (75% Arex Stratabound, 25% Arex Stringer) for preliminary flotation test work in Phase 1 testing.

• Second shipment (July 2016) – 550 kg sample; core samples were combined to form three master composites: Arex Stringer, Arex Stratabound, and Ambrex Stratabound, which were used for optimization and definitive flotation tests.

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• Variability Samples (July 2016) – 500 kg sample; core samples were combined to form ten Arex Stringer variability samples, ten Arex Stratabound variability samples, and eight Ambrex variability samples.

Detailed sample preparation for comminution was conducted by SGS GEOSOL to generate

representative aliquots of material in specific size intervals for different types of tests. The

material for comminution testing was sent to SGS Chile, while Bond Ball Mill Grindability testing

was conducted at SGS GEOSOL.

Material crushed to 2.0 mm was homogenized and separated into one kilogram sub-samples,

which were placed in plastic bags, sealed, and stored in a freezer for flotation test work.

Figures 13-1 and 13-2 illustrate the location of the metallurgical samples selected relative to

the Life of Mine (LOM) stopes and the representativeness of sampling in each deposit.

Source: Votorantim Metais, 2017.July 2017

A LOM stopes (grey wireframe) andrex samples selected (pink dots).

Location of ArexMetallurgical Samples


VM Holding S.A.

Figure 13-1

13-3

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w.rp

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.co

m


Ambrex LOM stopes (grey wireframe) and samples selected (pink dots).

Location of AmbrexMetallurgical Samples


VM Holding S.A.

Figure 13-2

13-4

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METALLURGICAL TESTING

PHASE 1 The 2016 metallurgical test program was carried out in two phases. In Phase 1, a single bulk

master composite sample of Arex Stringer and Stratabound mineralization representing both

deposits at a ratio of 75% Stratabound to 25% Stringer mineralization was tested. Twenty-

four open circuit bench scale flotation tests and two locked cycle tests (LCT) were conducted

using the blended composite sample. The purpose of the testing was to verify the primary

grind size (as this has implications for the downstream backfill plant) and to confirm if treating

a blended mineralization would result in good metallurgical performance, when compared to

treating the materials separately. Information on preliminary flotation test work is presented in

detail in Appendix G of the SGS GEOSOL Report.

Preliminary test results indicated that a sequential flotation circuit with a short talc pre-flotation

step followed by talc depression at a coarse primary grind size of P80 (80% passing) of 150 µm

produced acceptable results (see Table 13-1). The results were as follows:

• Final Cu concentrate: 30.3% Cu, 80.4% recovery.

• Final Pb concentrate: 45.4% Pb, 91.5% recovery (although zinc contamination of the lead concentrate was high).

• Final Zn concentrate: 56.3% Zn, 83.9% recovery

Although parameters were not optimized, circuit conditions were identified for use in the next

phase of testing. The overall results from LCT were consistent with previous LCT and the Zn

and Pb concentrate quality was higher than previous results. A blended composite of the Arex

mineralization resulted in acceptable metallurgical performance in Phase 1 testing.

TABLE 13-1 PHASE 1 - LCT 2 RESULTS VM Holding S.A. – Aripuanã Zinc Project

Grade (%) Recovery (%)

Product Cu Fe MgO Pb Zn S Cu Fe MgO Pb Zn S

Calculated Feed 0.59 15.5 12.1 1.61 3.50 8.40

Talc Rougher Conc. 0.57 14.9 11.0 1.60 3.80 7.59 9.52 1.43 4.14 1.17 0.70 1.31

Copper Recleaner Conc. 30.3 29.0 0.59 1.50 4.66 33.4 80.43 2.95 0.08 1.39 1.86 6.68

Lead Recleaner Conc. 0.62 12.9 1.88 45.4 11.6 20.8 3.48 2.77 0.55 91.50 9.85 8.84

Zinc Recleaner Conc. 0.20 9.02 0.10 0.44 56.3 35.5 1.99 3.43 0.05 1.57 83.92 26.55

Final Tailings 0.09 15.1 12.2 0.10 0.19 4.91 14.09 90.86 99.32 5.54 4.38 57.93

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PHASE 2 In Phase 2 testing, a more comprehensive testing program was undertaken on both blended

and individual Arex and Ambrex materials and variability testing was conducted on the different

lithologies (SGS GEOSOL, 2017). Test work consisted of comminution, flotation, mineralogy,

thickening, filtration, and rheology testing. Bench scale flotation tests were conducted to

establish circuit parameters for various mineralization blends, before conducting LCT. A series

of LCT were carried out on each master composite sample and various blends to optimize

circuit performance and to evaluate the flowsheet configuration. Information on optimization

flotation test work is presented in detail in Appendix H of the SGS GEOSOL Report. Optimum

conditions from development test work were applied to testing various variability samples.

COMMINUTION A variety of comminution test work was completed, including:

• CWi (Crushing Work Index)

• SMC (Semi-Autogenous Grinding (SAG) Mill Comminution)

• SPI (SAG Power Index)

• BWi (Bond Work Index)

• Ai (Bond Abrasion Index)

Information on comminution test work is presented in detail in Appendix E of the SGS GEOSOL

Report. A brief description of these tests and the results are summarized below.

CWi

The Bond Impact Work Index can be determined from the CWi test and used to calculate net

power requirements for sizing crushers. Also, this index can be used to determine the required

open sized settings for jaw crushers and gyratory crushers, or closed sized settings (cone) to

achieve a given product size. Table 13-2 summarizes the results of CWi testing. Arex Stringer

mineralization is considered to be moderately hard, while Ambrex is classified as soft.

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TABLE 13-2 CWI RESULTS VM Holding S.A. – Aripuanã Zinc Project

Sample Maximum

Impact Work Index

Minimum Impact Work Index

Average Impact Work Index Specific gravity

Arex STB 18.47 4.39 9.13 3.31 Arex STR 18.81 4.83 9.32 2.93 Ambrex 10.91 3.87 6.35 3.67

Notes: STB – Stratabound, STR – Stringer

SMC

SMC results are used to determine the drop weight index (DWi), which is a measure of the

strength of the rock when broken under impact conditions. The DWi is directly related to the

JK rock breakage parameters A and b, which can be used to estimate these parameters. The

JKTech Abrasion Test determines the parameter, Ta, which characterizes the resistance of the

particles to fracture by abrasion. If the value of Ta is low, then there is a higher resistance to

abrasion. The results of SMC testing are summarized in Table 13-3.

TABLE 13-3 SMC RESULTS VM Holding S.A. – Aripuanã Zinc Project

Sample DWi

(kWh/m3) A b A x b SG Ta

Arex STB 5.83 56.5 0.95 53.7 3.12 0.44 Arex STR 9.42 54.2 0.57 30.9 2.92 0.27 Ambrex 6.86 59.2 0.85 50.3 3.45 0.38

SPI

SPI is a measure of the hardness of an ore from a SAG (Semi-Autogenous Grinding) or AG

(Autogenous Grinding) perspective and the test measures the energy required to perform a

standard size reduction. The tests are aimed at determining SAG and ball mill power

requirements.

SPI determinations were conducted for all master composite and variability samples (total of

30 samples) and the results are presented in Table 13-4. SGS Chile did not convert SPI

minutes into power, therefore SPI values were not used in any comminution simulations. The

results did not show a wide variation in hardness within the deposit. Samples were

characterized as soft to moderate and the average SPI value for variability samples was 59.6

minutes.

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TABLE 13-4 SPI RESULTS VM Holding S.A. – Aripuanã Zinc Project

Sample Number Sample SPI (minutes)

Arex Stratabound (STB) Master Composite 47 Arex Stringer (STR) Master Composite 88 Ambrex Stratabound (STB) Master Composite 48 1 Arex STB Variability – High Sulphur 44 2 Arex STB Variability – Tremolite 55 3 Arex STB Variability – Pyrrhotite 80 4 Arex STB Variability – High Zinc 68 5 Arex STB Variability – Low Iron 47 6 Arex STB Variability – Low Zinc 52 7 Arex STB Variability – Pyrite 63 8 Arex STB Variability – Talc 39 9 Arex STB Variability – Chlorites 78 10 Arex STB Variability – Carbonates 44 11 Arex STR Variability – Low Iron 66 12 Arex STR Variability –Sulphur 81 13 Arex STR Variability – High Pyrrhotite 71 14 Arex STR Variability – High Gold 79 15 Arex STR Variability – High Pyrite 67 16 Arex STR Variability – High Copper 78 17 Arex STR Variability – Talc 53 18 Arex STR Variability – High Iron 81 19 Arex STR Variability – Low Copper 69 20 Ambrex STB Variability – Low Zinc 46 21 Ambrex STB Variability – Carbonates 40 22 Ambrex STB Variability – Pyrrhotite 62 23 Ambrex STB Variability – Talc 50 24 Ambrex STB Variability – High Zinc 54 25 Ambrex STB Variability – Sulphides 55 26 Ambrex STB Variability – Pyrite 47 27 Ambrex STB Variability – Tremolite 40

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TABLE 13-5 BWI RESULTS VM Holding S.A. – Aripuanã Zinc Project

Sample Number Sample BWi (kWh/t)

Arex Stratabound (STB) Master Composite 10.6 Arex Stringer (STR) Master Composite 12.4 Arex Mix 12.1 Ambrex Stratabound (STB) Master Composite 10.8 / 10.3 1 Arex STB Variability – High Sulphur 8.6 2 Arex STB Variability – Tremolite 9.9 3 Arex STB Variability – Pyrrhotite 12.1 4 Arex STB Variability – High Zinc 10.6 5 Arex STB Variability – Low Iron 8.9 6 Arex STB Variability – Low Zinc 11.8 7 Arex STB Variability – Pyrite 10.8 8 Arex STB Variability – Talc 9.9 9 Arex STB Variability – Chlorites 11.2 10 Arex STB Variability – Carbonates 11.8 11 Arex STR Variability – Low Iron 11.9 12 Arex STR Variability –Sulphur 12.4 13 Arex STR Variability – High Pyrrhotite 13.6 14 Arex STR Variability – High Gold 12.7 15 Arex STR Variability – High Pyrite 12.9 16 Arex STR Variability – High Copper 14.2 17 Arex STR Variability – Talc 14.1 18 Arex STR Variability – High Iron 14.6 19 Arex STR Variability – Low Copper 12.9 20 Ambrex STB Variability – Low Zinc 9.5 21 Ambrex STB Variability – Carbonates 9.9 22 Ambrex STB Variability – Pyrrhotite 11.1 23 Ambrex STB Variability – Talc 10.2 24 Ambrex STB Variability – High Zinc 10.3 25 Ambrex STB Variability – Sulphides 10.4 26 Ambrex STB Variability – Pyrite 9.1 27 Ambrex STB Variability – Tremolite 9.6

BWi

BWi determinations were performed on master composites and all variability samples. A total

of 31 BWi determinations were carried out using a closing screen size of 150 µm. Table 13-5

lists the BWi results. No major difference was noted between the master composites and the

variability samples. The material is classified as moderate to soft based on the BWi results.

Ai

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Ai can be used to determine steel media and liner wear in crushers, rod mills, and ball mills.

The Ai results are summarized in Table 13-6 and the mineralization is moderately abrasive.

TABLE 13-6 AI RESULTS VM Holding S.A. – Aripuanã Zinc Project

Sample Ai

Arex Stratabound Master Composite 0.086 Arex Stringer Master Composite 0.1425

Ambrex Master Composite 0.1448

RWi

RWi can be used to calculate net power requirements of the mill circuit, where the mill operates

in closed circuit with a classifier. The RWi results are listed in Table 13-7.

TABLE 13-7 RWI RESULTS VM Holding S.A. – Aripuanã Zinc Project

Sample RWi

Arex Stratabound Master Composite 12.2 Arex Stringer Master Composite 15.4

Ambrex Master Composite 11.2 FLOTATION Phase 2 flotation testing was conducted using master composite samples of the Arex

Stratabound, Arex Stringer, and Ambrex Stratabound mineralization, as well as three Arex

blended mineralization with varying ratios of Stratabound to Stringer material (i.e., 75%:25%,

50%:50%, and 25%:75%). The main objective of this phase of testing was to determine the

best grade and recovery achievable for each sample under different reagent dosages and

flotation times under a sequential flotation scheme (Cu-Pb-Zn). The test program and results

were documented in detail by SGS GEOSOL.

A simplified diagram of the sequential flotation process developed is illustrated in Figure 13-3.

The optimization test work determined that the best LCT results in terms of concentrate grades

and recoveries achieved were as follows (SGS GEOSOL, 2017):

• Arex Stratabound master composite: LCT 028

• Arex Stringer master composite: LCT 011 and LCT 025 (copper flotation only)

• Arex Mixed (75% Stratabound, 25% Stringer): LCT 030

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• Ambrex Stratabound master composite: LCT 029

The results from these tests are summarized in Tables 13-8 to 13-14 and the key findings are

as follows:

• Master composites of Arex Stratabound and Ambrex Stratabound mineralization were similar in Zn and Pb feed assays and Zn and Pb flotation recovery, however, the Ambrex sample exhibited low copper concentrate grade and recovery.

• The Arex Stringer master composite sample was high in Cu feed assay and the resulting Cu concentrate was also high in grade and recovery. Zn and Pb concentrate grades and recovery were low, because the feed grades of Zn and Pb were low.

• The Arex Mixed sample (75% Stratabound, 25% Stringer) exhibited the best flotation results:

o Cu concentrate: 31.3% Cu, 76.9% recovery o Pb concentrate: 51.7% Pb, 82.4% recovery o Zn concentrate: 52.4% Zn, 83.9% recovery

• Treatment of Ambrex Stratabound mineralization is still a work in progress, as

concentrate grades for Zn and Pb were below target.

• Cycles on the majority of LCT were not stabilized, thus an additional campaign of testing is recommended to confirm results.

• Flotation columns are preferred and widely accepted in industry for use in the final cleaning stage, however, column flotation testing has not been carried out at the bench scale.

FEED ROUGHER

ROUGHER

TALC PRE-FLOAT COPPER FLOTATION

TALC TAIL

CLEANER

1stCLEANER

1stCLEANER

2ndCLEANER

2ndCLEANER

2ndCLEANER

COPPERFINAL CONC

LEADFINAL CONC

ROUGHER

FINAL TAIL

ZINC RGH TAIL

ZINC FLOTATION

1stCLEANER

ROUGHER

ZINCFINAL CONC

LEAD FLOTATION


Simplified SequentialFlotation Circuit


VM Holding S.A.

Figure 13-3

13-1

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TABLE 13-8 SUMMARY OF KEY OPTIMIZATION LCT RESULTS VM Holding S.A. – Aripuanã Zinc Project

Grade DistributionCu %

Pb %

Zn %

Mg %

Fe %

Au ppm

Ag ppm

Wt. %

Cu %

Pb %

Zn %

Mg %

Fe %

Au %

Ag %

LCT 028 – Arex Stratabound Master Composite Calculated feed 0.33 1.53 4.51 7.03 12.9 0.20 33.7 100 100 100 100 100 100 100 100

Talc tail 0.04 0.73 2.30 11.6 8.21 17.5 2.11 8.36 8.92 28.9 11.1 Cu final conc. 26.7 3.63 7.16 0.79 31.7 11.3 1,068 0.86 69.5 2.05 1.37 0.10 2.11 49.7 27.2 Pb final conc. 0.81 60.6 8.39 0.54 5.89 1.53 852 2.01 4.92 79.8 3.74 0.15 0.92 15.6 50.7 Zn final conc. 0.26 0.54 48.6 0.98 9.38 0.24 40.0 7.64 6.01 2.70 82.5 1.06 5.55 9.34 9.06 Rougher tail 0.08 0.15 0.22 6.81 14.4 72.0 17.4 7.08 3.5 69.8 80.3

LCT 011 – Arex Stringer Master Composite Calculated feed 1.02 0.18 0.24 2.62 11.2 0.5 12.5 100 100 100 100 100 100 100 100

Talc tail Due to the low content of talc in feed, talc flotation was excluded from LCT circuit in this test Cu final conc. 25.4 2.68 4.45 0.43 33.1 13.5 253 3.85 95.7 55.8 71.8 0.64 11.4 93.3 77.7 Pb final conc. 1.93 10.7 3.85 1.69 31.7 4.65 210 0.67 1.26 38.6 10.8 0.43 1.89 6.3 11.2 Zn final conc. 0.46 0.20 4.89 3.80 17.5 0.31 12.0 0.48 0.21 0.50 9.5 0.67 0.72 0.29 0.44 Rougher tail 0.03 0.01 0.02 2.71 10.1 95.0 2.79 5.14 7.97 98.3 86.0

LCT 025 – Arex Stringer Master Composite (copper flotation only) Calculated feed 1.02 0.19 0.26 2.34 11.2 0.49 12.5 100 100 100 100 100 100 100 100

Talc tail Due to the low content of talc in feed, talc flotation was excluded from LCT circuit in this test Cu final conc. 26.7 1.84 2.63 0.54 36.2 13.8 252 3.73 98.1 35.4 37.5 0.87 12.1 93 75.1 Pb final conc. Due to the low content of lead in feed, lead flotation excluded from LCT circuit in this test Zn final conc. Due to the low content of zinc in feed, zinc flotation excluded from LCT circuit in this test Rougher tail 0.02 0.13 0.17 2.41 10.2 96.3 1.89 64.6 62.5 99.1 87.9

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Grade DistributionCu %

Pb %

Zn %

Mg %

Fe %

Au ppm

Ag ppm

Wt. %

Cu %

Pb %

Zn %

Mg %

Fe %

Au %

Ag %

LCT 030 – Arex Mixed (75% Stratabound ore, 25% Stringer ore) Calculated feed 0.45 1.34 3.56 5.90 12.2 0.27 28.4 100 100 100 100 100 100 100 100

Talc tail 0.06 0.64 1.56 11.8 8.28 13.1 1.75 6.22 5.73 26.1 8.88 Cu final conc. 31.3 1.14 3.45 0.28 35.2 14.4 660 1.10 76.9 0.93 1.06 0.05 3.17 58.4 25.5 Pb final conc. 1.45 51.7 10.4 0.49 12.0 2.8 741 2.14 6.95 82.4 6.26 0.18 2.11 22.0 55.8 Zn final conc. 0.31 0.81 52.4 0.66 9.65 0.3 44.0 5.69 3.95 3.43 83.9 0.63 4.51 6.32 8.81 Rougher tail 0.06 0.12 0.14 5.52 12.7 78.0 10.5 6.97 3.1 73.1 81.3

LCT 009 – Ambrex Stratabound Master Composite Calculated feed 0.08 1.89 4.36 5.38 17.0 0.18 36.7 100 100 100 100 100 100 100 100


LCT 029 – Ambrex Stratabound Master Composite Calculated feed 0.07 1.64 4.39 5.11 20.5 0.18 36.7 100 100 100 100 100 100 100 100


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TABLE 13-9 LCT 028 CONDITIONS AND RESULTS– AREX STRATABOUND MASTER COMPOSITE

VM Holding S.A. – Aripuanã Zinc Project

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TABLE 13-10 LCT 011 CONDITIONS AND RESULTS– AREX STRINGER MASTER COMPOSITE


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TABLE 13-11 LCT 025 CONDITIONS AND RESULTS– AREX STRINGER MASTER COMPOSITE


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TABLE 13-12 LCT 030 CONDITIONS AND RESULTS– AREX MIX (75% STRATABOUND, 25% STRINGER)


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TABLE 13-13 LCT 009 CONDITIONS AND RESULTS– AMBREX STRATABOUND MASTER COMPOSITE VM Holding S.A. – Aripuanã Zinc Project

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TABLE 13-14 LCT 029 CONDITIONS AND RESULTS– AMBREX STRATABOUND MASTER COMPOSITE VM Holding S.A. – Aripuanã Zinc Project

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RPA has reviewed the concentrate grades and recovery assumptions in the VMH LOM cash

flow model for the Aripuanã Zinc Project and there are inconsistencies in the figures in

comparison to the metallurgical test data (Table 13-15). In some cases where the LOM

assumption differs from the test data, VMH has chosen to select the average of the last three

LCT results, however, the LOM assumptions for the silver and gold recoveries appear to be

the same as the reported test results. In RPA’s opinion, the metallurgical test results should

be referenced in a manner that is consistent for all LOM assumptions (i.e., using the final

concentrate grades and recoveries) and the assays of any penalty elements should be

reported.

Based on a review of available metallurgical data, RPA is of the opinion that any deleterious

elements that could have a significant effect on potential economic extraction should be further

examined. If tremolite material is present (Worley Parsons, 2017b), then this may have

implications in processing.

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TABLE 13-15 COMPARISON OF METALLURGICAL DATA VM Holding S.A. – Aripuanã Zinc Project

Description Value in LOM model

Test data Test RPA Comments

System 1 – Arex Stringer

Cu Concentrate

VMH states that LCT 025 was used to represent Arex Stringer

mineralization and that the LOM assumptions refer to the average of

the last three LCT results. Cu Recovery (%) 95.7 LCT 011

Cu Grade (%) 25.4 LCT 011 Ag Recovery (%) 77.7 LCT 011 Au Recovery (%) 93.3 LCT 011 Cu Recovery (%) 96.0 98.1 LCT 025 LOM assumption < test data

Cu Grade (%) 27.3 25.1 LCT 025 LOM assumption > test data Ag Recovery (%) 75.1 75.1 LCT 025

Au Recovery (%) 93.3 93.0 LCT 025 LOM data appears to reference LCT 011 data

Cu Concentrate Cu Recovery (%) 96.0 95.7 LCT 011

Cu Grade (%) 27.3 25.4 LCT 011 LOM assumption > test data Ag Recovery (%) 75.1 77.7 LCT 011 LOM assumption < test data Au Recovery (%) 93.3 93.3 LCT 011 System 2 – Arex Stratabound Cu Concentrate Cu Recovery (%) 67.6 69.5 LCT 028 LOM assumption < test data

Cu Grade (%) 26.8 26.7 LCT 028 Ag Recovery (%) 27.2 27.2 LCT 028 Au Recovery (%) 49.7 49.7 LCT 028 Pb Concentrate Pb Recovery (%) 83.0 79.8 LCT 028 LOM assumption > test data

Pb Grade (%) 62.8 60.6 LCT 028 LOM assumption > test data Ag Recovery (%) 50.7 50.7 LCT 028 Au Recovery (%) 15.6 15.6 LCT 028 Zn Concentrate Zn Recovery (%) 82.4 82.5 LCT 028

Zn Grade (%) 49.0 48.6 LCT 028 Ag Recovery (%) 9.1 9.06 LCT 028 Au Recovery (%) 9.34 LCT 028 System 3 – Arex Mix (75% Stratabound, 25% Stringer) Cu Concentrate Cu Recovery (%) 72.0 76.9 LCT 030 LOM assumption < test data

Cu Grade (%) 30.8 31.3 LCT 030 LOM assumption < test data Ag Recovery (%) 25.5 25.5 LCT 030 Au Recovery (%) 58.4 58.4 LCT 030

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Pb Concentrate Pb Recovery (%) 81.3 82.4 LCT 030 LOM assumption < test data

Pb Grade (%) 55.9 51.7 LCT 030 LOM assumption > test data Ag Recovery (%) 55.8 55.8 LCT 030 Au Recovery (%) 22.0 22.0 LCT 030 Zn Concentrate Zn Recovery (%) 80.0 83.9 LCT 030 LOM assumption < test data

Zn Grade (%) 52.0 52.4 LCT 030 Ag Recovery (%) 8.8 8.81 LCT 030 Au Recovery (%) 6.32 LCT 030 System 4 – Ambrex Stringer (STR)

Cu Concentrate

LOM assumptions are the same as System 1 – Arex Stringer.

Metallurgical testing was not conducted.

Cu Recovery (%) 96.0 Cu Grade (%) 27.3

Ag Recovery (%) 75.1 Au Recovery (%) 93.0 System 5 – Ambrex Stratabound

Cu Concentrate LOM Ambrex STB data is identical to Arex STB data

Cu Recovery (%) 67.6 40.3 LCT 029 LOM assumption > test data Cu Grade (%) 26.8 24.6 LCT 029 LOM assumption > test data

Ag Recovery (%) 9.7 9.72 LCT 029 Au Recovery (%) 33.7 33.7 LCT 029

Pb Concentrate LOM Ambrex STB data is identical to Arex STB data

Pb Recovery (%) 83.0 74.9 LCT 029 LOM assumption > test data Pb Grade (%) 62.8 40.8 LCT 029 LOM assumption > test data

Ag Recovery (%) 38.3 38.3 LCT 029 Au Recovery (%) 30.2 30.2 LCT 029

Zn Concentrate LOM Ambrex STB data is identical to Arex STB data

Zn Recovery (%) 82.4 84.7 LCT 029 LOM assumption < test data Zn Grade (%) 49.0 45.3 LCT 029 LOM assumption > test data

Ag Recovery (%) 11.6 11.6 LCT 029 Au Recovery (%) 17.6 LCT 029 System 6 – Ambrex Mix (75% Stratabound, 25% Stringer)

Cu Concentrate

LOM assumptions are the same as System 2 – Arex Stratabound. Metallurgical testing was not

conducted Cu Recovery (%) 72.0

Cu Grade (%) 30.8 Ag Recovery (%) 25.5 Au Recovery (%) 58.4

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Pb Concentrate


conducted Pb Recovery (%) 81.3

Pb Grade (%) 55.9 Ag Recovery (%) 55.8 Au Recovery (%) 22.0

Zn Concentrate


conducted Zn Recovery (%) 80.0

Zn Grade (%) 52.0 Ag Recovery (%) 8.8 Au Recovery (%)

Optimum conditions from development test work were applied to flotation testing of different

variability samples. Each variability sample was subjected to Cu, Pb, and Zn flotation via an

open cleaner circuit (same configuration used for LCT, except that there was no recirculation

of cleaner and recleaner tailings). Talc flotation was only performed on samples from Arex

Stratabound or Ambrex Stratabound mineralization.

The results from variability flotation testing are presented in detail in Appendix I of the SGS

GEOSOL Report. Figures 13-4 and 13-5 illustrate the variation of metal assays in the flotation

products. There are large variations in metal assay and metal distribution to the talc tail and

recleaner concentrates. In the cases where the variation was negative, the results for the

variability sample were below the result obtained for the respective master composite with the

exception of zinc reported in the zinc recleaner concentrate.

SETTLING, RHEOLOGY, AND FILTRATION Settling and rheology test work on feed samples from master composites of the Arex and

Ambrex individual materials and the Arex Mixed material was conducted at SGS Chile. Details

of the test work program are presented in Appendix J of the SGS GEOSOL Report. The best

settling results were obtained using 3 g/t of the BASF Magnafloc 10 flocculant (see Table 13-

16). Rheology test work on the products from settling tests was also conducted using a Hake

550 viscometer (Figures 13-6 and 13-7).

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TABLE 13-16 SUMMARY OF SETTLING TESTS USING MAGNAFLOC 10 FLOCCULANT (3 G/T)


Parameter Arex Stratabound Arex Stringer

Arex Mixed (75% Stratabound, 25% Stringer)

Ambrex Stratabound

Initial % solids 18 18 18 18

% solids after sedimentation 65 66 66 67

Settling velocity (mm/s) 1.5 2 2 2

Unit area (m2/tph) 0.7 0.5 0.5 0.6

Yield point no shear (PA) 52 29 42 41

Yield point full shear (PA) 1.7 0.6 2.3 2.3

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FIGURE 13-4 VARIATION OF METAL ASSAYS IN FLOTATION PRODUCTS

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FIGURE 13-5 VARIATION OF METAL ASSAYS IN FLOTATION PRODUCTS

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FIGURE 13-6 YIELD STRESS VS. SOLIDS PERCENTAGE

FIGURE 13-7 VISCOSITY VS. SOLIDS PERCENTAGE

Settling test work on flotation tailings from Arex Stratabound, Arex Stringer, and Arex Mixed

(75% Stratabound, 25% Stringer) mineralization was conducted by ANDRITZ. Details of the

test work program are presented in Appendix K of the SGS GEOSOL Report. Filtration testing

of the Ambrex Stratabound flotation tailings was also performed. The best settling results were

obtained using the BASF Magnafloc 10 flocculant, resulting in 60% to 75% solids in the

products. A summary of the filtration test work is presented in Table 13-17.

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TABLE 13-17 SUMMARY OF FILTRATION TEST WORK CONDUCTED BY ANDRITZ


Operating Parameter

Arex Stratabound Arex Stringer

Arex Mixed (75% Stratabound, 25% Stringer)

Ambrex Stratabound

Filtration throughput – dry

basis (tph) 211 211 211 211

Production days per year 365 365 365 365

Equipment availability (%) 90 90 90 90

Pulp density (t/m3) 1.71 1.65 1.66 1.63

Feed solids content (%) 61 61 63 63

Cake thickness (mm) 40 40 40 40

Cake moisture (%) 7 9 9 7

Cake solids content (%) 93 91 91 93

Approximate filtration rate

(kg/h·m2) 104 94 92 94

Recommended filter press model Overhead Overhead Overhead Overhead

Recommended number of units 2 2 2 2

Recommended frame 2000/180 2000/180 2000/180 2000/180

Recommended filter fabric Andritz 211k Andritz 211k Andritz 211k Andritz 211k

Feed pressure (bar) 6 6 6 6

Chamber pressure (bar) 8 8 8 8

Chamber size (mm) 2000x2000 2000x2000 2000x2000 2000x2000

Number of chambers per

unit 146 to 152 162 to 168 166 to 168 162 to 168

SUMMARY In RPA’s opinion, the metallurgical test program undertaken to date for the Aripuanã Zinc

mineralization was detailed and systematic in approach.

To process Aripuanã Zinc mineralization, the material should be fed separately to improve

copper recovery and to reduce costs particularly when processing Copper Stringer material.

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Since Copper Stringer materials do not have significant zinc and lead grades, copper

processing should be separate for flotation and filtration and it is expected that the lead and

zinc circuits will be by-passed.

RPA recommends that metallurgical test results be referenced in a manner that is consistent

for all LOM assumptions (i.e., using the final concentrate grades and recoveries) and the

recoveries and the assays of any penalty elements be reported. Also, any deleterious

elements (e.g., potential tremolite material) that could have a significant effect on potential

economic extraction should be further examined.

Additional test work should be carried out to develop and to optimize Zn/Pb recovery circuits

on Ambrex materials, to conduct additional mineralogical analysis, to extend the variability

analysis to a full geometallurgical program using samples from different locations in the

deposits, and to conduct pilot plant test work to confirm the performance of the circuit selected.

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14 MINERAL RESOURCE ESTIMATE The Mineral Resource estimate, dated December 23, 2016 was completed by VMH personnel

using Datamine Studio 3, Leapfrog Geo, and Isatis softwares. Wireframes for geology and

mineralization were constructed in Leapfrog Geo based on geology sections, assay results,

lithological information, and structural data. Assays were capped to various levels based on

exploratory data analysis and then composited to one metre lengths. Wireframes were filled

with blocks measuring 5 m by 10 m by 5 m with sub-celling at wireframe boundaries. Blocks

were interpolated with grade using Ordinary Kriging (OK) and Inverse Distance Squared (ID2).

Blocks estimates were validated using industry standard validation techniques. Classification

of blocks was based on distance based criteria.

RPA has audited and accepted the VMH Mineral Resource estimate.

RPA is not aware of any environmental, permitting, legal, title, taxation, socio-economic,

marketing, political, or other relevant factors that could materially affect the Mineral Resource

estimate.

A summary of the Mineral Resources is provided in Table 14-1, with Table 14-2 listing Mineral

Resources by area.

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TABLE 14-1 MINERAL RESOURCE STATEMENT, DECEMBER 23, 2016 VM Holding S.A. – Aripuanã Zinc Project


Stratabound Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (Mlb) Pb (Mlb) Cu (Mlb) Au (koz) Ag (Moz)

Measured 8.6 5.88 2.16 0.19 0.23 52.65 1,109.0 407.1 36.0 64.2 14.5


Inferred 13.2 7.20 2.80 0.10 0.38 62.50 2,099.7 815.4 29.4 162.7 26.6

Stringer Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (Mlb) Pb (Mlb) Cu (Mlb) Au (koz) Ag (Moz)

Measured 2.3 0.28 0.12 1.54 1.18 17.61 14.4 6.3 78.5 87.8 1.3

Indicated 1.2 0.11 0.05 0.97 1.28 11.21 2.7 1.4 24.5 47.5 0.4 Measured and Indicated 3.5 0.22 0.10 1.35 1.21 15.49 17.2 7.7 103.1 135.3 1.7

Inferred 11.4 0.08 0.05 0.78 1.55 9.31 19.3 13.5 197.0 569.7 3.4

Total Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (Mlb) Pb (Mlb) Cu (Mlb) Au (koz) Ag (Moz)

Measured 10.9 4.68 1.72 0.48 0.43 45.18 1,123.5 413.5 114.6 152.0 15.8


Inferred 24.6 3.90 1.53 0.42 0.93 37.88 2,119.0 829.0 226.4 732.4 30.0 Notes:




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TABLE 14-2 MINERAL RESOURCES BY TYPE AND AREA, DECEMBER 23, 2016



Stra

tabo

und

Arex Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (Mlb) Pb (Mlb) Cu (Mlb) Au (koz) Ag (Moz)

Measured 3.9 6.10 2.15 0.34 0.28 55.66 526.2 185.2 29.1 34.9 7.0 Indicated 0.7 6.71 2.03 0.30 0.38 42.29 98.4 29.7 4.3 8.1 0.9 Measured and Indicated 4.6 6.19 2.13 0.33 0.29 53.72 624.6 215.0 33.4 43.0 7.9

Inferred 1.4 6.32 2.08 0.28 0.49 31.93 194.1 64.0 8.5 22.1 1.4

Ambrex Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (Mlb) Pb (Mlb) Cu (Mlb) Au (koz) Ag (Moz)

Measured 4.6 5.69 2.17 0.07 0.20 50.11 582.8 221.9 6.9 29.3 7.5 Indicated 9.1 5.28 2.03 0.07 0.24 48.23 1,062.5 407.5 14.4 71.4 14.1 Measured and Indicated 13.8 5.42 2.07 0.07 0.23 48.86 1,645.3 629.3 21.3 100.7 21.6

Inferred 11.8 7.31 2.88 0.08 0.37 66.10 1,905.7 751.4 21.0 140.6 25.1

Strin

ger

Arex Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (Mlb) Pb (Mlb) Cu (Mlb) Au (koz) Ag (Moz)


Inferred 1.7 0.04 0.04 0.62 3.67 9.14 1.4 1.7 23.7 203.0 0.5

Ambrex Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (Mlb) Pb (Mlb) Cu (Mlb) Au (koz) Ag (Moz)


Inferred 9.7 0.08 0.06 0.81 1.18 9.34 17.9 11.9 173.3 366.6 2.9 Notes:




COMPARISON WITH PREVIOUS ESTIMATE RPA reviewed and adopted the previous estimate dated October 20, 2016 and prepared a NI

43-101 Technical Report for Karmin, VMH’s joint venture partner for the Aripuanã Zinc Project.

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Differences between the previous estimate reviewed by RPA and the current estimate can be

attributed to the following:

• Additional wireframes over the deposit, most significantly in the Ambrex stringer zone

• A decrease in cut-off NSR value from $48/t to $46/t and $42/t

• Higher metal prices

• Dynamic anisotropy over the whole deposit compared to only being used at the Ambrex Link Zone previously

A comparison between the current and October 2016 estimate is provided in Table 14-3.

Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (Mlb) Pb (Mlb) Cu (Mlb) Au (koz) Ag (Moz) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (Mlb) Pb (Mlb) Cu (Mlb) Au (koz) Ag (Moz)Measured 8.6 5.88 2.16 0.19 0.23 52.65 1,109.0 407.1 36.0 64.2 14.5 7.9 6.16 2.27 0.20 0.24 55.75 1,070.2 395.1 35.1 62.0 14.1Indicated 9.8 5.38 2.03 0.09 0.25 47.83 1,160.8 437.2 18.7 79.5 15.0 8.3 5.88 2.24 0.09 0.27 53.40 1,080.1 411.2 17.2 71.3 14.3Measured and Indicated 18.3 5.61 2.09 0.14 0.24 50.08 2,269.9 844.3 54.7 143.7 29.5 16.2 6.02 2.26 0.15 0.26 54.54 2,150.2 806.2 52.3 133.2 28.4Inferred 13.2 7.20 2.80 0.10 0.38 62.50 2,099.7 815.4 29.4 162.7 26.6 11.4 8.00 3.13 0.11 0.40 69.76 2,009.8 785.2 26.7 148.0 25.6

Stringer Tonnes Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (Mlb) Pb (Mlb) Cu (Mlb) Au (koz) Ag (Moz) Tonnes Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (Mlb) Pb (Mlb) Cu (Mlb) Au (koz) Ag (Moz)Measured 2.3 0.28 0.12 1.54 1.18 17.61 14.4 6.3 78.5 87.8 1.3 2.1 0.31 0.14 1.65 1.25 18.86 14.0 6.2 76.0 84.1 1.3Indicated 1.2 0.11 0.05 0.97 1.28 11.21 2.7 1.4 24.5 47.5 0.4 1.0 0.12 0.06 1.08 1.35 12.39 2.7 1.3 23.7 43.1 0.4Measured and Indicated 3.5 0.22 0.10 1.35 1.21 15.49 17.2 7.7 103.1 135.3 1.7 3.1 0.25 0.11 1.47 1.28 16.77 16.7 7.6 99.7 127.2 1.7Inferred 11.4 0.08 0.05 0.78 1.55 9.31 19.3 13.5 197.0 569.7 3.4 14.3 0.08 0.06 0.98 1.34 10.61 24.4 17.8 307.7 617.3 4.9

Total Tonnes Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (Mlb) Pb (Mlb) Cu (Mlb) Au (koz) Ag (Moz) Tonnes Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (Mlb) Pb (Mlb) Cu (Mlb) Au (koz) Ag (Moz)Measured 10.9 4.68 1.72 0.48 0.43 45.18 1,123.5 413.5 114.6 152.0 15.8 10.0 4.94 1.83 0.51 0.46 48.02 1,084.2 401.3 111.1 146.1 15.4Indicated 10.9 4.83 1.82 0.18 0.36 43.97 1,163.6 438.6 43.2 127.0 15.5 9.3 5.27 2.01 0.20 0.38 49.03 1,082.7 412.5 40.9 114.3 14.7Measured and Indicated 21.8 4.76 1.77 0.33 0.40 44.58 2,287.0 852.0 157.8 279.0 31.3 19.3 5.09 1.91 0.36 0.42 48.51 2,167.0 813.8 152.0 260.4 30.1Inferred 24.6 3.90 1.53 0.42 0.93 37.88 2,119.0 829.0 226.4 732.4 30.0 25.7 3.59 1.42 0.59 0.93 36.85 2,034.3 803.0 334.4 765.3 30.4

Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (Mlb) Pb (Mlb) Cu (Mlb) Au (koz) Ag (Moz)Measured 9% ‐5% ‐5% ‐6% ‐5% ‐6% 4% 3% 3% 4% 3%Indicated 17% ‐8% ‐9% ‐8% ‐5% ‐10% 7% 6% 9% 12% 5%Measured and Indicated 13% ‐7% ‐7% ‐8% ‐5% ‐8% 6% 5% 5% 8% 4%Inferred 16% ‐10% ‐10% ‐5% ‐5% ‐10% 4% 4% 10% 10% 4%

Stringer Tonnes Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (Mlb) Pb (Mlb) Cu (Mlb) Au (koz) Ag (Moz)Measured 11% ‐7% ‐8% ‐7% ‐6% ‐7% 3% 2% 3% 4% 4%Indicated 16% ‐12% ‐11% ‐10% ‐5% ‐10% 2% 3% 4% 10% 5%Measured and Indicated 13% ‐9% ‐10% ‐8% ‐5% ‐8% 3% 2% 3% 6% 4%Inferred ‐20% ‐1% ‐5% ‐20% 16% ‐12% ‐21% ‐24% ‐36% ‐8% ‐30%

Total Tonnes Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (Mlb) Pb (Mlb) Cu (Mlb) Au (koz) Ag (Moz)Measured 9% ‐5% ‐6% ‐6% ‐5% ‐6% 4% 3% 3% 4% 3%Indicated 17% ‐8% ‐9% ‐10% ‐5% ‐10% 7% 6% 6% 11% 5%Measured and Indicated 13% ‐7% ‐7% ‐8% ‐5% ‐8% 6% 5% 4% 7% 4%Inferred ‐4% 9% 8% ‐29% 0% 3% 4% 3% ‐32% ‐4% ‐1%

TABLE 14-3 COMPARISON BETWEEN CURRENT AND OCTOBER 20, 2016 ESTIMATESVM Holding S.A. – Aripuanã Zinc Project

Tonnes

Tonnes

Tonnes

Stratabound

Stratabound


Contained MetalGradeOctober 20, 2016


Difference

Current Resource Estimate

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VM

Ho

ldin

g S

.A. – A

ripu

anã Z

inc P

roject, P

roject #2779

Tech

nical R

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rt NI 43-101 – Ju

ly 31, 2017 P

age 14-5

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RESOURCE DATABASE The resource database contains drilling information and analytical results up to December 23,

2016. Information received after this date was not used in the Mineral Resource estimate.

The database comprises 533 drill holes for a total of 142,080 meters of drilling. A total of 124

drill holes were complete by Karmin/Anglo American prior to VMH’s involvement in the Project

(pre-2004). The 124 drill holes were internally reviewed and found to be acceptable to support

Mineral Resource estimation.

VMH maintains the resource database in GeoExplo software. RPA received data from VMH

in comma separated values (.csv) format, as well as Datamine de-surveyed files (.dm). Data

were amalgamated and parsed as required and imported by RPA into Datamine Studio RM

and Aranz’s Leapfrog Geo software version for review.

For the purpose of the Mineral Resource Estimate, a total of 44 drill holes were excluded from

the database. The drill holes excluded either lacked information, were historic RC drilling or

were drilled for the purpose of metallurgical testing.

Section 12, Data Verification, describes the resource database verification steps carried out

by RPA and VMH. RPA is of the opinion that the drill hole database is valid and suitable to

estimate Mineral Resources for the Project.

TOPOGRAPHY A LiDAR topographic survey was completed over the Project in 2008. The resulting digital

terrain surface (DTM) is available in AutoCAD Drawing Exchange (DXF) and Datamine. The

surface has been validated using survey control points and drill hole collars.

GEOLOGICAL INTERPRETATION Wireframes of the stratabound and stringer mineralization for Arex and Ambrex were

constructed considering geology at a cut-off grade of 0.6% Zn in the stratabound zones and

0.5% Cu in the stringer zones in Aranz’ Leapfrog Geo software. In support of the mineralization

wireframes, a geological model, also created in Leapfrog Geo was prepared by VMH and

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included oxidation, alteration, and topography surfaces, in addition to modelled faults. A zone

of discontinuous remobilized stratabound mineralization within a fault zone in the upper sector

of Ambrex was also modelled and assigned to stratabound mineralization. Samples with both

zinc and copper grades above cut-off grades were considered to be stratabound type

mineralization. Some drill hole intercepts with grades below cut-off grade were included to

maintain geological continuity.

Mineralization at Arex strikes at approximately 110° azimuth, extending over a 1,500 m strike

length. Thin lenses of intermingling stratabound and stringer mineralization within two principal

limbs dip from ten degrees to 60° to the northeast, and are modelled to join in some areas near

surface. The main mineralized zone comes close to outcropping at surface. It is characterized

by tightly folded, well defined stringer and stratabound zones. Individual lens thicknesses

range from less than one metre to fifteen metres, but are generally from two metres to seven

metres. The mineralization zone is approximately 125 m thick overall, and individual lenses

are separated by barren, hydrothermally altered rock from one metre to tens of metres thick.

The main mineralization is delineated between two dipping faults.

The Ambrex deposit is located approximately 1,300 m southeast of Arex and approximately

100 m southeast of Link Zone. Mineralization strikes at approximately 125° and has a strike

extent of approximately 1,050 m based on current drilling. Mineralization at Ambrex is

dominated by stratabound mineralization, with volumetrically smaller, less well defined stringer

zone perpendicular to and to the east of it. Stratabound mineralization above the Gossan Fault

Zone dips at approximately 40º to the southeast. At depth, the mineralization is folded and

dips from near vertical to 70° to the southwest. Mineralization thicknesses typically range from

10 m to 60 m. Ambrex has an upper depth of 60 m below surface, but generally is 100 m

below surface. The deepest mineralization intersection within the Ambrex model is over 700

m below surface and the deposit remains open at depth. The stratabound mineralization is

well defined and follows stratigraphy. The stringer mineralization is poorly defined due to poor

drilling angles and crosses stratigraphy, following structural features.

The Link Zone is located between and along strike of Ambrex and Arex over a strike length of

approximately 850 m. There is an approximate 300 m overlap to the northwest with Arex. The

mineralization bears a closer similarity to Ambrex in that the stringer zone occurs at a high

angle to the stratabound zone. The stratabound mineralization comes close to surface and

extends to a depth of 500 m below surface while the stringer zone mineralization occurs

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approximately 200 m below surface and extends to a depth of approximately 400 m below

surface.

The stratabound mineralization lenses range from one metre to 30 m thick, with an average

thickness of approximately nine metres while the stringer zone thickness ranges from one

metre to 20 m with an average of approximately five metres true thickness.

Figure 14-1 shows a 3D perspective view of the wireframes and Figures 14-2 and 14-3 show

example sections of Ambrex and Arex, respectively.

RPA’s review of the mineralized wireframes included comparison with geological sections

prepared by on-site geologists, drill hole information, and a Net Smelter Return (NSR) value

calculated by RPA from drill hole assays. Assumptions used in NSR calculation are described

under Net Smelter Return Cut-Off Value in this section.

A geological model has been prepared over the deposit areas, delineating a hydrothermal

alteration zone, a series of faults, and weathering profiles. Meta-sedimentary and meta-

volcanic rocks have also been distinguished over Ambrex. RPA found mineralization

wireframes to be snapped to drill hole assay intervals, and to match well with the geological

interpretation. RPA notes that the cut-off grade value of 0.6% Zn chosen by VMH is low when

compared with the NSR cut-off value and has caused the inclusion of low grade samples. RPA

recommends increasing the wireframe modelling cut-off grade to exclude sub-economic

mineralization not related to massive or disseminated sulphides in the stratabound zone.

A total of 26 and 15 individual wireframes were constructed over Ambrex and Link Zone to

represent the stratabound and stringer zones, respectively. Many of the stringer zone

wireframes at Ambrex are defined by a limited amount of drill hole information. A total of 20

and 21 individual wireframes were constructed over Arex to represent the stratabound and

stringer zones, respectively.

Stratabound

Legend:

Stringer

1000 Metres

July 2017 Source: RPA, 2017.

Drill Hole Trace

AmbrexAmbrex Link Zone

Arex

3D Isometric View ofGeological Wireframes


VM Holding S.A.

Figure 14-1

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Ambrex Geological Model


VM Holding S.A.

Figure 14-2

14-10

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Arex Geological Model


VM Holding S.A.

Figure 14-3

14-11

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CAPPING OF HIGH GRADES VMH applied high grade capping to Zn, Pb, Cu, Au, and Ag assays in order to limit the influence

of a small amount of extreme values located in the upper tail of the metal distributions. Log

probability plots were inspected for each individual wireframe and applied a capping grade

according to inflections on log probability plots (example given in Figure 14-4 and 14-5). No

capping was performed in the hydrothermal zone and for the variables Fe, S, MgO, and

density. Raw assays were capped prior to compositing. A summary of capping grades used

is provided in Table 14-4 and capped versus uncapped statistics is provided in Table 14-5.

RPA reviewed the capping levels utilized by VMH and is of the opinion that, in general, the

capping grades are reasonable. RPA notes that some of the gold capping values appear high

and impart undue influence on the total contained metal.

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TABLE 14-4 GRADE CAPPING LEVELS VM Holding S.A. – Aripuanã Zinc Project

Ambrex Arex

Body Zn (%)

Pb (%)

Cu (%) Au (g/t) Ag (g/t) Body

Zn (%)

Pb (%)

Cu (%)

Au (g/t)

Ag (g/t)

1 - - 1 1 - 60 - - - 0.17 - 3 - - 0.4 - - 62 - - - - 80 4 40 15 0.2 - - 63 - - 0.45 - - 5 - 3.5 0.1 - 40 64 3 - 0.04 - - 7 10 2.5 - - - 65 - 3 0.1 - 11.5 8 - - 0.2 0.9 - 66 3 0.8 - - - 9 10 1.5 - - 30 72 - - 0.25 0.25 - 10 - - 0.2 1.5 - 80 - - 1.3 - 160 11 - - 0.5 - - 101 1 - - 4.42 - 12 5 3 - - 45 102 - - - - 171 20 4 - - - - 103 5 2 - - 116 21 6 6 0.5 0.7 - 104 0.5 - - - - 23 6 - - - - 105 0.8 0.4 - - - 30 17 10 1 2.5 358 106 1.5 - - 5.5 - 31 6 3 1.5 1 45 108 0.3 - 3.3 - - 32 30 - 1 - 178 109 - - 0.8 - - 33 - 22 5.5 5 428 110 0.2 - 4.3 10 - 34 8 5 - 1 133 112 0.6 - - 7 - 35 21 11 2.5 5 187 116 0.025 - 0.85 - - 50 - 10 - - 250 51 30 10 0.2 0.5 - 52 - - 0.7 2 - 53 15 8 0.2 0.9 130 54 - - 1.2 2.3 - 55 - - 0.6 1 290 121 - - - 2 - 131 - - - 47.5 - 141 - - 4 - - 142 - - - 3 - 143 - - 2 10 - 144 - - 4 - - 180 - - - 2 - 181 - - 2.5 - - 184 - - 7 - - 191 - - 1.5 - -

TABLE 14-5 UNCAPPED VERSUS CAPPED ASSAY STATISTICS VM Holding S.A. – Aripuanã Zinc Project

Uncapped Capped

Area Type Grade Count Sampled Minimum Maximum Mean Stdev Variance CV Maximum Mean Stdev Variance CV Metal Loss

Are

x

Stratabound

ZN (%) 6,901 6,815 0.0020 60.90 4.80 6.69 44.79 1.39 46.90 4.72 6.47 41.81 1.37 -2%

PB (%) 6,901 6,815 0.0000 42.81 1.78 3.16 10.01 1.78 42.81 1.76 3.10 9.64 1.76 -1%

CU (%) 6,901 6,815 0.0000 11.74 0.08 0.34 0.12 4.53 5.50 0.07 0.21 0.04 3.15 -11%

AU (g/t) 6,901 5,718 0.0000 16.95 0.22 0.55 0.31 2.55 5.00 0.21 0.39 0.15 1.91 -6%

AG (g/t) 6,901 6,795 0.0500 1,240.00 41.05 81.24 6,599.91 1.98 1,240.00 40.49 78.69 6,192.07 1.94 -1%

Stringer

ZN (%) 3,160 3,134 0.0002 30.60 0.14 0.87 0.75 6.05 30.60 0.14 0.87 0.75 6.05 0%

PB (%) 3,160 3,134 0.0001 8.98 0.06 0.39 0.15 6.20 8.98 0.06 0.39 0.15 6.20 0%

CU (%) 3,160 3,134 0.0001 11.10 0.51 0.87 0.75 1.71 8.79 0.49 0.79 0.63 1.63 -4%

AU (g/t) 3,160 3,134 0.0025 96.70 0.82 3.42 11.66 4.14 68.90 0.79 2.85 8.11 3.61 -4%

AG (g/t) 3,160 3,136 0.0050 605.00 6.71 15.64 244.48 2.33 605.00 6.71 15.64 244.48 2.33 0%

Am

brex

Stratabound

ZN (%) 3,145 3,137 0.0050 48.88 5.16 7.09 50.21 1.37 48.88 5.15 7.08 50.19 1.38 0%

PB (%) 3,145 3,137 0.0002 34.40 1.86 3.06 9.34 1.65 34.40 1.85 3.05 9.33 1.65 0%

CU (%) 3,145 3,137 0.0001 16.70 0.30 0.98 0.96 3.32 14.03 0.23 0.70 0.49 2.99 -21%

AU (g/t) 3,145 2,770 0.0025 10.56 0.23 0.59 0.35 2.57 10.56 0.23 0.59 0.35 2.58 -1%

AG (g/t) 3,145 3,126 0.0100 2,180.00 49.54 102.46 10,497.52 2.07 1,530.00 43.04 77.91 6,069.98 1.81 -13%

Stringer

ZN (%) 2,256 2,252 0.0001 21.00 0.20 1.05 1.10 5.23 21.00 0.19 1.02 1.04 5.32 -4%

PB (%) 2,256 2,252 0.0001 27.50 0.08 0.57 0.33 7.55 27.50 0.07 0.57 0.33 7.64 -1%

CU (%) 2,256 2,252 0.0001 20.44 1.36 2.39 5.70 1.76 20.44 1.35 2.37 5.61 1.76 -1%

AU (g/t) 2,256 2,231 0.0025 138.90 1.45 4.68 21.90 3.23 138.90 1.35 4.19 17.53 3.10 -7%

AG (g/t) 2,256 2,218 0.0500 536.00 14.77 30.19 911.37 2.04 536.00 14.77 30.19 911.37 2.04 0%

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VM

Ho

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g S

.A. – A

ripu

anã Z

inc P

roject, P

roject #2779

Tech

nical R

epo

rt NI 43-101 – Ju

ly 31, 2017 P

age 14-14

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FIGURE 14-4 CAPPING ANALYSIS FOR BODY=4 (AMBREX STRATABOUND)

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FIGURE 14-5 CU CAPPING ANALYSIS FOR BODY=116 (AREX STRINGER)

COMPOSITING VMH composited the capped assays to one metre, which corresponds to the dominant

sampling length for the deposit (Figure 14-6). Composites were weighted by length and

unsampled core intervals were ignored. Gold is sampled to a lesser extent than other

economic variables.

While the total length of unsampled intervals is insignificant compared to the total length of the

composites, RPA notes that the majority of unsampled intervals were not related to

mineralization and recommends substituting zeroes. RPA recommends substituting zeroes

for unsampled intervals.

The univariate statistics for the composites is provided in Table 14-6.

TABLE 14-6 COMPOSITE STATISTICS VM Holding S.A. – Aripuanã Zinc Project

Uncapped Capped

Area Type Grade Count Sampled Minimum Maximum Mean Stdev Variance CV Maximum Mean Stdev Variance CV Metal Loss

Are

x

Stratabound

ZN (%) 6,422 6,281 0.0025 46.78 4.87 6.17 38.04 1.27 46.78 4.79 5.97 35.62 1.25 -2%

PB (%) 6,422 6,281 0.0000 29.53 1.80 2.87 8.23 1.59 29.53 1.79 2.83 7.98 1.58 -1%

CU (%) 6,422 6,281 0.0001 10.83 0.08 0.32 0.10 4.17 5.50 0.07 0.19 0.04 2.86 -11%

AU (g/t) 6,422 5,244 0.0025 15.05 0.22 0.50 0.25 2.30 5.00 0.20 0.35 0.13 1.75 -6%

AG (g/t) 6,422 6,270 0.1000 1,035.49 41.47 72.71 5,286.32 1.75 1,035.49 40.92 70.91 5,028.43 1.73 -1%

Stringer

ZN (%) 2,979 2,908 0.0002 11.40 0.12 0.67 0.44 5.42 11.40 0.12 0.67 0.44 5.42 0%

PB (%) 2,979 2,908 0.0001 8.37 0.06 0.34 0.12 5.71 8.37 0.06 0.34 0.12 5.71 0%

CU (%) 2,979 2,908 0.0002 10.95 0.49 0.77 0.60 1.59 6.80 0.47 0.71 0.50 1.51 -4%

AU (g/t) 2,979 2,909 0.0025 68.94 0.79 2.69 7.23 3.39 45.27 0.76 2.26 5.12 2.98 -4%

AG (g/t) 2,979 2,910 0.0050 514.65 6.52 14.10 198.88 2.16 514.65 6.52 14.10 198.88 2.16 0%

Am

brex

Stratabound

ZN (%) 2,727 2,629 0.0064 44.42 5.05 6.28 39.43 1.24 44.42 5.04 6.28 39.42 1.25 0%

PB (%) 2,727 2,629 0.0002 20.35 1.82 2.69 7.26 1.48 20.35 1.81 2.69 7.24 1.48 0%

CU (%) 2,727 2,629 0.0001 16.67 0.32 0.99 0.98 3.13 13.25 0.25 0.77 0.59 3.05 -20%

AU (g/t) 2,727 2,314 0.0025 8.64 0.23 0.52 0.27 2.24 8.64 0.23 0.52 0.27 2.25 -1%

AG (g/t) 2,727 2,621 0.0108 1,553.06 48.84 91.47 8367.27 1.87 808.14 42.59 69.36 4,811.15 1.63 -13%

Stringer

ZN (%) 1,918 1,873 0.0001 16.73 0.18 0.87 0.75 4.79 16.73 0.18 0.85 0.72 4.84 -3%

PB (%) 1,918 1,873 0.0001 11.27 0.07 0.42 0.18 5.94 11.27 0.07 0.42 0.18 6.01 -1%

CU (%) 1,918 1,873 0.0001 20.44 1.32 2.17 4.71 1.65 20.44 1.31 2.15 4.64 1.65 -1%

AU (g/t) 1,918 1,853 0.0025 126.95 1.42 4.19 17.58 2.96 126.95 1.32 3.81 14.54 2.88 -7%

AG (g/t) 1,918 1,847 0.0500 373.09 14.35 27.20 739.76 1.90 373.09 14.35 27.20 739.76 1.90 0%

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VM

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.A. – A

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inc P

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ly 31, 2017 P

age 14-17

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FIGURE 14-6 HISTOGRAMS FOR ASSAY (LEFT) AND COMPOSITE (RIGHT) LENGTHS

EXPLORATORY DATA ANALYSIS VMH performed exploratory statistical analysis including boundary, bivariate and univariate

statistical analysis.

VMH generated contact plots for material inside and outside of the wireframes and concluded

that hard boundaries should be used during estimation (e.g., Figure 14-7).

The bivariate analysis results show strong correlations between stratabound Pb-Zn, Pb-Ag

and Cu-Au, while for stringer mineralization, good correlations between Cu-Ag and Fe-S exist.

In general, stratabound and stringer mineralization Fe and S show strong correlations (Figure

14-8). The results are consistent with the deposit type.

Given the large quantity of individual wireframes, VMH divided the wireframe domains up into

groups based on the geological continuity, Zn statistics for stratabound, and Cu statistics for

stringer mineralization (Table 14-7 and Figure 14-9). The grouping was applied to variography

and the interpolation strategy.

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TABLE 14-7 WIREFRAME GROUPING FOR VARIOGRAPHY AND SEARCH PARAMETERS


Area Group Min Type Body

Ambr

ex

G1 Stratabound 5, 6, 7, 9, 12 G2 Stratabound 1, 4, 8, 10, 11 G3 Stratabound 30, 31, 32, 33, 34, 35 G4 Stratabound 20, 21, 23 G5 Stratabound 22 G6 Stratabound 51 G7 Stratabound 52, 53 G8 Stratabound 50 G9 Stratabound 54, 55 G10 Stringer 170, 171, 172, 173, 174, 175, 176 G11 Stringer 120, 121, 122, 123, 131, 132, 141, 142, 143, 144, 180, 181, 184, 191, 192

Arex

G21 Stratabound 62, 67, 68, 70, 71, 73, 77, 79, 80 G22 Stratabound 72, 74, 75, 76, 81 G23 Stratabound 63, 65 G24 Stratabound 64, 66 G25 Stratabound 60, 61 G30 Stringer 113, 150 G31 Stringer 108, 111, 115, 153 G32 Stringer 104, 107, 114, 117, 151 G33 Stringer 105, 106, 152 G34 Stringer 109, 110, 116 G35 Stringer 101, 112 G36 Stringer 160, 161

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FIGURE 14-7 AREX STRATABOUND CONTACT ANALYSIS

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FIGURE 14-8 CORRELATION MATRICES FOR AMBREX AND AREX (STB=STRATABOUND, STR=STRINGER)

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FIGURE 14-9 ZN AND CU STATISTICS BY BODY AND GROUP

VARIOGRAPHY Experimental traditional variograms were fit by one to three spherical models in three directions

for variables Zn, Pb, Cu, Au, Ag, Fe, S, MgO, and density in Isatis. Variograms were not-

standardized. Examples of VMH variograms are shown in Figures 14-10 to 14-12. The

stratabound and stringer relative nugget effects for Zn, Pb, Cu, Au, and Ag are shown in

Figures 14-13 and 14-14, while the ranges of the variograms are shown in Figures 14-15 and

14-16.

For many of the variograms, the sill was fit to different levels for different directions giving the

impression of a zonal anisotropy present in the mineralization. The different sills were

accounted for by fitting long tails for the second and third structures for the direction with the

lower variance. The variograms were used for OK interpolation and as a guide for selecting

search ellipse ranges (range at 80% of the total sill).

In cases where the data did not support directional variograms, omni-directional variograms

were modelled.

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FIGURE 14-10 AREX STRATABOUND, GROUP 21 ZN DIRECTIONAL VARIOGRAMS

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FIGURE 14-11 AMBREX LINK ZONE STRATABOUND, GROUP 3 ZN DIRECTIONAL VARIOGRAMS

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FIGURE 14-12 AREX STRINGER, GROUP 36 ZN DIRECTIONAL VARIOGRAMS

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FIGURE 14-13 RELATIVE NUGGET EFFECT STRATABOUND

FIGURE 14-14 RELATIVE NUGGET EFFECT STRATABOUND

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FIGURE 14-15 VARIOGRAM RANGES STRATABOUND

*Note: Ranges shown exclude structures fit to zonal anisotropy

FIGURE 14-16 VARIOGRAM RANGES STRINGER

*Note: Ranges shown exclude structures fit to zonal anisotropy

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RPA is of the opinion that, in general, the variograms are reasonable. RPA notes that many

variograms have been fit with a strong zonal anisotropy. RPA recommends modelling

correlograms to avoid fitting second and third variogram model structures with long ranges.

BLOCK MODEL Ambrex and Arex wireframes were filled with blocks in Datamine Studio 3. The final block

model covers both zones. The block model was sub-celled at wireframes boundaries with

parent cells measuring 10 m by 5 m by 5 m and minimum sub-cell sizes of 1.00 m by 0.25 m

by 0.25 m. The block model setup is given in Table 14-8, while a description of the block

model attributes is given in Table 14-9.

The block size is appropriate for the drill spacing and proposed mining method and is suitable

to support the estimation of Mineral Resources and Mineral Reserves. Comparisons between

wireframe and block model volumes are reasonable.

TABLE 14-8 BLOCK MODEL SETUP VM Holding S.A. – Aripuanã Zinc Project

Parameter X Y Z Origin (m) 224,400 8,886,800 -600 Block Size (m) 10 5 5 Number of Blocks 297 440 210

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TABLE 14-9 BLOCK MODEL ATTRIBUTE DESCRIPTIONS VM Holding S.A. – Aripuanã Zinc Project

FIELD DESCRIPTION FIELD DESCRIPTION ZN Estimated Zn

ALT_PRIM

Primary alteration

PB Estimated Pb 1 Carbonate

CU Estimated Cu 2 Chlorite

AU Estimated Au(g/t) 3 Sericite

AG Estimated Ag(g/t) 4 Silica

FE Estimated Fe 5 Talc

MGO Estimated MgO 6 Tremolite

S Estimated S 7 Weathered Rock

DENSITY Density (g/cm³)

ALT_SEC

Secondary alteration

TON Tonnes 1 Biotite

CLASS

1 Measured 2 Magnetite

2 Indicated 3 Absent

3 Inferred

CLORIT

Chloritization

99 Not Classified 1 High

*CLI

1 Stratabound 2 Low

2 Stringer 3 Residual

3 Soil

INTENS

Intensity

4 Hydrothermal Zone 1 High

BODY

Deposit identification 2 Low

0-59 Ambrex Stratabound

PIRITA

Quantity of Pyrite

60-99 Arex Stratabound 1 High

100-199 Stringer bodies 2 Medium

1000 Hydrothermal Zone 3 Low

AREA Target 4 Weathered Rock

1 Arex 5 Absent

2 Ambrex

PIRROT

Quantity of Pyrrhotite

COLOUR

11 Arex Stratabound 1 High

17 Arex Stringer 2 Medium

2-3 Ambrex Stratabound 3 Absent

47 Ambrex Stringer

SULF Sulphur

5 Link Stratabound 1 Present

53 Link Stringer 2 Absent

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INTERPOLATION STRATEGY Grades were interpolated into blocks on a parent cell basis using OK. ID2 was used for groups

that did not yield interpretable variograms. Variables Zn, Pb, Cu, Au, Ag, Fe, S, MgO, and

density are interpolated and estimates are not density weighted.

Quantitative Kriging Neighbourhood Analysis (QKNA) was used for selecting minimum and

maximum samples per holes, and the minimum number of octants to be used during

interpolation. VMH found that the Kriging Efficiency and Slope of Regression was relatively

insensitive to the minimum number of samples and maximum samples per hole as compared

to the minimum number of octants used.

Search ellipsoids were oriented based on dynamic anisotropy angles extracted for the

mineralization wireframes. The search ranges were determined as follows:

• Pass 1: The range at 80% of the sill (25 m by 25 m by 25 m in the case of ID2)

• Pass 2: The range of the variogram (50 m by 50 m by 50 m in the case of ID2)

• Pass 3,4 and 5: Two, four and 10 times the range of the variogram (to interpolate remaining blocks)

The sample selection strategy is given in Table 14-10, while the search ranges for the Zn

stratabound and Cu stringer are given in Figures 14-17 and 14-18 respectively.

TABLE 14-10 SAMPLE SELECTION STRATEGY VM Holding S.A. – Aripuanã Zinc Project

Wireframes Group Search Pass

Min Samples

Max Samples

Max per hole

Min Samples

per Octant

Max Samples

per Octant

Minimum Octants

Used Method G1, G2 1 6 16 3 2 4 5 OK

G1, G2 2 6 16 3 2 4 5 OK

G1, G2 3 1 16 10 - - - OK

G1, G2 4 2 16 10 - - - OK

G3 1 4 16 5 2 4 4 OK

G3 2 4 16 5 2 4 4 OK

G3 3 3 16 10 - - - OK

G3 4 3 16 10 - - - OK

G4 1 3 16 5 2 4 4 OK/ID

G4 2 3 16 5 2 4 4 OK/ID

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Min Samples

Max Samples

Max per hole

Min Samples

per Octant

Max Samples

per Octant

Minimum Octants

Used Method G4 3 2 16 5 2 4 4 OK/ID

G5, G6, G7 1 6 16 3 2 4 5 OK

G5, G6, G7 2 6 16 3 2 4 5 OK

G5, G6, G7 3 3 16 10 - - - OK

G5, G6, G7 4 1 16 10 - - - OK

G8 1 3 16 5 2 4 4 OK

G8 2 3 16 5 2 4 4 OK

G8 3 3 16 5 2 4 4 OK

G8 4 3 16 5 2 4 4 OK

G8 5 1 16 5 2 4 4 OK

G9 1 3 16 5 2 4 4 OK

G9 2 3 16 5 2 4 4 OK

G9 3 3 16 5 - - - OK

G9 4 3 16 5 - - - OK

G9 5 1 16 5 - - - OK

G10 1 3 16 5 2 4 5 OK

G10 2 3 16 5 2 4 5 OK

G10 3 2 16 5 2 4 5 OK

G11 1 3 16 8 - - - OK/ID

G11 2 3 16 8 - - - OK/ID

G11 3 3 16 8 - - - OK/ID

G11 4 1 16 8 - - - OK/ID

G11 5 1 16 8 - - - OK/ID G21, G23, G30, G31, G32, G33, G34, G35, G36

1 4 16 5 1 4 4 OK/ID

G21, G23, G30, G31, G32, G33, G34, G35, G36

2 4 16 5 1 4 4 OK/ID

G21, G23, G30, G31, G32, G33, G34, G35, G36

3 3 16 5 - - - OK/ID

G21, G23, G30, G31, G32, G33, G34, G35, G36

4 2 16 5 - - - OK/ID

G21, G23, G30, G31, G32, G33, G34, G35, G36

5 2 16 5 - - - OK/ID

G22 1 3 16 5 1 4 4 OK

G22 2 3 16 5 1 4 4 OK

G22 3 3 16 5 - - - OK

G22 4 2 16 5 - - - OK

G22 5 2 16 5 - - - OK

G24 1 3 16 5 1 4 3 OK

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Min Samples

Max Samples

Max per hole

Min Samples

per Octant

Max Samples

per Octant

Minimum Octants

Used Method G24 2 2 16 5 - - - OK

G24 3 2 16 5 - - - OK

G24 4 2 16 5 - - - OK/ID

FIGURE 14-17 SEARCH RANGES FOR ZN STRATABOUND

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FIGURE 14-18 SEARCH RANGES FOR CU STRINGER

NET SMELTER RETURN CUT-OFF VALUE An NSR value was assigned to blocks for the purposes of validation of the geological

interpretation and resource reporting. NSR is the estimated dollar value per tonne of

mineralized material after allowance for metallurgical recovery and consideration of smelter

terms, including revenue from payable metals, treatment charges, refining charges, price

participation, penalties, smelter losses, transportation, and sales charges.

Input parameters used to develop the NSR calculation have been derived from metallurgical

test work on the Aripuanã Zinc property, smelter terms from comparable projects, and

information provided by VMH. These assumptions are dependent on the processing scenario,

and will be sensitive to changes in inputs from further metallurgical test work. Key assumptions

are listed below.

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Metal prices and exchange rate:

US$1.26 per pound of zinc US$1.01 per pound of lead US$3.08 per pound of copper US$1,471 per ounce of gold US$21.8 per ounce of silver US$1.00 equals R3.30

Metal prices were selected by VMH, and are based on consensus, long term forecasts from

banks, financial institutions, and other sources.

Metallurgical recoveries are based on preliminary metallurgical testing, and are summarized

by zone and deposit:

Arex Stratabound Copper Concentrate

27% Ag recovery to Cu concentrate 50% Au recovery to Cu concentrate 68% Cu recovery to Cu concentrate grading 27% copper

Lead Concentrate

16% Au recovery to Pb concentrate 51% Ag recovery to Pb concentrate 83% Pb recovery to Pb concentrate grading 63% lead

Zinc Concentrate

9% Ag recovery to Zn concentrate 82% Zn recovery to Zn concentrate grading 49% zinc

Arex Stringer Copper Concentrate

93% Au recovery to Cu concentrate 75% Ag recovery to Cu concentrate 96% Cu recovery to Cu concentrate grading 27% copper

Ambrex Stratabound Lead Concentrate

30% Au recovery to Pb concentrate 38% Ag recovery to Pb concentrate 83% Pb recovery to Pb concentrate grading 63% lead

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Zinc Concentrate

12% Ag recovery to Zn concentrate 82% Zn recovery to Zn concentrate grading 49% zinc

Copper Concentrate

34% Au recovery to Cu concentrate 10% Ag recovery to Cu concentrate 68% Cu recovery to Cu concentrate grading 27% copper

Ambrex Stringer Copper Concentrate

93% Au recovery to Cu concentrate 75% Ag recovery to Cu concentrate

Standard smelting and refining charges were applied to the various concentrates. It was

assumed that the concentrates would be marketed internationally.

The NSR factors are shown in Table 14-11 which can be used to calculate the NSR for any

set of metal grades.

TABLE 14-11 NSR FACTORS VM Holding S.A. – Aripuanã Zinc Project

Metal Units Arex Ambrex

Stratabound Stringer Stratabound Stringer Au US$ per g Au 23.99 38.63 22.3 38.3 Ag US$ per g Ag 0.47 0.44 0.28 0.43 Cu US$ per % Cu 33.59 47.9 33.41 47.65 Pb US$ per % Pb 12.03 - 11.97 - Zn US$ per % Zn 11.96 - 11.89 -

For the purposes of developing an NSR cut-off value, a total unit operating cost of US$46.00

per tonne of stratabound mineralization and US$42.00 per tonne of stringer mineralization

milled was estimated, which included mining, processing, and general and administrative

expenses.

The sensitivity of the Mineral Resource to NSR cut-off grade is shown in Tables 14-12 and 14-

13.

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TABLE 14-12 SENSITIVITY TO CUT-OFF GRADE - STRATABOUND VM Holding S.A. – Aripuanã Zinc Project

Measured and Indicated

NSR Cut-off Tonnes (Mt) Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Zn (Mlb) Pb (Mlb) Cu (Mlb) Au (koz) Ag (Moz)

$14.00 21.4 5.07 1.87 0.12 0.22 44.47 2,388.4 880.4 57.7 153.7 30.6

$30.00 20.7 5.19 1.92 0.13 0.23 45.67 2,370.3 875.1 57.3 152.4 30.4

$46.00 18.3 5.61 2.09 0.14 0.24 50.08 2,269.9 844.3 54.7 143.7 29.5

$62.00 15.4 6.18 2.33 0.15 0.26 56.56 2,093.2 789.9 51.1 129.0 27.9

Inferred


$14.00 18.4 5.60 2.14 0.08 0.31 47.29 2,271.8 869.1 34.2 185.3 28.0

$30.00 16.0 6.26 2.41 0.09 0.35 53.58 2,205.2 850.7 32.9 178.5 27.5

$46.00 13.2 7.20 2.80 0.10 0.38 62.50 2,099.7 815.4 29.4 162.7 26.6

$62.00 10.8 8.30 3.26 0.11 0.42 72.66 1,967.3 773.6 25.8 144.5 25.1

TABLE 14-13 SENSITIVITY TO CUT-OFF GRADE - STRINGER VM Holding S.A. – Aripuanã Zinc Project

Measured and Indicated


$18.00 3.7 0.21 0.09 1.27 1.16 14.70 17.4 7.8 104.7 139.0 1.8

$30.00 3.7 0.21 0.10 1.29 1.17 14.90 17.4 7.8 104.4 138.3 1.8

$42.00 3.5 0.22 0.10 1.35 1.21 15.49 17.2 7.7 103.1 135.3 1.7

$54.00 3.1 0.25 0.11 1.46 1.29 16.73 16.7 7.6 99.3 128.0 1.7

Inferred


$18.00 15.4 0.10 0.06 0.65 1.25 8.36 33.8 19.5 219.7 619.6 4.1

$30.00 13.7 0.09 0.06 0.70 1.37 8.85 27.3 17.2 211.9 603.2 3.9

$42.00 11.4 0.08 0.05 0.78 1.55 9.31 19.3 13.5 197.0 569.7 3.4

$54.00 9.0 0.07 0.05 0.90 1.80 10.28 13.8 10.5 177.0 518.2 3.0

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CLASSIFICATION Definitions for resource categories used in this report are consistent with those defined by CIM

(2014) and adopted by NI 43-101. In the CIM classification, a Mineral Resource is defined as

“a concentration or occurrence of solid material of economic interest in or on the Earth’s crust

in such form, grade or quality and quantity that there are reasonable prospects for eventual

economic extraction”. Mineral Resources are classified into Measured, Indicated, and Inferred

categories. A Mineral Reserve is defined as the “economically mineable part of a Measured

and/or Indicated Mineral Resource” demonstrated by studies at Pre-Feasibility or Feasibility

level as appropriate. Mineral Reserves are classified into Proven and Probable categories.

Blocks were classified as Measured, Indicated, and Inferred based on drill hole spacing

requirements determined from global variograms for the Arex stratabound, Arex stringer,

Ambrex stratabound, and Ambrex Link Zone stratabound domains. Flagging of the blocks by

drill hole spacing was done by using a search pass with dimensions as described in Table 14-

14 and capturing at least three drill holes.

The first pass involved a numerical classification as described of blocks followed by a post

processing of the classification to remove isolated blocks classified as Measured or Indicated.

The entire stringer zone at Ambrex was classified as Inferred due to the drill holes intersecting

the mineralization at low angles.

The classification criteria for each area are listed in Table 14-14 and the global variograms

used as a basis for the classification scheme are shown in Figure 14-19. A longitudinal section

showing the final classification is provided in Figure 14-20.

With regard to the classification, RPA notes the following:

• The overall classification is reasonable for the level of study.

• The average drill hole spacing for Measured and Indicated categories is slightly wider than the distances given in Table 14-14 due to the methodology used to flag blocks by distance.

• There are areas in Ambrex where wireframes have been extrapolated to greater distances than the Inferred classification criteria. The majority of this material has been included as Inferred.

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With respect to classification RPA recommends the following:

• Performing a visual review of the classification of all blocks with a minimum distance to the closest drill hole greater than 25 m, and consider downgrading blocks where appropriate to Inferred.

• Restricting wireframe extrapolation to distances consistent with the classification criteria.

TABLE 14-14 VMH SEARCH ELLIPSE RANGES FOR CLASSIFICATION CRITERIA


Area Type Measured Indicated Inferred Arex Stratabound 25 m X 25 m 50 m X 50 m 100 m X 100 m

Stringer 20 m X 20 m 50 m X 50 m 100 m X 100 m Ambrex Stratabound 20 m X 20 m 50 m X 50 m 100 m X 100 m

Stringer - - 100 m X 100 m Ambrex Link Zone Stratabound 25 m X 25 m 50 m X 50 m 200 m X 200 m

Stringer - - 100 m X 100 m Minimum DDH in ellipse* All 3 3 -

*Minimum DDH in ellipse refers to the isotropic search ellipsoid used to flag the distances in the blocks

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FIGURE 14-19 GLOBAL VARIOGRAMS USED FOR CLASSIFICATION CRITERIA

1000 Metres

Measured

Classification

Legend:

Indicated

Inferred

July 2017 Source: RPA, 2017.

Drill Hole Trace

Final Classification Designation


V Holding S.A.M

Figure 14-20

14-4

0

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VALIDATION

VMH A number of validation steps were performed by VMH including:

• Comparison between OK, NN, and composite mean grades (Table 14-15, Figures 14-21 and 14-22).

• Swath plots (Figure 14-23 to 14-26).

• Visual inspection of composites versus block grades (example Figure 14-27 to 14-30).

For many of the variables, areas and mineralization types, there is a better agreement between

the NN and OK means than the composite and OK means, which would suggest that the

composite data is clustered. Similar trends are observed on the swath plots. Gold block

grades show a large deviation from both the composite and NN mean although the deviation

is negative. The Cu composites versus block grades show discrepancies as high as 26% in

the stringer zone although the NN grades are within two percent. Mean comparisons on a

wireframe by wireframe basis show much larger discrepancies between the means.

In RPA’s opinion, the validation performed are typical industry standard validation techniques

and in general, the results presented look reasonable.

TABLE 14-15 COMPARISON BETWEEN OK, NN AND COMPOSITE MEANS (ZN AND CU)


Area Arex Arex Ambrex Ambrex Type Stratabound Stringer Stratabound Stringer Variable Zn Cu Zn Cu OK mean 5.72 1.04 5 0.6 NN Mean 5.08 1.03 5.19 0.61 Composite Mean 5.04 1.31 4.79 0.47 OK/NN 113% 101% 96% 98% OK/Composites 113% 79% 104% 128%

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FIGURE 14-21 COMPARISON BETWEEN OK AND NN MEANS (ZN STRATABOUND)

FIGURE 14-22 COMPARISON BETWEEN OK AND NN MEANS (CU STRINGER)

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FIGURE 14-23 AREX ZN SWATH PLOT – EASTING

FIGURE 14-24 AREX CU SWATH PLOT – EASTING

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FIGURE 14-25 AMBREX ZN SWATH PLOT – EASTING

FIGURE 14-26 AMBREX CU SWATH PLOT – EASTING

0 25

Metres

50 75 100

Source: Votorantim Metais, 2016.August 2017

Arex Vertical Section ShowingZn Block vs Composite Grades


VM Holding S.A.

Figure 14-27

14-45

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0 25

Metres

50 75 100


Arex Vertical Section ShowingCu Block vs Composite Grades


VM Holding S.A.

Figure 14-28

14-46

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0 25

Metres

50 75 100


Ambrex Vertical Section ShowingZn Block vs Composite Grades


VM Holding S.A.

Figure 14-29

14-47

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0 25

Metres

50 75 100


VM Holding S.A.


Ambrex Vertical Section ShowingCu Block vs Composite Grades

Figure 14-30

14-48

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RPA In addition to reviewing VMH’s validation, RPA performed the following validation steps:

• Check Estimates

• Global Change of Support Check (GCOS) (Figure 14-31)

• Visual inspection of the block model and composites provided

RPA tested a number of parameters including the substitution of zeroes for unsampled

intervals, more restrictive across strike search distance, density weighting of estimates and

downgraded classification designation according to RPA’s preferred criteria. The estimates

were most sensitive to density weighting and RPA’s preferred classification. Density weighting

would result in an overall positive deviation from VMH’s estimate while RPA’s re-classification

would result in a negative impact on the total Measured and Indicated. RPA found the

variances to be immaterial and is of the opinion that VMH’s estimate is reasonable.

RPA performed GCOS on selected wireframe domains and found that compared to the

theoretical grade and tonnage curve, the Ambrex model was reasonable while the Arex model

reported more tonnes at a lower grade.

Overall, the block grades are in agreement with the underlying composite data on sections and

plans. Dynamic anisotropy appears to be working as planned for most zones. RPA noted

minor areas where grade trends appeared to be perpendicular to the wireframe. At Arex there

appears to be a level of over-smoothing which is consistent with the observations from RPA’s

GCOS study.

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FIGURE 14-31 GLOBAL CHANGE OF SUPPORT CHECK FOR BODIES 53, 54 AND 80

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15 MINERAL RESERVE ESTIMATE No Mineral Reserves have been estimated for the Project.

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16 MINING METHODS INTRODUCTION The current Project is targeted on mining three main elongate mineralized zones, Arex, Link,

and Ambrex that have been defined in the central portion of the Aripuanã Project.

The Arex and Ambrex deposits are separate VMS deposits with differing mineral compositions

in stratabound and stringer forms and complex geometric shapes.

The deposit geometry is amenable to a number of underground mechanized mining techniques

including cut-and-fill and bulk stoping methods. A nominal production target of 5,000 tpd has

been used as the basis for the mine production schedule.

Mining will be undertaken using conventional mechanized underground mobile mining

equipment via a network of declines, access drifts and ore drives. Access to the Arex and

Ambrex deposits will be from separate portals, which will access the deposits from the most

favorable topographic locations.

Due to the presence of high grade mineralization in the upper levels of Arex, production will

commence in the Arex deposit and then move into the Ambrex deposit.

MINE DESIGN The mine design has been based around using modern mobile trackless equipment with

independent decline accesses into the Arex and Ambrex deposits.

The Arex deposit extends over a strike length of approximately 1,400 m. Upper portions of the

deposit are near-vertical, reducing at depth to a dip of approximately 60° to the northeast.

Mineralization occurs in discrete stratabound and stringer lenses of stratabound, ranging from

less than one metre to 15 m thick in width interspersed with some zones between 100 m to

150 m wide. Mineralization extends from close to surface to about 500 m below surface (mbs).

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The Ambrex deposit is located approximately 1,300 m southeast of Arex and represents the

largest of the known mineralized zones on the Project. The deposit has a strike extent of

approximately 1,050 m, based on current drilling. The dip varies from near vertical to 70° to

the northeast. Mineralization thicknesses typically range between 10 m and 50 m, with a

maximum of 150 m. The deposit extends vertically from 60 mbs to approximately 700 mbs.

The two deposits will be accessed from two independent surface cut and cover portals and the

ramps are designed at a gradient of 14% to be driven with an arched profile and a cross-

sectional area (CSA) of 27 m2 to accommodate the selected major equipment. The main

loading and hauling equipment will be 12.5 t class load haul dump (LHD) combined with 35.5 t

class haul trucks.

Main mining sublevels are spaced 75 m apart, with stope sublevels currently placed at 25 m

spacing.

Figures 16-1, 16-2, and 16-3 shows the mine design for the two deposits

July 2017

Portal

Portal

Arex Ambrex

Source: Votorantim Metais, 2017.

Mine Layout ofBoth Deposits


V Holding S.A.M

Figure 16-1

16-3

ww

w.rp

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July 2017

Portal

Ambrex

Source: Votorantim Metais, 2017.

Layout of Ambrex


V Holding S.A.M

Figure 16-2

16-4

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July 2017

Portal

Arex

Source: Votorantim Metais, 2017 .

Layout of Arex


V Holding S.A.M

Figure 16-3

16-5

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The secondary lateral ore and waste development including FW drifts and crosscuts, stope

access drives are designed with an arched profile and a CSA of 22.5 m2.

Table 16-1 shows the development dimensions used in the current mine design.

TABLE 16-1 DEVELOPMENT DIMENSIONS VM Holding S.A. – Aripuanã Zinc Project

Activity Type Dimensions (m)

Primary Development Raisebore Ramps

3.0 Dia 5.0 x 6.0

Secondary Lateral Development

Sublevels Cross Cuts

Footwall Drives Ore Drives

5.0 x 5.0

In total, the LOM development plan includes approximately 180 km of development,

comprising primary ramps, lateral ore and FW drives (levels, stope access and ventilation

infrastructure), production and service drifts and vertical development (raises).

The total development included in the LOM is shown in Table 16-2.

TABLE 16-2 LOM TOTAL DEVELOPMENT VM Holding S.A. – Aripuanã Zinc Project

Development Type Total Metres

Primary Development 42,944

Ramps 26,068

Ventilation drives 16,878

Secondary Lateral 129,665

Crosscuts 35,238

FW Drives 19,231

Ore Drives – VRM Stopes 22,846

Ore Drives - BS 52,350

Slot and Orepass Raises 2,988

Ventilation Raise Bores 3,961

TOTAL 179,558

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MINING METHOD The deposit geometry is suited to a number of underground mechanized mining techniques

including cut-and-fill and bulk longhole open stoping methods.

A nominal production target of 5,000 tpd (1.8 Mtpa) has been used as the basis for the mine

production schedule.

VMH has undertaken a number of mining method option studies, the result of which has been

the selection, for the conceptual mine design and mine plan, of longitudinal longhole retreat

stoping (bench stoping) for the narrower zones of the deposits with Vertical Retreat Mining

(VRM) applied for the thicker zones. To increase the extraction ratio, a primary and secondary

stoping sequence will be used in the VRM areas with cemented paste and rock fill used to

backfill primary stopes and uncemented rock fill placed in the secondary stopes. Finished

longhole retreat stopes will also be backfilled with rock fill.

The majority of the production from the Arex deposit is based on longitudinal longhole retreat

mining, however, in areas where the deposit is wider (greater than 15 m), Vertical Retreat

Mining (VRM) longhole mining with primary and secondary stopes will be used. The method

applied in the Ambrex deposit will be predominantly the VRM method.

Stope sizes are nominally 15 m long x 25 m high with various widths from hanging wall (HW)

to footwall (FW).

An estimate of the potentially mineable tonnage has been generated based upon the estimated

Mineral Resources. The estimate includes both Inferred and Indicated Mineral Resources.

Deswik Stope Optimizer (DSO) was used to generate stope shapes down to a minimum dip of

40°. This results in some flat stopes being included in the mine plan. A Minimum Mining Width

(MMW) of four metres has been applied.

No hanging wall or footwall dilution was added in the DSO analysis but was added later in the

mine scheduling.

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For the narrow vein stopes 10% dilution was added, which RPA considers to be acceptable

for the steeper dipping stopes. However, for stopes flatter than 50° to 55°, RPA’s opinion is

that dilution should be increased to between 15% and 20%.

A mining recovery of 95% has been applied to primary and vein stopes with 90% applied to

the secondary stopes.

GEOMECHANICS AND GROUND SUPPORT The available geomechanical data indicates that generally good ground conditions may be

anticipated in the Aripuanã underground. This assumption will need to be confirmed at the

next study stage to improve the geomechanical characteristics confidence level of the

geomechanical model, to confirm the proposed underground openings design, and to support

engineering used to determine cost and schedule assumptions for the PEA.

An additional and comprehensive geomechanical investigation and study will therefore be

needed during the next stage of project development.

For the Aripuanã mine design, the Rock Mass Rating (RMR) system developed by Bieniawski

(1989) was used based on the data collected during the FEL1 investigation program. From

the results of the investigation, the host rock was categorized into two main domains named

“Weathered Rock” and “Fresh Rock” with five RMR Classes.

The Weathered Rock represents the lower quality rock mass with RMR Classes of III, IV and

V; III/IV being Poor (RMR 40) and IV and V Exceptionally Poor (RMR 20) beneath the overlying

overburden with RMR. The overburden thickness ranges between approximately 25 m and

50 m, and the Weathered Rock has thickness of approximately 50 m to 60 m. Both of these

lithologies will be encountered during the excavation of ramp portals and the upper section of

the ramps. Approximately 80% of the Weathered Rock in the two deposits is placed in RMR

Class IV.

The Fresh Rock domain categorized by RMR Class II/III (RMR 60) represents the competent

host rock of the deposits and in which the majority of mining underground works (stopes,

declines, drifts, etc.) will be excavated. Approximately 70% of the Fresh Rock in the two

deposits is placed in RMR Class II.

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Three RMR classes are expected in the underground developments in both Arex and Ambrex.

Predominantly the ground conditions are expected to be in the Good/Normal category with a

typical RMR of 60. This results in a recommended pattern bolt spacing of 1.5 m x 1.5 m in the

hanging wall and sidewalls with 2.4 m long bolts used in decline/access drifts, crosscuts, and

footwall drives in waste rock, with 1.8 m long bolt for ore drives. Only relatively small sections

of lower class ground conditions are expected and for these closer spacing of bolts will be

required.

Additional temporary cable bolting using 4.5 m to 6.0 m long cable bolts will be needed in the

hanging wall at the access drive /stope brow locations with cable bolts maintained

approximately 1.0 m to 1.5 m back from the brow edge.

Stability analyses were carried out on stopes with a height of 20 m, lengths of 45 m and 60 m

for various stope widths and dips (hanging wall angle). The stope stability analysis showed

that hanging wall support is generally required for all of the likely stope configurations, although

it should be noted that support, stability and dilution will additionally benefit from a good drill

and blast performance (explosive properties, drill hole design, drilling accuracy and explosive

distribution etc.).

Cable length will vary in most cases from 6 m to 13 m, dependent on stope configuration and

hanging wall angle. Cable bolts on a regular pattern of about 2 m x 2 m spacing for both Arex

and Ambrex is envisaged based on the currently available geomechanical data.

Based on an assessment of unplanned stope dilution, the maximum recommended stope

length is 60 m for Arex and 45 m for Ambrex.

As the Arex mineralisation is relatively close to surface, and to mitigate against the possibility

of any surface subsidence, which would create environmental damage and breaches of the

permit conditions, a crown pillar needs to be left above the mining zone in Arex. An

assessment carried out in the geomechanical study recommended a crown pillar of 45 m to

46 m in thickness. No crown pillar is envisaged for Ambrex.

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MINE INFRASTRUCTURE

MATERIAL HANDLING Production and waste will be handled via internal ore and waste passes.

Mine trucks will dump material into a grizzly to control the size of broken rock passing through.

A rock breaker will be installed at the entrance of the grizzly to handle oversized material. After

the grizzly, material will flow into a storage bin Material is then fed from the bin into haul trucks

that haul directly up the surface ramp to the surface stockpile at the process plant.

BACKFILL For tailings disposal at Aripuanã approximately 50% of the tailings dry solids is expected to be

placed back underground as backfill, in order to reduce the environmental impact.

Backfill is also required in order to allow a primary and secondary extraction sequence in the

VRM areas of the mine. Based on the available testwork data on tailings, cemented paste fill

is considered to be the best solution.

A paste plant of sufficient capacity to meet the demand for paste backfill underground, will be

located at surface. Paste will be delivered underground via dedicated boreholes. The delivery

of paste to stopes will be by pipeline. The geometry of the Arex and Ambrex deposits suggests

that much of the paste can be delivered by gravity, however outlying stopes may require the

use of a paste pump. Typically, the paste piping comprises ASTM Grade A53 mild steel with

a wall thickness of Schedule 80 or Schedule 120.

Further engineering and testwork will be required during the next phase of study to confirm the

tailings characteristics and the design of the paste facility.

VENTILATION A preliminary ventilation design has been prepared for Aripuanã Mine using generic

parameters to determine the overall mine airflow for both Arex and Ambrex. The ventilation

design criteria used conform to established international best practices. Although acceptable

for a PEA, further ventilation modelling using industry standard software, such as Ventsim or

VUMA, will be needed for the next level of study.

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Under best practice ventilation requirements would be determined based on diesel fleet

schedule however at this level of study it is appropriate to use an empirical model to determine

the ventilation requirements.

The air requirements are based upon the active mining fleet and the other standard mine

ventilation criteria. An air diesel power ratio of 0.05 m³/s/kW is widely accepted as an

underground minimum, however, it may be necessary to raise this to 0.07 m³/s/kW for

Aripuanã to provide extra airflow for cooling purposes. This can be confirmed when ventilation

simulation modelling is conducted.

The empirical model is relationship between annual production rate and quantity of air required

to circulate through the mine.

This type of estimate is sufficient for the Aripuanã PEA report, although for a bankable

feasibility study detailed calculations and ventilation simulations will need to be conducted.

From the empirical relationship above, the airflow requirement for a 1.8 Mtpa mine steady state

production is approximately 610 m³/s.

With an airflow velocity of 6.5 m/s down the main access decline 5.0 m W x 6.0 m H

(approximately 30 m² section) an intake of 195 m³/s is achievable. The remaining intake

requirement will be obtained from two intake ventilation raises with a CSA of 32 m2. The

exhaust return airway system would consist of three raises with a CSA of 32 m2 to handle 610

m³/s at a velocity of 13 m/s.

The main variable drive fans will consist of 2 x 250 kW axial fans located in a station at the top

of each ventilation raise. The nominal operating point of the fans is approximately 100m/s3 at

1.95 kPa.

MINE DEWATERING A hydrogeological study, including a site-wide stochastic model, has been undertaken in an

earlier phase of the Project development based on the available hydrological and

hydrogeological data. This provided a preliminary assessment of the likely inflow into the mine

as well as the likely drawdown around the deposits.

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The study suggests that total inflow into the mien will be relatively low, peaking in years 7 and

8 of operation at 160 m3/hr. The Arex operations are expected to produce the most flow

because the deposit is located in an area of higher aquifer potential.

The mine dewatering will make a significant contribution to the total water demand of the

Project.

An allowance has been made for provision of underground dewatering pumps in the capital

cost estimate.

MAINTENANCE FACILITIES An underground mechanical maintenance shop is envisaged for both areas of the mine will be

constructed. This shop is envisaged to handle all maintenance requirements, and will include

a welding area, tire bay, wash bay, lubricants area, tool storage, and training area. Major

equipment rebuilds would be sent offsite.

POWER AND COMPRESSED AIR The mine is envisaged to have a relatively high degree of machine mechanization, and

consequently, an extensive electrical distribution system is required. A central substation will

be located in the vicinity of each portal from where electrical power will be distributed

underground to other substations located underground throughout the mine.

The electrical load is split between mine equipment, pumping systems, compressors, mine

stationary equipment, ventilation systems, and miscellaneous facilities.

A compressed air system will be installed in the mine, which will be used by some of the mine

equipment. The system will also comprise a storage tank, and an air dryer with compressors

will be stationed in the vicinity of the portals. The air will be distributed through varying sizes

of pipe starting with 100 mm and getting smaller as the air reaches the working areas.

REFUGE STATIONS AND ESCAPEWAYS The mine will be provided with second means of egress from the workings to the surface. This

will be catered for by equipping the ventilation drop raises from level to level with a ladder way

with an escape door at the main fan stations.

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Refuge stations equipped a supply of fresh air will be provided at strategic locations

underground. The locations will be such that workers are able to reach them from the work

places within the duration of the self-contained self-rescue apparatus worn by all underground

personnel.

MINE EQUIPMENT The mine will be operated with a fully mechanized mobile mining equipment fleet, with a

minimum of hand equipment.

The list of equipment prepared by VMH is shown in Table 16-3. The following equipment has

been provided for the Project:

TABLE 16-3 EQUIPMENT FLEET VM Holding S.A. – Aripuanã Zinc Project

RPA is of the opinion that the fleet estimate may be somewhat short in the number of units of

certain equipment.

In particular the number of production drills (fan drills) may have been underestimated. In

order to meet the production targets, there will be a minimum of four stopes in production

(drill/blast/muck). In addition to the stopes in full production there will be the stopes that being

prepared for production. RPA is of the opinion that two to three more production drills will be

required in order to maintain the production requirements. In the early years of the mine life,

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Arex and Ambrex are not connected, and use separate portals, making it more difficult to share

equipment efficiently.

The equipment list will be reassessed as part of the next, more comprehensive and detailed

study.

LIFE OF MINE PLAN

PRE-PRODUCTION SCHEDULE A pre-production period of two years is envisaged for the initial development of the mine.

MINE PRODUCTION The mine development and production schedule was generated using the rates shown in Table

16.4.

TABLE 16-4 ADVANCE RATES VM Holding S.A. – Aripuanã Zinc Project

Heading Size Rate

Ramp 5.0mW x 6.0mH 80m/mo

Vent Access 4.0mW x 4.0mH 60m/mo

Ore Headings Level development 5.0mW x 5.0mH 60m/mo

Raises Alimak -bore 3m Dia. 90m/mo

Stope Various 20,000 - 40,000 t/mo

RPA considers the monthly for the secondary capital development and operating development

rates used in the LOM to be generally acceptable for this level of study. An advance rate of

60 m/mo for lateral access drives is reasonable and within industry standards.

However, the assumed ramp development rate to be at the top end of what may be achievable

over a sustained period, in RPA’s opinion. Similarly, RPA considers the raiseboring rates used

to be aggressive. These rates should be reassessed in the next phase of study and the impact

on the schedule evaluated.

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The majority of the stopes are scheduled at 20,000 t/mo, which RPA considers to be

reasonable.

RPA recommends that daily rather monthly rates should be used in the next so that the varying

available days per month can be more accurately allowed for.

The mine is assumed to be operating on a 360 days per year rotation, with three 8-hour shifts

per day. The effective operating hours per day were calculated to be 18 hours per day.

The mine plan envisages a production rate of 5,000 tpd or 1.8 Mtpa. Production is assumed

to ramp up to full production over a two year period.

The production schedule is shown in Table 16-5.

UNITS TOTAL 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044MINING

AREX StringerProduction '000 tonnes 3,450 114 242 176 110 42 48 73 115 145 47 98 45 59 39 207 363 455 277 399 206 191

Zn Grade % 0.10% 0.18% 0.15% 0.05% 0.10% 0.23% 0.34% 0.09% 0.12% 0.09% 0.06% 0.08% 0.02% 0.05% 0.02% 0.14% 0.04% 0.11% 0.19% 0.05% 0.04% 0.02%Pb Grade % 0.06% 0.07% 0.07% 0.02% 0.08% 0.08% 0.21% 0.03% 0.06% 0.08% 0.03% 0.07% 0.06% 0.06% 0.02% 0.04% 0.06% 0.07% 0.11% 0.02% 0.02% 0.01%Cu Grade % 0.83% 1.11% 1.24% 1.04% 1.74% 1.28% 1.39% 0.85% 0.99% 0.99% 0.94% 1.17% 0.58% 0.40% 0.49% 1.11% 0.46% 0.63% 0.90% 0.70% 0.59% 0.41%Ag Grade oz/t 0.31 0.40 0.36 0.23 0.33 0.36 0.49 0.24 0.40 0.23 0.35 0.34 0.24 0.22 0.29 0.30 0.23 0.32 0.43 0.30 0.28 0.19 Au Grade oz/t 0.07 0.03 0.03 0.04 0.07 0.02 0.03 0.03 0.02 0.02 0.02 0.03 0.10 0.19 0.03 0.05 0.23 0.07 0.04 0.05 0.04 0.07

AREX StrataboundProduction '000 tonnes 4,280 390 366 339 130 92 69 51 73 81 129 53 100 100 52 158 360 447 745 349 189 6

Zn Grade % 5.21% 6.85% 6.11% 4.98% 4.12% 5.17% 4.16% 4.59% 4.02% 4.19% 4.95% 5.43% 7.41% 4.64% 5.37% 5.01% 4.69% 4.53% 5.27% 5.17% 4.64% 3.16%Pb Grade % 1.79% 2.36% 2.03% 1.64% 1.22% 2.29% 1.41% 1.32% 1.16% 1.47% 1.76% 1.66% 2.47% 1.94% 1.83% 1.93% 1.66% 1.49% 1.76% 1.87% 1.56% 0.83%Cu Grade % 0.23% 0.35% 0.21% 0.16% 0.29% 0.22% 0.17% 0.29% 0.40% 0.47% 0.20% 0.37% 0.21% 0.18% 0.25% 0.20% 0.18% 0.18% 0.23% 0.24% 0.13% 0.02%Ag Grade oz/t 1.34 2.22 2.18 1.42 0.88 1.47 0.90 1.47 1.01 1.67 1.01 0.77 1.14 1.15 1.02 1.14 0.84 1.14 1.12 1.49 0.99 0.56 Au Grade oz/t 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.00 0.01 0.01 0.00 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.00

AREX MixProduction '000 tonnes 1,839 67 197 206 59 52 59 63 40 49 77 4 37 15 7 320 199 11 159 144 74

Zn Grade % 2.61% 2.29% 2.26% 2.63% 2.35% 2.51% 2.36% 1.78% 1.30% 1.20% 3.07% 2.60% 2.07% 3.36% 3.19% 2.19% 2.38% 2.13% 4.30% 3.43% 3.47%Pb Grade % 0.89% 0.72% 0.61% 0.74% 0.65% 1.02% 0.73% 0.67% 0.35% 0.37% 1.16% 0.85% 0.67% 1.07% 1.36% 0.83% 0.86% 0.72% 1.84% 0.75% 1.53%Cu Grade % 0.86% 1.18% 1.30% 1.00% 1.18% 0.51% 0.78% 0.59% 0.97% 0.97% 0.71% 0.69% 1.34% 0.53% 0.30% 0.67% 0.86% 0.93% 0.84% 0.58% 0.48%Ag Grade oz/t 0.85 0.84 0.77 0.82 1.00 0.75 0.82 0.74 0.54 0.60 1.13 0.42 0.59 1.07 0.72 0.80 0.82 0.77 1.29 0.66 1.21 Au Grade oz/t 0.02 0.02 0.02 0.02 0.01 0.02 0.01 0.01 0.01 0.02 0.01 0.01 0.02 0.01 0.01 0.02 0.02 0.02 0.03 0.02 0.01

AMBREX StringerProduction '000 tonnes 6,470 - - 6 118 94 188 230 734 512 921 743 720 302 630 142 37 38 172 346 236 229 61 11 ‐

Zn Grade % 0.05% 0.00% 0.00% 0.06% 0.14% 0.04% 0.10% 0.11% 0.10% 0.09% 0.05% 0.04% 0.03% 0.02% 0.02% 0.02% 0.04% 0.04% 0.04% 0.03% 0.03% 0.03% 0.03% 0.02%Pb Grade % 0.04% 0.00% 0.00% 0.02% 0.06% 0.04% 0.04% 0.04% 0.06% 0.07% 0.02% 0.02% 0.04% 0.02% 0.04% 0.04% 0.05% 0.03% 0.03% 0.04% 0.02% 0.02% 0.01% 0.01%Cu Grade % 0.78% 0.00% 0.00% 0.62% 0.86% 0.99% 0.81% 1.02% 0.90% 0.69% 1.02% 0.96% 0.65% 0.57% 0.51% 0.33% 0.66% 1.00% 0.78% 0.64% 0.58% 0.72% 0.97% 0.84%Ag Grade oz/t 0.27 - - 0.42 0.35 0.36 0.26 0.34 0.30 0.25 0.30 0.38 0.29 0.21 0.18 0.21 0.25 0.26 0.19 0.19 0.15 0.24 0.24 0.36 Au Grade oz/t 0.04 - - 0.01 0.02 0.02 0.02 0.04 0.04 0.03 0.03 0.03 0.04 0.04 0.05 0.06 0.04 0.04 0.05 0.04 0.04 0.02 0.03 0.06

AMBREX StrataboundProduction '000 tonnes 20,067 2 98 624 1,355 1,433 1,389 1,208 796 1,007 619 861 814 1,297 1,085 956 784 859 433 579 848 1,082 1,232 496 209

Zn Grade % 5.94% 5.69% 6.59% 5.02% 4.76% 4.87% 4.67% 4.62% 4.53% 5.92% 6.67% 9.12% 7.19% 10.35% 10.72% 7.93% 5.24% 5.61% 5.08% 5.05% 4.77% 4.52% 3.66% 3.56% 3.24%Pb Grade % 2.39% 1.98% 2.43% 1.88% 2.07% 1.97% 2.13% 1.87% 1.59% 2.05% 2.40% 4.36% 3.16% 4.53% 5.11% 3.15% 2.01% 1.95% 1.72% 1.95% 1.60% 1.42% 1.08% 1.25% 1.12%Cu Grade % 0.06% 0.04% 0.04% 0.04% 0.05% 0.05% 0.04% 0.06% 0.05% 0.08% 0.07% 0.07% 0.06% 0.07% 0.07% 0.04% 0.07% 0.06% 0.10% 0.13% 0.12% 0.09% 0.05% 0.03% 0.02%Ag Grade oz/t 1.79 2.00 2.56 1.58 1.75 1.81 1.81 1.55 1.13 1.49 1.91 2.88 2.22 3.18 3.37 2.61 1.87 1.46 1.07 1.38 1.09 0.81 0.72 0.81 0.88 Au Grade oz/t 0.01 0.00 0.01 0.00 0.01 0.01 0.01 0.01 0.00 0.01 0.01 0.01 0.01 0.02 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01

AMBREX MixProduction '000 tonnes 846 - - 19 10 85 43 182 61 22 29 15 86 21 1 23 73 2 30 5 0 123 16

Zn Grade % 3.42% 0.00% 0.00% 2.89% 3.12% 2.83% 3.92% 2.92% 2.80% 1.07% 5.97% 2.28% 4.92% 5.79% 10.41% 3.49% 3.62% 0.81% 4.22% 2.21% 1.09% 3.10% 3.15%Pb Grade % 1.16% 0.00% 0.00% 0.57% 1.01% 0.81% 1.27% 0.86% 1.08% 0.32% 1.46% 0.94% 1.96% 3.58% 4.15% 1.44% 1.33% 0.30% 1.98% 0.89% 0.37% 0.85% 0.55%Cu Grade % 0.37% 0.00% 0.00% 0.16% 0.33% 0.38% 0.21% 0.39% 0.15% 0.42% 0.12% 0.43% 0.24% 0.12% 0.05% 0.09% 0.18% 1.46% 0.58% 0.10% 0.26% 0.81% 0.34%Ag Grade oz/t 0.91 - - 0.34 1.05 0.63 0.83 0.86 0.98 0.45 1.06 0.59 1.36 2.23 1.03 1.38 0.78 0.50 1.19 0.53 0.20 0.75 0.76 Au Grade oz/t 0.01 - - 0.00 0.01 0.01 0.00 0.01 0.01 0.01 0.00 0.01 0.01 0.02 0.02 0.00 0.01 0.05 0.02 0.01 0.02 0.04 0.01

TOTAL MinedProduction '000 tonnes 36,953 574 903 1,369 1,781 1,798 1,796 1,807 1,819 1,815 1,822 1,774 1,802 1,794 1,814 1,806 1,815 1,812 1,817 1,822 1,553 1,632 1,308 508 209

Zn Grade % 4.06% 4.98% 3.73% 3.96% 4.03% 4.36% 3.97% 3.59% 2.31% 3.55% 2.87% 4.63% 3.95% 7.84% 6.59% 5.09% 3.61% 3.81% 3.85% 2.89% 3.34% 3.25% 3.49% 3.48% 3.24%Pb Grade % 1.59% 1.71% 1.24% 1.38% 1.70% 1.76% 1.76% 1.40% 0.81% 1.24% 1.02% 2.19% 1.69% 3.44% 3.13% 2.01% 1.36% 1.31% 1.35% 1.05% 1.14% 1.01% 1.03% 1.22% 1.12%Cu Grade % 0.33% 0.60% 0.71% 0.35% 0.26% 0.16% 0.19% 0.27% 0.49% 0.37% 0.61% 0.52% 0.35% 0.17% 0.23% 0.31% 0.27% 0.26% 0.41% 0.41% 0.27% 0.27% 0.10% 0.05% 0.02%Ag Grade g/t 39 53 44 38 46 50 47 39 23 32 29 50 39 76 66 53 36 33 29 27 26 20 22 25 27 Au Grade g/t 0.61 0.42 0.52 0.38 0.35 0.22 0.25 0.36 0.60 0.55 0.69 0.62 0.75 0.79 0.89 0.64 1.73 0.74 0.62 0.72 0.53 0.62 0.20 0.22 0.21

Contained MetalZn kt 1,500 29 34 54 72 78 71 65 42 64 52 82 71 141 120 92 66 69 70 53 52 53 46 18 7 Pb kt 587 10 11 19 30 32 32 25 15 23 19 39 30 62 57 36 25 24 24 19 18 17 13 6 2 Cu kt 120 3 6 5 5 3 3 5 9 7 11 9 6 3 4 6 5 5 8 7 4 4 1 0 0 Ag kozs 46,852 971 1,285 1,685 2,628 2,865 2,727 2,243 1,328 1,840 1,723 2,847 2,273 4,386 3,836 3,060 2,077 1,924 1,691 1,601 1,294 1,060 917 406 183 Au kozs 725 8 15 17 20 13 14 21 35 32 41 35 44 46 52 37 101 43 36 42 27 33 9 4 1

FINA

L DR

AF

T

VM

Ho

ldin

g S

.A. – A

ripu

anã Z

inc P

roject, P

roject #2779

Tech

nical R

epo

rt NI 43-101 – Ju

ly 31, 2017 P

age 16-16

TABLE 16-5 SUMMARY MINE SCHEDULE VM Holding S.A. – Aripuanã Zinc Project

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17 RECOVERY METHODS The description of the processing plant is largely taken from information presented in the

Votorantim Metais Technical Report (Votorantim, 2015) and the Basis of Design Report

(Worley Parsons, 2017b).

PROCESS DESCRIPTION Based on the metallurgical test program completed to date, the Aripuanã Zinc process

flowsheet has been developed by considering conventional technologies for treatment and

copper, lead, and zinc recovery as separate concentrates. Plant throughput is forecasted to

be 1.8 million tpa. A simplified process flowsheet is shown in Figure 17-1. Key elements of

the process flowsheet include primary crushing, SAB (semi-autogenous grinding (SAG)

followed by Ball milling) circuit, talc pre-flotation of Stratabound mineralization, sequential

flotation of copper, lead, and zinc, and single copper flotation for Stringer mineralization. A

description of the key processing plant unit operations is described below.

COMMINUTION The crushing circuit will consist of one stage. Production will be trucked from the underground

mine to the Run-of-Mine (ROM) stockpile, close the plant crushing area. Production will be

directly discharged into a hopper or held temporarily in two stockpiles (each approximately

11,000 m3 in size) based on mineralization type and grade and recovered later by wheel loader.

Under the loading hopper, a fixed grizzly scalper will be installed with an aperture of 600 mm.

Oversize material from the grizzly scalper will be broken down by a rock breaker and fed again

to the hopper.

ROM/Stockpile SAB Milling Talc FlotationPrimary

Crushing

Lead Flotation Zinc FlotationCopper

FlotationThickening andrejects filtration

LeadConcentrate

Filtration

ZincConcentrate

Filtration

CopperConcentrate

Filtration

Concentrate storage and transportation

Dry stackingBackfill

Float

Float Float Float

July 2017 Source: 5Karmin Exploration Inc., 201 .

Simplified Process Flow Sheet


VM Holding S.A.

Figure 17-1

17-2

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Production will be extracted from the hopper at a nominal rate of 182.6 tonnes per hour (tph)

by an apron feeder to feed a 150 mm aperture vibratory scalper. Oversize material from the

vibratory scalper will feed a jaw crusher. Crushed product below 150 mm in size will be

transferred by a belt conveyor to an elongated silo for homogenization. Both Stratabound and

Stringer mineralization will be recovered from below the silo using belt feeders at a nominal

rate of 152.2 tph (dry basis) to feed the SAG mill feeding belt conveyor.

A trommel at the SAG mill will separate coarse material for recirculation as SAG mill feed. To

maintain the ideal chemistry and slurry density in the SAG circuit, the addition of recovered

water without chemical reagents is controlled. Undersize trommel material is discharged into

a pump box and the slurry will feed a set of hydrocyclones. Hydrocyclone underflow material

will return to the ball mill and the hydrocyclone overflow with P80 (80% passing size) of 0.125

mm (Stringer) and 0.075 mm (Stratabound) will be directed to copper flotation (Stringer) or to

talc flotation (Stratabound). An online particle size analyzer will be installed to control partition

and grinding of the hydrocyclone overflow stream. The ball mill discharge is combined with

the trommel underflow and recirculated as feed to the hydrocyclones.

FLOTATION Flotation will be conducted sequentially, i.e., the production from the comminution circuit will

pass through four independent circuits in sequence. The first flotation circuit is talc/light

mineral flotation (e.g., minerals containing magnesium) to remove naturally hydrophobic

minerals and to prevent them from contaminating the sulphide concentrates. Due the high

content of light minerals in Stratabound mineralization, these minerals must be removed before

sulphide flotation. Only Stratabound mineralization will be treated via talc flotation. Talc

removal is not generally required for Stringer mineralization due to their low talc content and

any talc present can be depressed by using CMC (carboxymethyl cellulose). The flotation and

recovery of copper, lead, and zinc follow talc flotation.

Hydrocyclone overflow slurry will directly feed the rougher talc flotation cells. Reagents added

for talc flotation include MIBC (methyl isobutyl carbinol) as a frother and SMBS (sodium

metabisulphite) as a depressor. The rougher talc flotation concentrate produced will be

pumped to tailings filtration, dewatered, and disposed. The rougher talc flotation tailings

(containing copper, lead, and zinc minerals) will proceed to the copper flotation circuit.

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Prior to copper rougher flotation, rougher talc flotation tailings (Stratabound) or hydrocyclone

overflow (Stringer) will be conditioned in a tank using the following reagents:

• Stratabound: AERO 3894 or A3894 (dialkyl thionocarbamate collector for copper), zinc sulphate (depressor), SMBS (depressor), and CMC (talc depressor)

• Stringer: A3894 (collector), MIBC (frother), and CMC (talc depressor)

Prior to conditioning and cleaner flotation, copper rougher flotation concentrate will be

reground to a P80 of 30 µm (Stratabound) or 45 µm (Stringer), to increase sulphide liberation

and to promote higher cleaner stage recovery. The product from the copper cleaner flotation

circuit is the final copper concentrate. Copper rougher flotation tailings will be pumped to feed

the lead flotation circuit (Stratabound) or in the case of Stringer mineralization, delivered to

tailings filtration.

The lead flotation circuit is similar to the copper flotation circuit, but the quantity of flotation

cells and the types of reagents used are different. Lead and zinc flotation are only performed

for Stratabound mineralization. The reagents used for lead flotation include:

• AEROPHINE 3418A (dialkyl dithiophosphinate collector for lead)

• Zinc sulphate (depressor)

• SMBS (depressor)

• Lime (pH regulator)

• CMC (talc depressor)

Prior to lead rougher flotation, the feed slurry is conditioned with these reagents in a tank. The

lead circuit consists of rougher flotation, rougher concentrate regrinding, and cleaner flotation.

The product from the lead cleaner flotation circuit is the final lead concentrate. The Lead

rougher flotation tailings will be pumped to feed the zinc flotation circuit.

The zinc flotation circuit is similar to the copper and lead flotation circuits, but the quantity of

flotation cells and the types of reagents used are different. The reagents used for zinc flotation

include:

• AERO 208 or A208 (dialkyl dithiophosphate collector for zinc)

• Copper sulphate (depressor)

• Lime (pH regulator)

• CMC (talc depressor)

• MIBC/IF50 (frothers)

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Prior to zinc rougher flotation, the feed slurry is conditioned with these reagents in a tank. The

zinc circuit consists of rougher flotation, rougher concentrate regrinding, and cleaner flotation.

The product from the zinc cleaner flotation circuit is the final zinc concentrate. Zinc rougher

flotation tailings will be pumped to tailings filtration, dewatered, and disposed.

THICKENING AND FILTRATION Thickening and filtration will be performed on flotation concentrates and tailings. Three

concentrates (copper, lead, and zinc) will be produced and will require separate thickening and

filtration. Tailings generated from flotation will consist of talc concentrate, copper flotation

tailings (Stringer) and zinc flotation tailings (Stratabound).

Each concentrate slurry (estimated solids percentage will range from 20% to 25%), will be

pumped to a storage tank feeding two press filters, which will reduce the moisture to

approximately 10%. The filtered copper and zinc concentrates will fall by gravity onto belt

conveyors that will deliver the material to segregated covered storage areas. The copper and

zinc concentrates will be reclaimed by wheel loader for transport by truck. After filtration, the

lead concentrates will be bagged in one metric tonne bags. All filtrates will be recovered for

use in flotation.

Copper flotation tailings (Stringer) and zinc flotation tailings (Stratabound) will be classified

using hydrocyclones to separate the tailings into a fine fraction (overflow stream) and a coarse

fraction (underflow stream). The hydrocyclone overflow will be diverted to a 15 m diameter

thickener for dewatering, prior to combination with the talc concentrate and filtration by press

filter. A flocculant (BASF Magnafloc 10) will be added to the thickener to increase the solids

sedimentation rate. The hydrocyclone underflow will be filtered by vacuum belt filtration to

approximately 12% to 15%, transported by conveyor or truck, and disposed of in the dry tailings

dump or re-slurried with the addition of cement and pumped as material for mine backfill

(optional). The filtrates from the press and belt filter will be pumped to a recovered water pond

and reclaimed for return to the process.

RECOVERED AND MAKE-UP WATER SYSTEMS The water system is designed to maximize water recovery and recirculation. Water from

tailings thickener overflow and tailings filtration will be pumped to a recovered water pond with

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a two-day retention capacity. After treatment with hydrogen peroxide, the water is pumped to

a 600 m3 recovered water tank, which will receive make-up water as required.

Water collected from concentrate filtration will be segregated and recirculated for use in the

respective flotation circuit.

Make-up water will be collected from a storage pond close to the facilities and will be pumped

to a 400 m3 make-up water tank. This water will be used as make-up for recovered water and

for specific uses including feed for the Water Treatment Station (WTS), pump sealing, fire

suppression, vacuum pump sealing, reagent preparation, potable water, and feed to various

points in the plant circuit.

REAGENT PREPARATION AERO 3894 This collector is supplied as liquid product in 200 L drums. The solution from the drums will

be transferred to a storage tank and distributed without dilution in copper flotation.

AEROPHINE 3418A AND AERO 208 The collectors will be supplied as liquid products in 200 L drums and will have identical

preparation systems. Solutions will be transferred to dosage tanks, prepared in solubilization

tanks to 10% by weight, and transferred to storage tanks. The collector will be pumped and

delivered at required dosage rates in several flotation stages for the respective flotation

circuits.

SODIUM METABISULPHITE This reagent will be supplied in 850 kg bags and delivered to a storage hopper. A screw

feeder-doser will transfer the material from the storage hopper to an agitator tank, where SMBS

will be dissolved in water to reach a concentration of 10%. The solution will be transferred to

a storage tank and pumped at required dosages to talc, copper, and lead flotation.

COPPER SULPHATE Copper sulphate will be supplied in bags and delivered to a storage hopper. A screw feeder-

doser will transfer the material from the storage hopper to an agitator tank, where the copper

sulphate will be dissolved in water to reach a concentration of 10%. The solution will be

transferred to a storage tank and pumped at required dosages to zinc flotation.

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ZINC SULPHATE Zinc sulphate will be supplied in one metric tonne bags and delivered to a storage hopper. A

screw feeder-doser will transfer the material from the storage hopper to an agitator tank, where

the copper sulphate will be dissolved in water to reach a concentration of 10%. The solution

will be transferred to a storage tank and pumped at required dosages to copper and lead

flotation.

MIBC AND IF50 Both MIBC and IF50 will be supplied in 200 L drums or 1,000 L containers in liquid form. The

frothing agents will be transferred by pump to respective storage and distribution tanks. The

frother will be added in separate lines to various flotation stages. MIBC will be added to

maintain froth stability as required in all flotation stages, while IF50 will only be added in zinc

flotation.

CMC CMC will be supplied in one metric tonne bags and delivered to a storage hopper. A screw

feeder-doser will transfer the material from the storage hopper to an agitator tank, where the

CMC will be dissolved in water to reach a concentration of 10%. The solution will be

transferred to a storage tank and pumped at required dosages to copper, lead, and zinc

flotation.

HYDRATED LIME Hydrated lime will be supplied in bulk by truck and pneumatically transported to storage silos.

All dust generated during material transfer will be collected by a de-dusting system comprised

of exhaust fans and bag filters. Lime will be transferred using a rotating valve coupled with a

screw feeder-doser to a covered mixing tank and combined with water to prepare a slurry

containing 10% to 15% solids. Lime slurry will be pumped to various process stages and the

reagent will be added at required dosages to control circuit pH.

CEMENT Cement will be supplied in bulk by truck and pneumatically transferred to storage silos. All

dust generated during material transfer will be collected by a de-dusting system comprised of

exhaust fans and bag filters. Cement will be transferred using a rotating valve coupled with a

screw feeder-doser to a backfill re-slurrying tank and delivered to an agitated slurry mix tank.

Cement slurry will be pumped to the mine via a pipeline along the access road from the plant

to the mine.

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FLOCCULANT Flocculant will be delivered in 25 kg sealed bags and transferred to a storage hopper. Material

will be transferred from the storage hopper by screw feeder to an agitated tank and a 1%

solution will be prepared. The prepared solution will be pumped to a storage tank and

distributed to the thickener.

COMPRESSED AIR SYSTEMS A dedicated compressed air system will be provided for the press filters for each type of

concentrate. One or more compressors, with a stand-by unit, will be available for each filtration

system. These compressors will be screw type, air cooled, oil-free, and at a pressure of 7

kg/cm2.

An exclusive small-size compressor will be installed, without a stand-by unit, to generate dry,

oil-free air for the laboratory.

Screw compressors will be installed, with one stand-by unit, to generate dry oil-free air for the

beneficiation plant and workshop service and instrumentation air.

Dedicated blowers will be installed, with one stand-by unit, to generate low pressure, oil-free

air (approximately 0.4 kg/cm2) for the flotation stage (tank cells).

DUST SUPPRESSION SYSTEM The dust suppression system for primary crushing and the homogenization silo will consist of

a central unit with pumping and filtration systems, as well as piping and spray nozzles.

DRAINAGE A drainage system has been devised throughout the operational area, which includes:

• Process drainage – restricted to process facility buildings of operational units. The aim is to contain leakage and overflows that may occur during the development of activities and process. The effluent collected returns to the production process itself.

• Industrial drainage – restricted to access areas within the industrial unit and entrance gate areas, which may be reached by leakage from piping and its supporting structures, cargo transportation, etc. This drainage must be connected to the emergency drainage and/or effluent treatment station. A water, oil, and grease separation system will be installed in the workshop and in areas with industrial effluents.

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• Pluvial drainage – aimed at collecting rainwater in areas without risk of contamination, which can be disposed of in the hydrographic network without treatment.

• Emergency drainage – aimed at controlling emergency situations related to liquid effluents and industrial drainage and installed in an appropriate location so as to prevent pollution of the local drainage network.

EFFLUENT TREATMENT STATION (ETS) Compact effluent treatment system (or Compact ETS) is a modular system for biological

treatment of wastewater (sewage). The water treatment system includes a pretreatment stage

with grid, sandbox, grease box, septic tank, and screen or flotation. In case the system is

aerobic, there is typically an aeration/digestion chamber. A Compact ETS based on aerobic

reactors requires oxygen supply to allow for the development of aerobic organisms (activated

sludge) and includes decantation. Water can be disinfected by chlorination, ozonization or UV

radiation, and reused or discharged to the environment.

The treatment stages are as follows:

• Effluent intake through an inlet diffuser to avoid turbulence of any material already deposited.

• Decantation and segregation of material in the septic tank.

• Effluent flow out through an outlet prefilter filled with number 3 gravel.

• A passage and inspection box between the septic tank and the biological septo-diffuser filters to facilitate distribution.

• Effluent treatment through anaerobic filtration.

• Treated effluent may be discharged, collected and taken to a receiving body, or reused for other industrial purposes.

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18 PROJECT INFRASTRUCTURE The overall waste management strategy for the Aripuanã Zinc Project is largely taken from

information presented in a Waste Management Strategy Report (Worley Parsons, 2017c) and

the Basis of Design Report (Worley Parsons, 2017b). The current waste management strategy

includes the following aspects:

• Surface water management to minimize water entering the tailings area.

• Adoption of dry stack (filtered) tailings disposal on surface and tailings disposal as cemented paste backfill underground.

• Site selection for the Tailings Management Facility (TMF) sites.

• Minimizing the size and space required for the fresh water pond and thus, providing more space for adjacent TMF sites. A portion of the process plant water demand will be supplied from mine dewatering, which will be supplemented by pumping from an aquifer in the vicinity of the mine site.

• Utilization of non-acid forming mine waste rock to provide supplemental perimeter containment of the tailings.

WASTE PRODUCTION

TAILINGS PRODUCTION Up to 4,750 tpd of tailings solids will be generated at full plant production and approximately

17 million tonnes of tailings will require secure disposal over a period of ten years. In

accordance with a regulatory commitment, a minimum of 50% of the tailings must be disposed

of in underground mine workings and plans for tailings disposal as cemented paste backfill has

been considered. The remainder of the tailings (approximately 8.5 million tonnes of solids) will

be stored on surface in accordance with the filtered dry stack method of disposal. If properly

filtered, tailings can be spread and compacted in lifts similar to typical earth embankment

construction. Preliminary design and management of the dry stack facilities, or TMF sites,

have been considered.

TAILINGS PROPERTIES The metallurgical properties of the mineralization and the grind size during crushing and the

concentration of talc will significantly impact the physical properties of tailings. Talc content is

expected to be in the range of 5% to 10% of the tailings by weight.

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A laboratory test program has recently been completed by RCS (Rheological Consulting

Services) of the University of Melbourne in Victoria, Australia to determine the effect of grind

size (P80 of 150 µm vs. P80 of minus 75 µm) and talc content on rheological and geotechnical

properties of the tailings. The test data is currently under review.

TAILINGS MANAGEMENT FACILITY DESIGN Twelve sites were considered by VMH for above ground tailings deposition in a trade-off study.

The site layout for Option 10A is currently under consideration and is shown in Figure 18-1

and in greater detail in Appendix B of the Waste Management Strategy Report. The process

plant site would be centrally located with the Arex deposit to the north, the Ambrex deposit to

the east, and four TMF sites to the west and south. The water supply dam is located at the

south end of the lease area. Topsoil, excess waste rock, and waste soil will be stockpiled to

the southwest of the water supply reservoir.

A preliminary conceptual design of the TMF is shown in Figure 18-2 and the following aspects

have been considered:

• Perimeter containment to enhance stability of the TMF using waste rock from the mine.

• Placement and management of potentially saturated tailings in internal cells during the wet season.

• Surface water management at each TMF site.

• Any requirements for a liner and seepage collection system at the base of the tailings deposit.

• The ease of reclaiming and closing the facility and the end of mining.

An acid base accounting (ABA) test program is currently in progress for both the tailings and

waste rock and the conceptual design of the TMF sites should be reviewed based on the ABA

test results. The next stage of design should also assess slope stability and geotechnical

parameters based on current laboratory test results.

PAIOL DE EXPLOSIVOS

29

0 2 05

Metres

5 00 750 10 00

Ju 2017ly Source: Votorantim Metais, 2017.

General Site Plan and ProposedTMF Sites for Option 10A


VM Holding S.A.

Figure 18-1

18-3

ww

w.rp

acan

.co

m

0 100 400

Metres

200 300

TMF Conceptual Design


Aripuanã Zinc ProjectMato Grosso State, Brazil

VM Holding S.A.

Figure 18-2

18-4

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POWER SUPPLY Electrical power is proposed to be provided to the Aripuanã Project by the Dardenelos

Hydroelectric Plant, connected to the National Energy System, and located near the Project.

The Project requires the installation of a 69 kV transmission line and associated infrastructure,

such as substations and switchyards, to connect to the Dardenelos transmission system.

RPA understands that the authorization from the Ministry of Mines and Energy for the

connection has not yet been obtained, however, it is not expected to be a significant obstacle

to advancing the Project.

WATER SUPPLY The Project water balance requires a top-up of fresh water supply of approximately 150 m3/h.

VMH has undertaken a water supply engineering study based on the construction of a water

dam and creation of a fresh water lake in a valley adjacent to the Project site (see Figure 18-

1).

VMH has obtained authorization from the regional authority to construct the dam and to draw

up to 378 m3/h of fresh water from the dam to supply the Project.

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19 MARKET STUDIES AND CONTRACTS MARKETS The principal commodities at the Project are freely traded, at prices and terms that are widely

known, so that prospects for sale of any production are virtually assured. RPA reviewed the

concentrate terms provided by VMH and found them to be consistent with current industry

norms.

Metal prices are based on long-term consensus forecasts by independent banks and financial

institutions. A year-by-year price curve was used to cash flow modelling.

CONTRACTS No contracts for operations have been negotiated yet.

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20 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT ENVIRONMENTAL AND SOCIAL SETTING The surface components of the Aripuanã Zinc Project are located around 25 km northwest of

the municipality of Aripuanã, in the northwestern corner of the Mato Grosso State, Brazil,

approximately 1,200 km northwest from Brasília, the federal capital.

The Aripuanã Zinc property contains 22 contiguous EPs, mining concessions, and EPs in

application, covering an area of approximately 740 m². The EPs are owned by Dardanelos, a

joint venture between Karmin (30%) and VMH (70%), with VMH acting as the operator.

The Project area has two creeks, Arrainha Creek and Maranhã Creek, both of which are

tributaries of Guaribal Creek, which is a tributary of the Aripuanã River, which drains part of

the extreme northwest of the state of Mato Grosso and belongs to the Amazon River basin.

The Project area is located within an area called Depressão Amazonica Meridional (RADAM

Brasil 1982) and the Depressão Norte do Mato Grosso (Seplan 1999). This depression

includes the drainage network of the Aripuanã River and Tenente Marques River. The area is

hilly with elevations from 129 MASL to 361 MASL and a general northwest-southeast direction.

The area does not have a climate station. According to the Köppen-Geiger climate

classification, the climate in Aripuanã is AM – a Monsoon tropical, megathermal with

temperatures in the coolest months above 18°C, with no winter season. Annual precipitation

is above 2,000 mm, concentrated in the warmer months, and averages below 600 mm in the

driest months.

In the Aripuanã River basin regimen follows the precipitation pattern, with the wet season

spanning from November until May. Low flows start in June and end in October. The minimum

flows are observed in September and October.

Regarding the surface water quality, due to the geological conditions in the region, metals

which presented concentrations above the detection limit are: aluminum, dissolved iron,

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manganese, barium, and zinc. These are part of the rock composition in the area and do not

indicate contamination or pollution.

In August 2008, the parameters which did not meet the limits established by the Ministry of

Environment (CONAMA) Resolution No. 357/05 for Class II water bodies were: phosphorus

(all sampling locations, except one), dissolved iron (two locations) and manganese (one

location). In April, the parameters were: turbidity (one location), dissolved oxygen (one

location), phosphorus (all), dissolved iron (all), dissolved aluminum (two locations),

manganese (five locations), thermotolerant coliforms (all, except two) and Escherichia coli

(three locations). In December, the parameters were: colour (five locations), BOD (one

location), total phosphorus (four locations), dissolved iron (one location), manganese (two

locations), and E. coli and thermotolerant coliforms (four locations).

Descriptions of vegetation in the area, the terrestrial fauna, or aquatic fauna baseline

campaigns are being finalized and will be included in an EIA to be filed on 7 August.

There are two conservation areas described in the municipality located 100 km to 200 km away

from the Project: Estação Ecológica Rio Flor do Prado, with an area of 9 ha, and Reserva

Extrativista Guariba Roosevelt, with an area of approximately 165 ha.

The Project area is located on the left banks of Rio Guariba and right banks of the Roosevelt

River. This area is dedicated to farming of Rubber Trees (Hevea Brasiliensis), Nuts

(Bertholletia excelsa), and Copaíba Oil (Copaífera landsdorfii).

ENVIRONMENTAL STUDIES The environmental licensing process for the Aripuanã Zinc Project started in 2008 following

the Terms of Reference (ToR) (Ofício nº 20084/CM/SUIMIS/2008) issued by Mato Grosso

environmental agency (SEMA/MT). For strategic reasons, the process was put on hold and

the field activities performed in 2008 were consolidated into a document in the format of a

“Diagnosis of an EIA – Environmental Impact Assessment of the Project” (EIA). In 2012, a

new ToR was requested (Ofício nº 85522/CM/SUIMIS/2012), and many of the studies

performed as a result were consolidated into a comprehensive EIA. The EIA was completed

in 2012, however, was not filed with the authorities, due to low commodity prices at that time.

In 2014, with zinc prices increasing, the EIA was filed. Taking into account further exploration

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on the property, increased production levels were presented in 2015 with productions

increasing from 1.2 Mtpa to 1.8 Mtpa. SEMA performed many inspections and the Public

Hearing was held on August 26, 2015. During 2015 and 2016, the permitting process was

analyzed by SEMA/MT, however, due to changes in the engineering process, the analyses

were put on hold until all changes were performed. There were also updates in the biotic media

campaigns and the inclusion of the noise and vibration studies. Therefore, a new ToR was

requested (Protocolo nº 79893/2017). At the time of report writing, VMH was in the process

of finalizing an updated EIA for submittal.

RPA has been provided with the following reports regarding social and environmental areas:

• Environmental Impact Study – Estudo de Impacto Ambiental – Projeto Aripuanã/MT-Mina Subterrânea de Polimetálicos. – Mineração Dardanelo ltda; GeoMinas Geologia Mineração e Assessoria, ltda – July 2017.

• Volume I – General Information on the Project (Informações Gerais sobre o Empreendimento).

Volume II – Physiography Study (Diagnóstico do meio físico).

Volume IV –Social Studies (Meio Antrópico).

• Impact Matrix – Excel spreadsheet.

• Volume III was not available for review, as it is currently being finalized.

Project impacts (described in the Impact Matrix prepared by VMH) for construction, operations,

and closure phases are listed below. These impacts were considered during Project planning.

Each potential effect was evaluated considering their magnitude, probability, and duration.

• Air quality due to particulate material generation and combustion gases;

• Noise;

• Vibration due to the use of explosives;

• Soil structure and erosion processes

• Water bodies dredge due to sediments presence and silting;

• Interventions in the Arrainha and Maranhão Creeks due to the formation of the Dam, the waste pile and recovered water pond.

• Changes in the terrain and landscape;

• Changes in the surface water and soil quality;

• Changes in the aquifers recharge load;

• Changes in the springs load;

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• Changes in groundwater flow;

• Changes in groundwater quality;

• Reduction of the open forest cover, with losses in the flora and threatened flora;

• Interventions in Permanent Preserved Areas;

• Reduction in the connectivity between native vegetation;

• Loses in the vegetation cover anthropized;

• Fauna displacement due to machines, vehicles and people movement and noise generation.

• Risk to fauna due to vehicles and hunting activities;

• Losses of fauna specimens due to vegetation suppression;

• Mammal representatives losses due to habitat loss; including endangered species;

• Lontra longicaudis (lontra) habitat loss;

• Scientific information loss regarding small mammals and herpetofauna;

• Changes in the fish populations due to changes in the water bodies flow;

• Changes in the freshwater biota due water bodies silting;

• Changes in vectors insects populations;

• Potential increase in prostitution indexes, violence and drugs consumption and social cultural conflicts due to immigrants arrival in Aripuanã Municipality;

• Potential decrease in the number of residences in Aripuanã’s urban area;

• Employment and wage generation;

• New business opportunities generation;

• Increase in taxes collection;

• Potential increase in endemic diseases due to the arrival of immigrants;

• Increase in the need of social basic service;

• Water quality changes due to backfill movement and effluent generation in the sterile deposit, waste and minerals (Acidic drainage);

• Springs suppression or changes in the flow;

• Changes in the Amphibia population due to sediments in water bodies;

• Changes in the fishes populations due to changes in the water bodies;

• Uncomfortable situations generation due to traffic in MT 208 highway;

• Tax collection increase;

• Springs recovery;

• Vegetation recovery in recovered areas;

• Work demand decrease. Work force decommissioning;

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• Decrease in tax collection and consequent decrease in the money transferences to public services during the closure phase;

• Community expectations and worries.

PROJECT PERMITTING No permits, exploration or environmental, were available for review.

SOCIAL OR COMMUNITY REQUIREMENTS The municipality of Aripuanã was founded in 1943 and has a total area of approximately 25,107

km² and a population or approximately 20,600. The Project is located approximately 20 km

northwest from Aripuanã. The municipality is away from the main economical centres of the

state (i.e., Cuiaba, Sinop, and Lucas do Rio Verde). Until 1995, there were gold and diamond

artisanal mining activities in the area.

The EIA describes two indigenous villages located approximately 10 km to 12 km from the

Project: Arara do Rio Branco with an area of approximately 11 ha and Aripuanã with an area

or approximately 750 ha. The total population is 512, 74 of which live in areas outside of the

villages.

Consultation with indigenous peoples to date regarding Project impacts and mitigation have

been under the tutelage and consent of National Historical and Artistic Heritage Institute

(IPHAN) with National Indian Foundation (FUNAI).

No resettlement will be required to implement the Aripuanã Zinc Project.

Archaeological studies performed in the direct and indirect area of influence of the Project

showed no archaeological remains, however, additional studies will be performed to confirm

these findings.

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MINE CLOSURE REQUIREMENTS Based on the EIA, Dardanelos is preparing a Mine Closure Plan for the Aripuanã Project,

including alternatives for future use. No other information regarding the mine closure plan was

available for review.

RPA included an allowance of US$10 million at the end of the mine life for closure and

reclamation.

KEY ISSUES AND RECOMMENDATIONS FOR FUTURE WORK Based on the information reviewed and the Project knowledge obtained during this review,

RPA is of the opinion that the current EIA is compliant with Brazilian standards and regulation

needs for the current stage of the Project. As the Project is advanced, more detailed EIA

submissions will be required with regard to the following:

• Establishing existing environmental and socio-economic conditions in the Project area and the influence in the Project.

• Predicting Project effects.

• Specifying and detailing mitigation measures to prevent significant impacts.

• Detailing future monitoring and management activities of the Project.

• Continuing baseline data collection. This will also include community and stakeholder consultation and impact generated by the Project in each area.

• Testing to determine geochemistry baseline data.

• Confirming that there are no fauna or flora species of importance or any endangered or threatened species affected by the Project.

• An ecological and human health risk assessment should be carried out, with the aim of identifying if water quality, air quality, and noise combined with local uses of the areas have the potential of affecting the health of local wildlife, feedstock, and/or the local population.

• Site closure will require large amounts of soil. A detailed soil balance should be developed with the aim of ensuring that the required amounts of soils will be available to support closure activities.

• Historically, closure of mine sites has the potential to result in significant economic impacts. To avoid these impacts a detailed social management plan should be

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developed, which includes ongoing consultation, training and planning of workers and local community members, with the aim of mitigating the economic and social effects of mine closure.

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21 CAPITAL AND OPERATING COSTS VMH has completed engineering studies on the Project, involving detailed cost estimates built

up from first principles. Costs were estimated as of Q2 2017, in Brazilian currency. RPA

reviewed the estimates and converted to US$ using an exchange rate of US$1.00 = R$3.30.

CAPITAL COSTS Capital costs were estimated using a combination of first principles, quotations, and factored

estimates. Capital costs are estimated at a +/- 20% confidence level.

The estimates are based on a two-year construction schedule.

PRE-PRODUCTION CAPITAL Pre-production capital costs totalling US$354 million are summarized in Table 21-1.

TABLE 21-1 PRE-PRODUCTION CAPITAL COST ESTIMATE VM Holdings S.A. – Aripuanã Project

Area Category Units Initial Costs

Mine Development US$ millions 23.9 Mobile Equipment US$ millions 31.4 Plant & Infrastructure Site Prep & Earthworks US$ millions 22.8 Civil & Roadwork US$ millions 24.2 Steelwork US$ millions 16.7 Electrical US$ millions 36.1 Instrumentation US$ millions 9.6 Mechanical Equipment US$ millions 75.3 Piping US$ millions 14.8 Communications US$ millions 6.0 Subtotal Direct Costs US$ millions 260.9 Indirect Costs EPCM US$ millions 18.9 Temporary Services US$ millions 10.4 Owner’s Team US$ millions 19.2 Other US$ millions 13.4 Subtotal Indirects US$ millions 69.7 Contingency US$ millions 23.6 Total Capital Cost US$ millions 354.3

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In RPA’s opinion, the estimate can be classified as Class 4, per American Association of Cost

Engineers (AACE) guidelines, which generally corresponds to pre-feasibility studies.

Contingency comprises 7% of direct and indirect capital costs, which RPA considers to be low

for the current stage of the Project.

SUSTAINING CAPITAL Sustaining capital costs totalling US$229 million over the operating life of mine are summarized

in Table 21-2.

TABLE 21-2 SUSTAINING CAPITAL COST ESTIMATE VM Holding S.A. – Aripuanã Zinc Project

Parameter Units Sustaining Costs

Mine Equipment US$ millions 44.8 Capital Development US$ millions 139.5 Plant Equipment US$ millions 28.7 Tailings US$ millions 6.1 Closure and Remediation US$ millions 10.0 Total Capital Cost US$ millions 229.0

RPA added an allowance of US$10 million for Closure and Reclamation to the estimate

provided by VMH.

Exclusions from the capital cost estimate include, but are not limited to, the following:

• Project financing and interest charges • Working capital • Escalation during construction

OPERATING COSTS Operating costs, averaging US$64 million per year at full production, were estimated for

Mining, Processing, and General and Administration (G&A). Operating cost inputs such as

labour rates, consumables, and supplies were based on VMH operating data. A summary of

operating costs is shown in Table 21-3.

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TABLE 21-3 OPERATING COST ESTIMATE VM Holding S.A. – Aripuanã Zinc Project

Parameter Total LOM

(US$ millions) Average Year

(US$ millions / yr) LOM Unit Cost

(US$ / t) Mining 763 35.0 20.65

Processing 572 26.4 15.47

G&A 85 3.6 2.31

Total 1,420 64.0 38.43

LOM average unit costs are influenced by three higher-cost years during ramp-up to full

production and by five years of lower production at the end of the mine life.

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22 ECONOMIC ANALYSIS The economic analysis contained in this report is based, in part, on Inferred Resources, and

is preliminary in nature. Inferred Resources are considered too geologically speculative to

have mining and economic considerations applied to them and to be categorized as Mineral

Reserves. There is no certainty that economic forecasts on which this Preliminary Economic

Assessment is based will be realized.

RPA has generated a Cash Flow Projection from the LOM production schedule and capital

and operating cost estimates, and this is summarized in Table 22-1. A summary of the key

criteria is provided below.

ECONOMIC CRITERIA REVENUE

• LOM processing of 37 Mt, grading 4.06% Zn, 1.59% Pb, 0.33% Cu, 39 g/t Ag and 0.61 g/t Au

• LOM average metallurgical recovery of 82% Zn, 82% Pb, 86% Cu, 66% Ag and 82% Au

• LOM average metal payable of 84% Zn, 95% Pb, 96% Cu, 77% Ag and 87% Au

• LOM payable metal of 1,028 kt Zn, 459 kt Pb, 101 kt Cu, 23,638 koz Ag and 529 koz Au

• LOM metal prices based on forward-looking independent forecasts, averaging US$1.06/lb Zn, US$0.88/lb Pb, US$2.74/lb Cu, US$18.95/oz Ag, and US$1,278/oz Au.

• All revenues are received in US$.

• Total gross revenue of US$5,024 million.

• Total offsite treatment, transportation, and refining charges of US$1,383 million.

• Total royalties of US$192 million.

• Net revenue of US$3,449 million.

• Average unit net revenue of US$93/t processed.

• Revenue is recognized at the time of production.

COSTS

• Pre-production period: 24 months.

• Mine life: 24 years.

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• Life of Mine production plan as summarized in Section 16.

• Pre-production capital totals US$354.3 million.

• Sustaining capital over the LOM totals US$229.0 million.

• Average operating cost over the mine life is US$38.43 per tonne processed.

TAXATION AND ROYALTIES RPA has relied on a VMH taxation model for calculation of income taxes applicable to the cash

flow.

As discussed in Section 4, the Project is subject to royalties which differ for the two deposits.

In addition, a corporate income tax rate of 34% was applied to taxable income. The calculation

of taxable income takes into consideration the depreciation schedule, assuming a 10 year fixed

rate method. Over the LOM, the Project will pay US$390 million in corporate income taxes,

net of credits for working capital.


MININGUnderground

Operating Days 350 days 8,400 350 350 350 350 350 350 350 350 350 350 350 350 350 350 350 350 350 350 350 350 350 350 350 350 Tonnes milled per day tonnes / day 765 1,639 2,581 3,912 5,090 5,139 5,132 5,162 5,199 5,187 5,206 5,070 5,147 5,126 5,182 5,161 5,187 5,177 5,191 5,206 4,437 4,664 3,738 1,451 598

Production '000 tonnes 36,953 574 903 1,369 1,781 1,798 1,796 1,807 1,819 1,815 1,822 1,774 1,802 1,794 1,814 1,806 1,815 1,812 1,817 1,822 1,553 1,632 1,308 508 209 Zn Grade % 4.06% 4.98% 3.73% 3.96% 4.03% 4.36% 3.97% 3.59% 2.31% 3.55% 2.87% 4.63% 3.95% 7.84% 6.59% 5.09% 3.61% 3.81% 3.85% 2.89% 3.34% 3.25% 3.49% 3.48% 3.24%Pb Grade % 1.59% 1.71% 1.24% 1.38% 1.70% 1.76% 1.76% 1.40% 0.81% 1.24% 1.02% 2.19% 1.69% 3.44% 3.13% 2.01% 1.36% 1.31% 1.35% 1.05% 1.14% 1.01% 1.03% 1.22% 1.12%Cu Grade % 0.33% 0.60% 0.71% 0.35% 0.26% 0.16% 0.19% 0.27% 0.49% 0.37% 0.61% 0.52% 0.35% 0.17% 0.23% 0.31% 0.27% 0.26% 0.41% 0.41% 0.27% 0.27% 0.10% 0.05% 0.02%Ag Grade g/t 39 53 44 38 46 50 47 39 23 32 29 50 39 76 66 53 36 33 29 27 26 20 22 25 27Au Grade g/t 0.61 0.42 0.52 0.38 0.35 0.22 0.25 0.36 0.60 0.55 0.69 0.62 0.75 0.79 0.89 0.64 1.73 0.74 0.62 0.72 0.53 0.62 0.20 0.22 0.21

PROCESSING

Mill Feed '000 tonnes 36,953 574 903 1,369 1,781 1,798 1,796 1,807 1,819 1,815 1,822 1,774 1,802 1,794 1,814 1,806 1,815 1,812 1,817 1,822 1,553 1,632 1,308 508 209Zn Grade % 4.06% 4.98% 3.73% 3.96% 4.03% 4.36% 3.97% 3.59% 2.31% 3.55% 2.87% 4.63% 3.95% 7.84% 6.59% 5.09% 3.61% 3.81% 3.85% 2.89% 3.34% 3.25% 3.49% 3.48% 3.24%Pb Grade % 1.59% 1.71% 1.24% 1.38% 1.70% 1.76% 1.76% 1.40% 0.81% 1.24% 1.02% 2.19% 1.69% 3.44% 3.13% 2.01% 1.36% 1.31% 1.35% 1.05% 1.14% 1.01% 1.03% 1.22% 1.12%Cu Grade % 0.33% 0.60% 0.71% 0.35% 0.26% 0.16% 0.19% 0.27% 0.49% 0.37% 0.61% 0.52% 0.35% 0.17% 0.23% 0.31% 0.27% 0.26% 0.41% 0.41% 0.27% 0.27% 0.10% 0.05% 0.02%Ag Grade g/t 39 53 44 38 46 50 47 39 23 32 29 50 39 76 66 53 36 33 29 27 26 20 22 25 27Au Grade g/t 0.61 0.42 0.52 0.38 0.35 0.22 0.25 0.36 0.60 0.55 0.69 0.62 0.75 0.79 0.89 0.64 1.73 0.74 0.62 0.72 0.53 0.62 0.20 0.22 0.21 Contained Zn '000 tonnes 1,500 29 34 54 72 78 71 65 42 64 52 82 71 141 120 92 66 69 70 53 52 53 46 18 7Contained Pb '000 tonnes 587 10 11 19 30 32 32 25 15 23 19 39 30 62 57 36 25 24 24 19 18 17 13 6 2Contained Cu '000 tonnes 120 3 6 5 5 3 3 5 9 7 11 9 6 3 4 6 5 5 8 7 4 4 1 0 0Contained Ag koz 46,852 971 1,285 1,685 2,628 2,865 2,727 2,243 1,328 1,840 1,723 2,847 2,273 4,386 3,836 3,060 2,077 1,924 1,691 1,601 1,294 1,060 917 406 183 Contained Au koz 725 8 15 17 20 13 14 21 35 32 41 35 44 46 52 37 101 43 36 42 27 33 9 4 1

Net RecoveryZn 82% 82% 81% 82% 82% 82% 82% 82% 81% 82% 81% 82% 82% 82% 82% 82% 82% 82% 81% 82% 82% 82% 82% 82% 82%Pb 82% 82% 82% 83% 83% 83% 82% 82% 80% 81% 82% 83% 82% 83% 83% 83% 82% 82% 82% 82% 82% 83% 83% 83% 83%Cu 86% 79% 83% 81% 86% 83% 86% 86% 92% 89% 93% 93% 90% 85% 90% 83% 80% 87% 83% 87% 85% 84% 81% 79% 68%Ag 66% 87% 81% 71% 62% 62% 62% 64% 66% 64% 66% 62% 64% 61% 61% 65% 68% 68% 79% 72% 67% 64% 60% 60% 60%Au 82% 78% 83% 81% 80% 73% 75% 81% 89% 83% 87% 82% 86% 79% 83% 81% 89% 86% 83% 87% 82% 83% 71% 69% 64%

Concentrate ProductionZn Concentrate '000 tonnes 2,499 47 55 90 120 131 119 108 69 107 87 138 119 236 201 153 109 115 115 87 87 89 77 30 11

Zn % 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% 49%Ag g/t 61 55 65 60 75 76 80 70 53 55 57 66 61 65 66 67 62 52 41 53 47 39 42 49 58

Pb Concentrate '000 tonnes 774 13 15 25 40 42 42 34 19 29 25 51 40 82 75 48 33 31 32 25 23 22 18 8 3Pb % 62% 62% 62% 62% 63% 63% 63% 62% 62% 63% 62% 63% 62% 63% 63% 62% 62% 63% 62% 62% 62% 62% 63% 63% 63%Ag g/t 723 1,137 1,235 888 784 826 774 803 702 711 739 595 641 639 595 781 797 744 708 769 660 552 610 585 705 Au g/t 2.75 1.99 3.12 2.71 2.15 2.05 2.03 2.68 2.29 3.45 3.42 2.35 2.32 2.44 2.10 3.12 3.63 2.70 3.29 3.06 3.74 5.35 3.52 3.35 4.31

Cu Concentrate '000 tonnes 379 10 19 13 14 9 11 15 30 22 38 31 21 10 14 17 14 15 22 23 13 13 4 1 0Cu % 27.6% 27.8% 28.4% 28.5% 27.6% 27.7% 27.6% 27.8% 27.4% 27.4% 27.4% 27.3% 27.5% 27.2% 27.2% 28.3% 28.3% 27.3% 27.7% 27.5% 27.4% 27.8% 27.2% 27.0% 26.8%Ag g/t 636 903 576 704 722 1,244 972 676 340 453 330 486 606 1,601 1,024 809 774 784 621 510 556 413 826 1,828 5,605 Au g/t 44.29 16.65 18.60 26.02 28.26 23.54 23.35 28.70 30.51 33.92 26.80 25.20 52.02 94.14 84.58 47.57 192.25 71.57 36.75 45.83 45.53 54.53 33.05 70.65 151.17

Concentrate Moisture 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10%

Total RecoveredZn '000 tonnes 1,228 23 27 44 59 64 58 53 34 53 43 67 58 116 98 75 54 57 57 43 43 44 38 15 6Pb '000 tonnes 483 8 9 16 25 26 26 21 12 18 15 32 25 51 47 30 20 19 20 16 15 14 11 5 2Cu '000 tonnes 105 3 5 4 4 2 3 4 8 6 10 9 6 3 4 5 4 4 6 6 4 4 1 0 0Ag koz 30,643 840 1,044 1,197 1,631 1,780 1,679 1,434 879 1,171 1,144 1,760 1,462 2,677 2,322 1,975 1,402 1,313 1,335 1,156 864 675 552 243 109 Au koz 608 6 13 13 16 9 11 17 31 27 35 29 38 36 43 30 91 37 30 37 22 27 6 3 1

REVENUEMetal Prices

Zn 2,338 US$/lb 1.06$ 1.09$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ 1.06$ Pb 1,933 US$/lb 0.88$ 0.89$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ 0.88$ Cu 6,042 US$/lb 2.74$ 2.73$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ 2.74$ Ag 18.91 US$/oz 18.95$ 19.31$ 19.45$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ 18.91$ Au 1,276 US$/oz 1,278$ 1,294$ 1,297$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$ 1,276$

Exchange Rate $3.30 R$/US$ $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30 $3.30

Concentrate Payable %Zn % 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84% 84%Pb % 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% 95%Cu % 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96% 96%Ag % 77% 84% 82% 79% 76% 76% 76% 77% 78% 77% 78% 76% 77% 75% 74% 77% 78% 79% 81% 80% 77% 76% 74% 74% 74%Au % 87% 85% 87% 86% 84% 79% 80% 85% 88% 88% 89% 86% 87% 85% 86% 86% 89% 88% 88% 88% 88% 89% 84% 83% 84%

Payable MetalZn '000 tonnes 1,028 19.5 22.9 37.2 49.3 53.9 48.8 44.5 28.4 44.0 35.7 56.4 48.8 96.9 82.3 63.1 45.0 47.3 47.7 36.0 35.7 36.5 31.5 12.2 4.7Pb '000 tonnes 459 7.6 8.7 14.9 23.7 24.9 24.8 19.8 11.3 17.4 14.6 30.4 23.7 48.6 44.5 28.5 19.2 18.5 18.9 14.9 13.9 12.9 10.6 4.9 1.8Cu '000 tonnes 101 2.6 5.1 3.7 3.8 2.3 2.8 4.0 8.0 5.7 9.9 8.2 5.5 2.6 3.7 4.5 3.8 3.9 6.0 6.2 3.4 3.6 1.0 0.2 0.0Ag koz 23,638 702 859 947 1,237 1,356 1,272 1,102 689 897 892 1,330 1,125 1,999 1,724 1,518 1,098 1,033 1,085 925 669 510 409 179 81Au koz 529 5.1 11.0 11.5 13.3 7.3 8.6 14.3 27.5 23.5 31.2 25.1 33.0 30.6 37.1 26.2 80.8 32.8 26.3 32.7 19.3 24.1 5.1 2.1 0.8

Gross RevenueZn US$ '000 $2,405,464 $47,047 $53,536 $87,085 $115,179 $126,085 $114,170 $103,971 $66,376 $102,791 $83,403 $131,926 $114,129 $226,655 $192,528 $147,436 $105,153 $110,618 $111,510 $84,245 $83,394 $85,259 $73,559 $28,499 $10,911Pb US$ '000 $887,469 $14,962 $16,738 $28,731 $45,839 $48,042 $47,988 $38,346 $21,757 $33,572 $28,126 $58,838 $45,861 $93,858 $86,104 $55,020 $37,119 $35,792 $36,583 $28,860 $26,878 $25,017 $20,431 $9,440 $3,569Cu US$ '000 $607,550 $15,729 $30,642 $22,237 $23,222 $14,004 $17,213 $24,208 $48,119 $34,401 $60,013 $49,592 $33,170 $15,531 $22,249 $27,385 $23,040 $23,729 $36,131 $37,345 $20,778 $21,565 $5,972 $1,121 $153Ag US$ '000 $447,746 $13,561 $16,706 $17,917 $23,390 $25,642 $24,055 $20,838 $13,027 $16,953 $16,875 $25,159 $21,270 $37,794 $32,604 $28,714 $20,763 $19,531 $20,516 $17,492 $12,651 $9,651 $7,725 $3,378 $1,534Au US$ '000 $675,626 $6,629 $14,281 $14,676 $16,991 $9,360 $11,026 $18,200 $35,112 $29,991 $39,802 $31,980 $42,068 $38,995 $47,369 $33,446 $103,134 $41,835 $33,500 $41,732 $24,623 $30,796 $6,451 $2,655 $971

Total Gross Revenue US$ '000 $5,023,854 $97,928 $131,903 $170,646 $224,622 $223,132 $214,452 $205,562 $184,391 $217,708 $228,219 $297,495 $256,498 $412,831 $380,854 $292,002 $289,211 $231,504 $238,241 $209,674 $168,325 $172,289 $114,137 $45,094 $17,138

Concentrate ChargesTotal Charges US$ '000 $1,382,981 $26,799 $33,614 $48,931 $66,251 $69,362 $65,276 $59,350 $44,008 $59,427 $55,467 $82,698 $67,780 $124,719 $110,004 $82,892 $59,547 $61,189 $64,183 $51,219 $46,493 $46,503 $37,081 $14,639 $5,551

Net Smelter Return US$ '000 $3,640,873 $71,130 $98,289 $121,715 $158,370 $153,770 $149,175 $146,212 $140,383 $158,282 $172,752 $214,796 $188,719 $288,113 $270,850 $209,110 $229,664 $170,316 $174,058 $158,455 $121,831 $125,786 $77,057 $30,455 $11,586

Royalty NSRArex Royalties 4.90% US$ '000 $48,154 $3,476 $4,257 $3,292 $1,610 $839 $712 $676 $840 $1,063 $1,071 $655 $1,115 $1,125 $395 $3,040 $7,168 $4,196 $5,871 $4,043 $1,821 $888 $0 $0 $0Ambrex Royalties 5.40% US$ '000 $143,540 $10 $616 $2,945 $6,778 $7,379 $7,271 $7,150 $6,654 $7,376 $8,148 $10,877 $8,962 $14,318 $14,190 $7,942 $4,503 $4,573 $2,929 $4,101 $4,572 $5,814 $4,161 $1,645 $626Total Royalties US$ '000 $191,693 $3,486 $4,873 $6,237 $8,388 $8,218 $7,983 $7,826 $7,495 $8,439 $9,219 $11,532 $10,077 $15,443 $14,586 $10,982 $11,670 $8,769 $8,800 $8,144 $6,393 $6,702 $4,161 $1,645 $626

Net Revenue US$ '000 $3,449,179 $67,643 $93,416 $115,478 $149,983 $145,552 $141,192 $138,385 $132,888 $149,843 $163,533 $203,264 $178,642 $272,669 $256,265 $198,128 $217,994 $161,547 $165,258 $150,311 $115,438 $119,084 $72,896 $28,810 $10,961Unit NSR US$ / t proc $93 $118 $103 $84 $84 $81 $79 $77 $73 $83 $90 $115 $99 $152 $141 $110 $120 $89 $91 $82 $74 $73 $56 $57 $52

Net Revenue by MetalZn % 41% 42% 34% 44% 45% 51% 47% 44% 29% 40% 30% 38% 37% 49% 44% 44% 28% 40% 40% 33% 42% 42% 59% 58% 58%Pb % 17% 14% 12% 16% 20% 21% 22% 18% 11% 14% 11% 19% 16% 22% 22% 18% 11% 14% 14% 12% 15% 13% 18% 21% 21%Cu % 13% 17% 25% 15% 12% 7% 9% 13% 27% 17% 27% 18% 14% 4% 6% 10% 8% 11% 16% 19% 13% 14% 6% 3% 1%Ag % 11% 18% 16% 14% 14% 15% 15% 13% 9% 10% 9% 11% 10% 12% 11% 13% 8% 11% 11% 10% 10% 7% 9% 10% 12%Au % 18% 9% 14% 12% 11% 6% 7% 12% 25% 19% 23% 15% 22% 13% 17% 16% 45% 24% 19% 26% 20% 24% 8% 9% 8%

OPERATING COST

Mining (Underground) US$ / t proc $20.65 $35.41 $24.23 $20.77 $18.70 $18.16 $18.28 $18.18 $18.41 $18.88 $18.83 $19.00 $19.33 $19.52 $19.06 $19.22 $19.23 $19.96 $21.21 $23.50 $23.66 $19.29 $23.26 $42.44 $62.43Processing+Tailings US$ / t proc $15.47 $17.21 $16.83 $15.07 $14.99 $15.64 $14.92 $15.06 $14.28 $14.46 $13.80 $14.05 $14.08 $15.09 $14.51 $15.00 $14.93 $14.94 $14.50 $14.13 $15.27 $16.07 $23.27 $26.73 $40.96G&A US$ / t proc $2.31 $5.16 $3.97 $2.62 $2.01 $2.00 $2.00 $1.99 $1.97 $1.98 $1.97 $2.02 $1.99 $2.00 $1.98 $1.99 $1.98 $1.98 $1.98 $1.97 $2.31 $2.20 $2.74 $7.07 $17.15Total Operating Cost US$ / t proc $38.43 $57.78 $45.03 $38.46 $35.70 $35.79 $35.20 $35.23 $34.66 $35.31 $34.60 $35.07 $35.40 $36.61 $35.55 $36.21 $36.14 $36.88 $37.69 $39.60 $41.25 $37.57 $49.27 $76.24 $120.55

Mining (Underground) US$ '000 $762,941 $20,313 $21,892 $28,436 $33,315 $32,661 $32,829 $32,838 $33,491 $34,265 $34,311 $33,722 $34,833 $35,021 $34,575 $34,718 $34,919 $36,160 $38,537 $42,824 $36,750 $31,497 $30,428 $21,545 $13,059Processing US$ '000 $571,541 $9,870 $15,202 $20,635 $26,695 $28,121 $26,808 $27,218 $25,984 $26,249 $25,149 $24,927 $25,358 $27,076 $26,312 $27,102 $27,108 $27,079 $26,346 $25,750 $23,719 $26,241 $30,451 $13,572 $8,568G&A US$ '000 $85,494 $2,961 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588 $3,588Total Operating Cost US$ '000 $1,419,976 $33,144 $40,682 $52,659 $63,599 $64,370 $63,225 $63,645 $63,063 $64,102 $63,049 $62,237 $63,780 $65,685 $64,475 $65,409 $65,615 $66,828 $68,471 $72,162 $64,058 $61,327 $64,468 $38,705 $25,216

Operating Cashflow US$ '000 $2,029,204 $34,499 $52,733 $62,819 $86,384 $81,182 $77,967 $74,740 $69,824 $85,741 $100,485 $141,027 $114,862 $206,985 $191,789 $132,719 $152,378 $94,719 $96,786 $78,148 $51,381 $57,757 $8,428 -$9,895 -$14,255

TABLE 22-1 CASH FLOW SUMMARYVM Holding S.A. - Aripuana Zinc Project

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CAPITAL COSTDirect Cost

Mining US$ '000 55,325$ 14,204$ 24,523$ 16,597$ Plant & Infrastructure US$ '000 197,715$ 29,336$ 83,164$ 85,215$

Total Direct Cost US$ '000 253,040$ 43,541$ 107,687$ 101,812$

EPCM / Owners / Indirect Cost US$ '000 77,803$ 11,544$ 32,726$ 33,533$ Subtotal Costs US$ '000 330,843$ 55,085$ 140,413$ 135,345$

Contingency US$ '000 23,609$ 3,503$ 9,930$ 10,175$ Initial Capital Cost US$ '000 354,452$ 58,588$ 150,344$ 145,521$

Sustaining Capital US$ '000 219,037$ $5,534 $12,715 $11,975 $17,210 $8,784 $17,486 $8,446 $14,947 $9,155 $18,247 $7,004 $12,105 $7,868 $9,329 $9,506 $15,948 $6,703 $14,756 $4,803 $2,606 $1,303 $1,303 $1,303 Reclamation and closure US$ '000 10,000$ $5,000 $5,000

Total Capital Cost US$ '000 583,489$ 58,588$ 150,344$ 145,521$ 5,534$ 12,715$ 11,975$ 17,210$ 8,784$ 17,486$ 8,446$ 14,947$ 9,155$ 18,247$ 7,004$ 12,105$ 7,868$ 9,329$ 9,506$ 15,948$ 6,703$ 14,756$ 4,803$ 2,606$ 1,303$ 1,303$ 6,303$ 5,000$

CASH FLOWNet Pre-Tax Cashflow US$ '000 1,445,715$ (58,588)$ (150,344)$ (111,021)$ 47,199$ 50,104$ 74,408$ 63,972$ 69,183$ 57,254$ 61,379$ 70,794$ 91,329$ 122,780$ 107,858$ 194,879$ 183,921$ 123,391$ 142,872$ 78,771$ 90,083$ 63,393$ 46,577$ 55,151$ 7,124$ (11,198)$ (20,558)$ (5,000)$ Cumulative Pre-Tax Cashflow US$ '000 (58,588)$ (208,931)$ (319,953)$ (272,753)$ (222,649)$ (148,241)$ (84,269)$ (15,086)$ 42,168$ 103,547$ 174,341$ 265,670$ 388,450$ 496,308$ 691,188$ 875,109$ 998,499$ 1,141,371$ 1,220,143$ 1,310,226$ 1,373,619$ 1,420,196$ 1,475,346$ 1,482,471$ 1,471,273$ 1,450,715$ 1,445,715$

Taxes (net of Working Capital credit) US$ '000 389,827$ 961$ (2,096)$ (976)$ 3,380$ 6,303$ 5,376$ 4,633$ 3,273$ 8,616$ 9,774$ 23,377$ 32,118$ 76,610$ 59,411$ 35,549$ 48,969$ 23,673$ 29,699$ 20,995$ (7,334)$ 16,993$ 86$ (2,830)$ (6,733)$

After-Tax Cashflow US$ '000 1,055,888$ (58,588)$ (150,344)$ (111,983)$ 49,295$ 51,080$ 71,028$ 57,669$ 63,807$ 52,621$ 58,106$ 62,178$ 81,556$ 99,403$ 75,740$ 118,269$ 124,510$ 87,841$ 93,903$ 55,098$ 60,384$ 42,397$ 53,912$ 38,158$ 7,039$ (8,368)$ (13,825)$ (5,000)$ Cumulative After-Tax Cashflow US$ '000 (58,588)$ (208,931)$ (320,914)$ (271,619)$ (220,539)$ (149,510)$ (91,842)$ (28,034)$ 24,587$ 82,692$ 144,870$ 226,426$ 325,829$ 401,569$ 519,839$ 644,348$ 732,189$ 826,092$ 881,191$ 941,575$ 983,972$ 1,037,884$ 1,076,042$ 1,083,081$ 1,074,713$ 1,060,888$ 1,055,888$

PROJECT ECONOMICS 0.5 1.5 2.5 3.5 4.5 5.5 6.5 7.5 8.5 9.5 10.5 11.5 12.5 13.5 14.5 15.5 16.5 17.5 18.5 19.5 20.5 21.5 22.5 23.5 24.5 25.5 26.5Pre-Tax IRR % 18.98%Pre-tax NPV at 7.0% discounting 7.0% US$ '000 $461,147 (56,639)$ (135,834)$ (93,745)$ 37,247$ 36,953$ 51,287$ 41,210$ 41,651$ 32,214$ 32,275$ 34,791$ 41,947$ 52,703$ 43,268$ 73,064$ 64,444$ 40,406$ 43,725$ 22,530$ 24,080$ 15,837$ 10,875$ 12,034$ 1,453$ (2,134)$ (3,662)$ (832)$ Pre-tax NPV at 9% discounting 9.0% US$ '000 $324,172 (56,117)$ (132,113)$ (89,504)$ 34,909$ 33,998$ 46,321$ 36,536$ 36,249$ 27,522$ 27,069$ 28,643$ 33,900$ 41,812$ 33,697$ 55,857$ 48,364$ 29,768$ 31,622$ 15,995$ 16,781$ 10,834$ 7,303$ 7,933$ 940$ (1,356)$ (2,284)$ (510)$ Pre-tax NPV at 11.0% discounting 11.0% US$ '000 $220,912 (55,609)$ (128,558)$ (85,526)$ 32,757$ 31,327$ 41,913$ 32,463$ 31,628$ 23,581$ 22,775$ 23,665$ 27,504$ 33,311$ 26,363$ 42,912$ 36,486$ 22,052$ 23,004$ 11,426$ 11,772$ 7,463$ 4,940$ 5,270$ 613$ (868)$ (1,436)$ (315)$

After-Tax IRR % 16.79%After-Tax NPV at 7.0% discounting 7.0% US$ '000 $320,716 (56,639)$ (135,834)$ (94,557)$ 38,901$ 37,673$ 48,958$ 37,149$ 38,414$ 29,607$ 30,554$ 30,557$ 37,458$ 42,668$ 30,384$ 44,341$ 43,627$ 28,765$ 28,738$ 15,759$ 16,141$ 10,592$ 12,587$ 8,326$ 1,435$ (1,595)$ (2,463)$ (832)$ After-Tax NPV at 9% discounting 9.0% US$ '000 $217,170 (56,117)$ (132,113)$ (90,279)$ 36,460$ 34,660$ 44,217$ 32,936$ 33,433$ 25,295$ 25,625$ 25,157$ 30,273$ 33,851$ 23,663$ 33,899$ 32,741$ 21,191$ 20,783$ 11,188$ 11,249$ 7,246$ 8,453$ 5,489$ 929$ (1,013)$ (1,536)$ (510)$ After-tax NPV at 11.0% discounting 11.0% US$ '000 $138,694 (55,609)$ (128,558)$ (86,267)$ 34,212$ 31,937$ 40,009$ 29,265$ 29,171$ 21,673$ 21,560$ 20,785$ 24,561$ 26,969$ 18,513$ 26,043$ 24,700$ 15,699$ 15,119$ 7,992$ 7,891$ 4,991$ 5,718$ 3,646$ 606$ (649)$ (966)$ (315)$

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CASH FLOW ANALYSIS Considering the Project on a stand-alone basis, the undiscounted after-tax cash flow totals

US$1,055 million over the mine life, and simple payback occurs six years from start of

production.

The Net Present Value (NPV) at a 9% discount rate is $217 million (based on mid-period

discounting), and the Internal Rate of Return (IRR) is 16.8%.

SENSITIVITY ANALYSIS Project risks can be identified in both economic and non-economic terms. Key economic risks

were examined by running cash flow sensitivities:

• Metal price

• Head grade

• Metallurgical recovery

• Operating costs

• Capital costs

IRR sensitivity over the base case has been calculated for a variety of ranges depending on

the variable. The sensitivities are shown in Figure 22-1 and Table 22-2.

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FIGURE 22-1 SENSITIVITY ANALYSIS

TABLE 22-2 SENSITIVITY ANALYSES VM Holding S.A. – Aripuanã Zinc Project

Description Units Low Case

Mid-Low Case

Base Case

Mid-High Case

High Case

Head Grade (Zn) % Zn 3.25 3.65 4.06 4.46 4.87 Overall Recovery (Zn) % 79 80 82 83 85 Metal Prices (Zn) US$ / lb Zn 0.85 0.96 1.06 1.17 1.27 Operating Costs US$/t 31 35 38 42 46 Capital Cost US$ millions 284 319 355 390 426

Adjustment Factor

Head Grade (ZnEq) % 80 90 100 110 120 Overall Recovery % 96 98 100 102 104 Metal Prices (Zn) % 80 90 100 110 120 Operating Costs % 80 90 100 110 120 Capital Cost % 80 90 100 110 120

Post-Tax NPV @ 9%

Head Grade (ZnEq) US$ millions -114 51 217 382 547 Overall Recovery US$ millions 151 184 217 250 283 Metal Prices (Zn) US$ millions -114 51 217 382 547 Operating Costs US$ millions 315 266 217 168 119 Capital Cost US$ millions 278 247 217 186 155

($200)

($100)

$0

$100

$200

$300

$400

$500

$600

0.7 0.8 0.9 1 1.1 1.2 1.3

Afte

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PV a

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S$

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Percent Change From Base Case

Head Grade

Recovery

Metal Price

Operating Cost

Capital Cost

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Factors were applied to all metals in the various categories, however, in the table, zinc is shown

because it provides the most revenue.

The Project is most sensitive to changes in metal prices and head grade, and least sensitive

to capital costs.

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23 ADJACENT PROPERTIES RPA is not aware of any significant deposits or properties adjacent to Aripuanã.

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24 OTHER RELEVANT DATA AND INFORMATION No additional information or explanation is necessary to make this Technical Report

understandable and not misleading.

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25 INTERPRETATION AND CONCLUSIONS The Project merits further work to improve economic outcomes, including completion of an

advanced engineering study.

RPA offers the following conclusions for each area:

GEOLOGY AND MINERAL RESOURCES • The Aripuanã Zinc deposits are located within the central-southern portion of the

Amazonian Craton, in which Paleoproterozoic and Mesoproterozoic lithostratigraphic units of the Rio Negro-Juruena province (1.80 Ga to 1.55 Ga) predominate.

• The Aripuanã Zinc polymetallic deposits are typical VMS deposits associated with felsic bimodal volcanism. Three main elongate mineralized zones, Arex, Link, and Ambrex, have been defined in the central portion of the Project. A smaller, deeper zone, Babaçú, lies to the south of Ambrex.

• The drilling, sampling, sample preparation, analysis, and data verification procedures are appropriate for the estimation of Mineral Resources.

• As prepared by VMH and adopted by RPA, the Aripuanã Measured and Indicated Mineral Resources comprise 21.8 Mt at 4.8% Zn, 1.8% Pb, 0.3% Cu, 0.4 g/t Au, and 45 g/t Ag for 2.3 billion pounds of Zn, 852 million pounds of Pb, 158 million pounds of Cu, 279,000 ounces of Au, and 31 million ounces of Ag. The Aripuanã Inferred Mineral Resources comprise 24.6 Mt at 3.9% Zn, 1.5% Pb, 0.42% Cu, 0.93 g/t Au, and 38 g/t Ag for 2.1 billion pounds of Zn, 829 million pounds of Pb, 226 million pounds of Cu, 732,000 ounces of Au, and 30 million ounces of Ag.

• The Mineral Resource estimate is consistent with the CIM definitions as incorporated by reference into NI 43-101.

• Limited exploration has identified additional, possible mineralized bodies including Massaranduba, Boroca, and Mocoto to the south and Arpa to the north.

MINING • The deposits support a production rate of 1.8 Mtpa, however, several years are

required to advance ramps and development sufficiently to access the required number of workplaces.

• The large resource base provides a long mine life (24 years). There may be opportunities to be more selective in the mining of high-grade areas in the early years of the LOM, to improve capital payback.

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• Deposit geometry and geomechanical properties are amenable to bulk longhole mining methods, with some cut and fill mining in narrower areas.

• Dilution and extraction estimates appear reasonable, ranging from 5% to 12% (dilution) and 90% to 95% (extraction). There is a risk of poorer recovery and additional dilution in flat-dipping stopes (below 50°).

• Arex and Ambrex deposits are not connected until later in the mine life, making it difficult to share the mobile equipment fleet efficiently. More units may be required in the early years.

• The issues identified above can be addressed in the next stage of study.

PROCESS • The results from recent SGS GEOSOL metallurgical testing form the current basis for

engineering design of the sequential Cu/Pb/Zn flotation circuit.

• Separation of material types is necessary to improve copper recovery and to reduce costs, particularly when processing Copper Stringer material. Since Copper Stringer mineralization does not have significant zinc and lead grades, copper processing should be separate for flotation and filtration and it is expected that the lead and zinc circuits will be bypassed.

• To process Arex and Ambrex Stratabound mineralization, talc removal by flotation is required prior to sequential flotation of Cu, Pb, and Zn.

• Data for the final concentrate grades and recoveries for Arex and Ambrex mineralization in the Aripuanã LOM financial model did not rely consistently on metallurgical test data. The assumptions for the concentrate grades and recoveries for Ambrex Stringer and Ambrex Mixed materials were based on identical LOM assumed data for Arex mineralization and not on any metallurgical test results.

• The presence or absence of any deleterious elements that could impact extraction have not yet been clearly identified through metallurgical testing.

ENVIRONMENTAL CONSIDERATIONS • The EIA, currently being finalized by VMH, is compliant with Brazilian standards and

regulation needs for the current stage of the Project. As the Project is advanced, more detailed EIA submissions will be required with regard to the following: o Establishing existing environmental and socio-economic conditions in the Project

area and the influence on the Project. o Predicting Project effects. o Specifying and detailing mitigation measures to prevent any significant impacts. o Detailing future monitoring and management activities of the Project. o Continuing baseline data collection. This will also include community and

stakeholder consultation and impact generated by the Project in each area. o Testing to determine geochemistry baseline data.

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o Confirming that there are no fauna or flora species of importance or any endangered or threatened species affected by the Project.

o An ecological and human health risk assessment should be carried out, with the aim of identifying if water quality, air quality, and noise combined with local uses of the areas have the potential of affecting the health of local wildlife, feedstock, and/or the local population.

o Completing plans for site closure and reclamation.

COSTS AND ECONOMICS • Pre-production capital costs total US$355 million.

• In RPA’s opinion, the capital cost estimate can be classified as Class 4, per AACE

guidelines, which generally corresponds to pre-feasibility studies.

• Contingency comprises 7% of direct and indirect capital costs, which RPA considers to be low for the current stage of the Project.

• Operating costs average US$38.43 per tonne over the LOM, with higher unit costs at the start and end when full production is not achievable.

• Economic results are adversely affected by a relatively long ramp-up to full production. Optimization of the mine design and schedule will help to improve the Project economics.

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26 RECOMMENDATIONS RPA offers the following recommendations for each area:

GEOLOGY AND MINERAL RESOURCES • Increase the wireframe modelling cut-off grade to limit the amount of sub-economic

material not related to massive or disseminated sulphides in the stratabound zone in the wireframes.

• Substitute zeroes for unsampled intervals.

• Model correlograms to avoid fitting long second and third variogram model structures when an apparent zonal anisotropy is observed.

• Perform a visual review of the classification of all blocks with a minimum distance to the closest drill hole greater than 25 m, and consider downgrading blocks where appropriate to Inferred.

MINING • Use only Measured and Indicated Resources at the next stage of study.

• Optimizing the ramp-up to full production will help improve economic outcomes.

PROCESS • Reference the metallurgical test data for the final concentrate grades and recoveries

and report the assays of any penalty elements for Arex and Ambrex mineralization.

• Further examine any deleterious elements (e.g., potential tremolite material) that could have a significant effect on potential economic extraction.

• Carry out additional test work to develop and optimize Zn/Pb recovery circuits on Ambrex mineralization, to conduct additional mineralogical analysis, to extend the variability analysis to a full geometallurgical program using samples from different locations in the deposits, and to conduct pilot plant test work to confirm the performance of the circuit selected.

INFRASTRUCTURE • Complete a review of the ABA program test results for both the tailings and waste rock

and assess the conceptual design of the TMF sites based on the ABA test results.

• The next stage of design of the TMF should assess slope stability and geotechnical parameters based on current laboratory test results on grind size and talc content.

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ENVIRONMENTAL AND SOCIAL CONSIDERATIONS • Update the EIA in parallel with the next stage of study on the Project.

• Continue collection of baseline data.

RECOMMENDED BUDGET A 2018 budget for field work, testing, and a Feasibility Study is summarized in Table 26-1.

TABLE 26-1 2018 PROJECT ADVANCEMENT BUDGET VM Holding S.A. – Aripuanã Zinc Project

Item Units Cost

Exploration Drilling US$ millions 5.0 Metallurgical Testwork US$ millions 1.0 VMH Project Team US$ millions 3.0 Feasibility Study US$ millions 2.0 Total US$ millions 11.0

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27 REFERENCES AMEC International (Chile) S.A., 2007: Aripuanã Property NI 43-101 Technical Report Mato

Grosso State, Brazil, prepared for Karmin Exploration Inc., filed on SEDAR/available at www.sedar.com October 31, 2007.

Azevedo Sette Advogados, 2017: Title Opinion – Projects Aripuanã and Caçapava do Sul,

Belo Horizonte, June 14, 2017. Engler, A., 2009: The Geology of South America. GEOLOGY Vol. IV, pp. 374-405. LCASSIS Consultoria em Recursos Minerais, 2017, Relatório de Validação das Amostras

Selecionadas para Teste Metalúrgico, Projecto Aripuanã – MT, prepared for Votorantim Metais (March 2017).

RPA, 2017, Technical Report on the Aripuanã Zinc Project, Mato Grosso State, Brazil,

prepared for Karmin Exploration Inc. (March 1, 2017). SGS GEOSOL, 2017, Bench Scale Metallurgical Testwork on Drill Core Samples from the

Aripuanã Project, Final Report, prepared for Votorantim Metais (February 15, 2017). Simon, A., Marinho, R., and Lacroix, P., 2007: Aripuanã Property NI43-101 Technical Report,

Mato Grosso, Brazil. A technical report prepared by AMEC Americas Limited for Karmin Exploration Inc.

Tassinari, C.C.G., Cordani, U.G., Nutman, A.P., Van Schmus, W.R., Bettencourt, J.S., and

Taylor, P.N., 2010: Geochronological systematics on basement rocks from the Rio Negro-Juruena Province (Amazonian Craton) and tectonic implications. International Geology Review, Vl. 38, Issue 2.

Votorantim Metais Ltda., 2015, Technical Report, FEL 2 Study, Location: Aripuanã, MT,

Commodity: Zn, Pb, Cu, Rev. 00, internal report. Votorantim Metais Ltda. (2016). Relatório De Recursos Minerais Projeto Aripuanã by Talita C.

de O. Ferreira and Rafael Moniz Caixeta (30 December 2016) Worley Parsons, 2017a, Projeto Aripuanã, Fase V1, Metallurgical Testwork, 7MI-0401-RL-

0200PCD0804, Rev. 1, prepared for Votorantim Metais (April 26, 2017). Worley Parsons, 2017b, Projeto Aripuanã, FEL2, Basis of Design, 7MI-0401-RL-

0000COR1021R01, Rev. 1, prepared for Votorantim Metais (January 19, 2017). Worley Parsons, 2017c, Projeto Aripuanã, Fase V1, Waste Management Strategy, Technical

Report, 7MI-0401-RL-0300PRO0801, Rev. 5, prepared for Votorantim Metais (May 16, 2017).

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28 DATE AND SIGNATURE PAGE This report titled “Technical Report on the Preliminary Economic Assessment of the Aripuanã

Zinc Project, State of Mato Grosso, Brazil” and dated July 31, 2017 was prepared and signed

by the following authors:

(Signed and Sealed) “Jason J. Cox” Dated at Toronto, ON July 31, 2017 Jason J. Cox, P.Eng. Principal Mining Engineer (Signed and Sealed) “Sean Horan” Dated at Toronto, ON July 31, 2017 Sean Horan, P.Geo. Senior Geologist (Signed and Sealed) “Brenna J.Y. Scholey” Dated at Toronto, ON July 31, 2017 Brenna J.Y. Scholey, P.Eng. Principal Metallurgist (Signed and Sealed) “Stephan Theben” Dated at Toronto, ON July 31, 2017 Stephan Theben, Dipl.-Ing. SLR Consulting

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29 CERTIFICATE OF QUALIFIED PERSON JASON J. COX I, Jason J. Cox, P.Eng., as an author of this report entitled “Technical Report on the Pre-Feasibility Study of the Aripuanã Zinc Project, State of Mato Grosso, Brazil” prepared for VM Holding S.A. and dated July 31, 2017, do hereby certify that:

1. I am a Principal Mining Engineer and Executive Vice President, Mine Engineering, with Roscoe Postle Associates Inc. of Suite 501, 55 University Ave Toronto, ON, M5J 2H7.

2. I am a graduate of the Queen’s University, Kingston, Ontario, Canada, in 1996 with a

Bachelor of Science degree in Mining Engineering.

3. I am registered as a Professional Engineer in the Province of Ontario (Reg. #90487158). I have worked as a Mining Engineer for more than 20 years since my graduation. My relevant experience for the purpose of the Technical Report is: • Review and report as a consultant on many mining operations and projects around

the world for due diligence and regulatory requirements • Feasibility Study project work on several mining projects, including five North

American mines • Operational experience as Planning Engineer and Senior Mine Engineer at three

North American mines • Contract Co-ordinator for underground construction at an American mine

4. 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.

5. I visited the Aripuanã Zinc Project on June 2 to 5, 2017.

6. I am responsible for Sections 15, 16, 19, 21, and 22 and contributed to Sections 1, 2, 3, 18, 25, 26, and 27 of the Technical Report.

7. I am independent of the Issuer applying the test set out in Section 1.5 of NI 43-101.

8. I have had no prior involvement with the property that is the subject of the Technical Report.

9. I have read NI 43-101, and the Technical Report has been prepared in compliance with NI 43-101 and Form 43-101F1.

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10. At 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.

Dated this 31st day of July, 2017. (Signed and Sealed) “Jason J. Cox” Jason J. Cox, P.Eng.

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SEAN HORAN I, Sean Horan, P.Geo., as an author of this report entitled “Technical Report on the Pre-Feasibility Study of the Aripuanã Zinc Project, State of Mato Grosso, Brazil” prepared for VM Holding S.A. and dated July 31, 2017, do hereby certify that: 1. I am Senior Geologist with Roscoe Postle Associates Inc. of Suite 501, 55 University Ave

Toronto, ON, M5J 2H7. 2. I am a graduate of Rhodes University, South Africa, in 2003 with a B.Sc. (Hons.) degree in

Environmental Studies, and in 2004 with a B.Sc. (Hons.) degree in Geology. I also have a post-graduate certificate in Geostatistics from the University of Alberta, Canada.

3. I am registered as a Professional Geologist in the Province of Ontario (Reg.#2090). I have

worked as a geologist for a total of 10 years since my graduation. My relevant experience for the purpose of the Technical Report is: • Geological consulting to the mining and exploration industry in Canada and worldwide,

including resource estimation and reporting, due diligence, geostatistical studies, QA/QC, and database management.

• Geologist responsible for all geological aspects of underground mine development, underground exploration, resource definition drilling planning, and resource estimation at a gold mine in Ontario, Canada.

• Geologist with an alluvial diamond mining and prospecting company in Angola. • Experienced user of AutoCAD, Datamine Studio 3. SQL Database Administration,

Visual Basic, Javascript (Datamine Studio 3), Century Systems (Fusion SQL drill hole database tools), Snowden Supervisor, and GSLIB.

4. 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.

5. I visited the Aripuanã Zinc Project on January 30 to February 3, 2017. 6. I am responsible for Sections 4 to 12 and 14 and contributed to Sections 1, 2, 3, 25, 26,

and 27 of the Technical Report. 7. I am independent of the Issuer applying the test set out in Section 1.5 of NI 43-101. 8. I have had prepared a previous NI 43-101 Technical Report on the Aripuanã Zinc Project

for Karmin Exploration Inc. dated March 1, 2017 and a resource audit report for Votorantim Metais Ltda. dated May 24, 2017 on the property that is the subject of the Technical Report.

9. I have read NI 43-101, and the Technical Report has been prepared in compliance with NI

43-101 and Form 43-101F1.

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10. At 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.

Dated this 31st day of July, 2017. (Signed and Sealed) “Sean Horan” Sean Horan, P.Geo.

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BRENNA J.Y. SCHOLEY I, Brenna J.Y. Scholey, P.Eng., as an author of this report entitled “Technical Report on the Pre-Feasibility Study of the Aripuanã Zinc Project, State of Mato Grosso, Brazil” prepared for VM Holding S.A. and dated July 31, 2017, do hereby certify that: 1. I am Principal Metallurgist with Roscoe Postle Associates Inc. of Suite 501, 55 University

Ave., Toronto, ON, M5J 2H7. 2. I am a graduate of The University of British Columbia in 1988 with a B.A.Sc. degree in

Metals and Materials Engineering. 3. I am registered as a Professional Engineer in the Province of Ontario (Reg. #90503137)

and British Columbia (Reg. #122080). I have worked as a metallurgist for a total of 29 years since my graduation. My relevant experience for the purpose of the Technical Report is: • Reviews and reports as a metallurgical consultant on a number of mining operations

and projects for due diligence and regulatory requirements. • Senior Metallurgist/Project Manager on numerous base metals and precious metals

studies for an international mining company. • Management and operational experience at several Canadian and U.S. milling,

smelting and refining operations treating various metals, including copper, nickel, and precious metals.

4. I have read the definition of "qualified person" set out in National Instrument 43-101 (NI 43-


5. I did not visited the Aripuanã Zinc Project. 6. I am responsible for preparation of Sections 13 and 17 and contributed to Sections 1, 2, 3,

18, 25, 26, and 27 of the Technical Report. 7. I am independent of the Issuer applying the test set out in Section 1.5 of NI 43-101. 8. I have had no prior involvement with the property that is the subject of the Technical Report. 9. I have read NI 43-101, and the Technical Report has been prepared in compliance with NI

43-101 and Form 43-101F1. 10. At 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.

Dated this 31st day of July, 2017. (Signed and Sealed) “Brenna J.Y. Scholey” Brenna J.Y. Scholey, P.Eng.

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STEPHAN THEBEN I, Stephan Theben, Dipl.-Ing., as an author of this report entitled “Technical Report on the Pre-Feasibility Study of the Aripuanã Zinc Project, State of Mato Grosso, Brazil” prepared for VM Holding S.A. and dated July 31, 2017, do hereby certify that: 1. I am Mining Sector Lead and Managing Principal with SLR Consulting (Canada) Ltd. at 36

King Street East, 4th floor, Toronto, M5C1E5. 2. I am a graduate of RWTH Aachen Technical University in 1997 with a Mining Engineering

Degree. I also passed the State Exam for Mining Engineering in 2000. 3. I am registered as a Professional Member with the Society for Mining, Metallurgy and

Exploration (Membership # 04231099). I have worked as a mining environmental professional for a total of 19 years since my graduation. My relevant experience for the purpose of the Technical Report is: • Responsible for the preparation and success approval of several Environmental Impact

Assessment Reports • Responsible for environmental aspects of mine permitting for several projects • Responsible for the environmental and geotechnical components of several PEA, PFS

and FS studies • Experience if reviewing and auditing environmental and permitting data for a multitude

of projects • Work as a government official in Germany and as a technical expert for the European

Union in the area of mine permitting 4. I have read the definition of "qualified person" set out in National Instrument 43-101 (NI 43-


5. I did not visit the Aripuanã Zinc Project. 6. I am responsible for the preparation of Section 20 and contributed to Sections 1, 2, 3, 25,

and 26 (environmental aspects) of the Technical Report. 7. I am independent of the Issuer applying the test set out in Section 1.5 of NI 43-101. 8. I have had no prior involvement with the property that is the subject of the Technical Report. 9. I have read NI 43-101, and the Technical Report has been prepared in compliance with NI

43-101 and Form 43-101F1.

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10. At the effective date of the Technical Report, to the best of my knowledge, information, and belief, Section 20 of the Technical Report for which I am responsible contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Dated this 31st day of July, 2017. (Signed and Sealed) “Stephan Theben” Stephan Theben, Dipl.-Ing.

Documents

VM HOLDING S.A. TECHNICAL REPORT ON THE …Report Control Form Document Title Technical Report on the Preliminary Economic Assessment of the Aripuanã Zinc Project, State of Mato Grosso,