karmin exploration inc. technical report on the …

March 1, 2017

KARMIN EXPLORATION INC.

TECHNICAL REPORT ON THEARIPUANÃ ZINC PROJECT,MATO GROSSO STATE, BRAZIL

NI 43-101 Report

Qualified Persons:Valerie G. Wilson, P.Geo.Sean D. Horan, P.Geo.

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 Aripuanã Zinc Project, Mato Grosso

State, Brazil

Client Name & Address

Karmin Exploration Inc. First Canadian Place 100 King Street West, Suite 5700 Toronto, Ontario M5X 1C7

Document Reference

Project #2567

Status & Issue No.

FINAL Version

Issue Date March 1, 2017 Lead Author Valerie G. Wilson

Sean Horan (Signed)

(Signed)

Peer Reviewer Reno Pressacco

(Signed)

Project Manager Approval David A. Ross (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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Karmin Exploration Inc. – Aripuanã Zinc Project, Project #2567

Technical Report NI 43-101 – March 1, 2017 Page i

TABLE OF CONTENTS PAGE

1 SUMMARY ...................................................................................................................... 1-1 Executive Summary ....................................................................................................... 1-1 Technical Summary ....................................................................................................... 1-5

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 ................................................................................................................ 7-3 Description of the Deposits ............................................................................................ 7-4 Mineralization ................................................................................................................ 7-8

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

9 EXPLORATION ............................................................................................................... 9-1 1999-2002 Exploration ................................................................................................... 9-1 Votorantim 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 Quality Assurance/Quality Control ............................................................................... 11-3

12 DATA VERIFICATION ................................................................................................. 12-1 Audit of Drill Hole Database ......................................................................................... 12-1

13 MINERAL PROCESSING AND METALLURGICAL TESTING ..................................... 13-1 Metallurgical Sampling ................................................................................................. 13-3 Metallurgical Testing .................................................................................................... 13-3

14 MINERAL RESOURCE ESTIMATE ............................................................................. 14-1 Resource Database ..................................................................................................... 14-2 Geological Interpretation .............................................................................................. 14-2 Statistical Analysis ....................................................................................................... 14-9 Compositing ................................................................................................................. 14-9 Cutting High Grade Values ........................................................................................ 14-11 Block Model ............................................................................................................... 14-13

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Technical Report NI 43-101 – March 1, 2017 Page ii

Variography ............................................................................................................... 14-15 Interpolation Parameters ............................................................................................ 14-25 Net Smelter Return Cut-Off Value .............................................................................. 14-31 Validation ................................................................................................................... 14-38 Mineral Resources ..................................................................................................... 14-44

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

16 MINING METHODS ..................................................................................................... 16-1

17 RECOVERY METHODS .............................................................................................. 17-1

18 PROJECT INFRASTRUCTURE .................................................................................. 18-1

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

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

Environmental Studies ................................................................................................. 20-2 Project Permitting ........................................................................................................ 20-3 Mine Closure Requirements ......................................................................................... 20-4

21 CAPITAL AND OPERATING COSTS .......................................................................... 21-1

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 Summary of Mineral Resources – October 20, 2016 ........................................ 1-2 Table 1-2 Proposed Budget .............................................................................................. 1-4 Table 4-1 Exploration Authorization Permits ..................................................................... 4-5 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 .................................................. 11-6 Table 11-2 Expected Values and Ranges of Standards ................................................ 11-10 Table 11-3 Expected Values and Ranges of Standards ................................................ 11-11 Table 13-1 Summary of Studies...................................................................................... 13-1 Table 13-2 Number of Flotation Tests ............................................................................. 13-4 Table 13-3 Head Assays of Aripuanã Material ................................................................ 13-4

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Technical Report NI 43-101 – March 1, 2017 Page iii

Table 13-4 Aripuanã Physical Data ................................................................................. 13-6 Table 13-5 Comminution Results .................................................................................... 13-6 Table 13-6 Primary Grind and pH Investigation .............................................................. 13-8 Table 13-7 Flotation Testing of Arex Copper Stringer Material ........................................ 13-9 Table 13-8 Flotation Testing of Arex Global Blend Stringer Material ............................. 13-11 Table 13-9 Variability Tests on Arex Copper Stringer Material ...................................... 13-12 Table 13-10 Flotation Tests on Ambrex Copper Stringer Material ................................. 13-13 Table 13-11 LCT of Arex Global Blend Copper-Lead-Zinc Material .............................. 13-16 Table 13-12 Batch and LCT of Ambrex Stratabound Composite 3 Material .................. 13-19 Table 13-13 Concentrate Grades and Recovery for Stringer Materials ......................... 13-20 Table 13-14 Concentrate Grades and Recovery for Stratabound Materials .................. 13-20 Table 13-15 Flotation Concentrates for Multi-element Analyses ................................... 13-21 Table 13-16 Solids Loading and Underflow Density for Overflow clarity < 100 mg/L ..... 13-21 Table 13-17 Filtration Test Results ............................................................................... 13-22 Table 14-1 Summary of Mineral Resources – October 20, 2016 ..................................... 14-1 Table 14-2 Basic Statistics of Resource Assays ............................................................. 14-9 Table 14-3 Basic Statistics of Resource Composites .................................................... 14-10 Table 14-4 Capping Values at Ambrex ......................................................................... 14-11 Table 14-5 Capping Values at Arex .............................................................................. 14-12 Table 14-6 Capping Values at Link Zone ...................................................................... 14-13 Table 14-7 Ambrex Block Model Parameters ................................................................ 14-14 Table 14-8 Ambrex Wireframe Grouping for Variography ............................................. 14-15 Table 14-9 Arex Wireframe Grouping for Variography .................................................. 14-19 Table 14-10 Ambrex Stratabound Interpolation Parameters ......................................... 14-25 Table 14-11 Ambrex Stringer Interpolation Parameters ................................................ 14-27 Table 14-12 Arex Stratabound and Stringer Interpolation Parameters .......................... 14-28 Table 14-13 NSR Factors ............................................................................................. 14-33 Table 14-14 Sensitivity to NSR Cut-off Grade ............................................................... 14-34 Table 14-15 Ambrex Classification Criteria ................................................................... 14-35 Table 14-16 Arex Classification Criteria ........................................................................ 14-36 Table 14-17 Mineral Resources by Area – October 20, 2016 ........................................ 14-45 Table 14-18 Comparison with Previous Estimate .......................................................... 14-47 Table 20-1 List of Project lands ...................................................................................... 20-3 Table 20-2 List of Permits ............................................................................................... 20-4 Table 26-1 Proposed Budget .......................................................................................... 26-1

LIST OF FIGURES PAGE

Figure 4-1 Location Map ................................................................................................... 4-2 Figure 4-2 Mineral Dispositions and Property Map ........................................................... 4-3 Figure 4-3 Surface Rights Map ......................................................................................... 4-7 Figure 7-1 Regional Geology ............................................................................................ 7-2 Figure 7-2 Property Geology ............................................................................................. 7-7 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 ..................................................... 11-5 Figure 11-2 Control Chart for CRM AP0002: Lead .......................................................... 11-7 Figure 11-3 Control Chart for CRM AP0001: Zinc ........................................................... 11-7

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Technical Report NI 43-101 – March 1, 2017 Page iv

Figure 11-4 Percent Relative Difference Plot: Zinc Duplicate Samples ........................... 11-8 Figure 11-5 Blank Results for Zinc, Lead and Copper ..................................................... 11-9 Figure 11-6 Control Chart for CRM AP0002: Lead ........................................................ 11-12 Figure 11-7 Control Chart for CRM AP0001: Lead ........................................................ 11-12 Figure 11-8 Control Chart for CRM AP0001: Zinc ......................................................... 11-13 Figure 11-9 Percent Relative Difference Plot: Zinc Duplicate Samples ......................... 11-14 Figure 12-1 Density Measurements at Ambrex by Rock Unit .......................................... 12-3 Figure 12-2 Density Measurements at Arex by Rock Unit ............................................... 12-3 Figure 13-1 Simplified Block Flow Diagram of Process ................................................... 13-2 Figure 14-1 3D Isometric View of Geological Wireframes ............................................... 14-5 Figure 14-2 Ambrex Geological Model ............................................................................ 14-6 Figure 14-3 Arex Geological Model ................................................................................. 14-7 Figure 14-4 Link Zone Geological Model ........................................................................ 14-8 Figure 14-5 Maximum Variogram Range Modelled within the Stratabound Zone at Ambrex in Each Group for Zinc, Lead and Silver ......................................................................... 14-16 Figure 14-6 Ambrex Stratabound Zone Group 2 Zinc Variogram Model........................ 14-17 Figure 14-7 Ambrex Stratabound Zone Group 2 Lead Variogram Model ...................... 14-18 Figure 14-8 Maximum Variogram Range Modelled within the Stringer Zone at Arex in Each Group for Copper and Gold ............................................................................................ 14-21 Figure 14-9 Maximum Variogram Range Modelled within the Stratabound Zone at Arex in Each Group for Zinc, Lead and Silver ............................................................................. 14-22 Figure 14-10 Arex Stratabound Zone Group 1 Zinc Variogram Model .......................... 14-23 Figure 14-11 Arex Stringer Zone Group 12 Copper Variogram Model .......................... 14-24 Figure 14-12 Search Ellipse Dimensions Employed in the Stratabound Zone at Ambrex ....... ....................................................................................................................................... 14-26 Figure 14-13 Search Ellipse Dimensions Employed in the Stratabound Zone at Arex ... 14-29 Figure 14-14 Search Ellipse Dimensions Employed in the Stringer Zone at Arex ......... 14-30 Figure 14-15 Aripuanã Zinc Resource Classification – Longitudinal Section ................. 14-37 Figure 14-16 West Facing Vertical Cross Section Comparing Block and Composite Zinc Grades at Ambrex .......................................................................................................... 14-40 Figure 14-17 West Facing Vertical Cross Section Comparing Block and Composite Zinc Grades at Link ................................................................................................................ 14-41 Figure 14-18 West Facing Vertical Cross Section Comparing Block and Composite Zinc Grades at Arex ............................................................................................................... 14-42 Figure 14-19 West Facing Vertical Cross Section Comparing Block and Composite Copper Grades at Arex ............................................................................................................... 14-43

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Technical Report NI 43-101 – March 1, 2017 Page 1-1

1 SUMMARY EXECUTIVE SUMMARY Roscoe Postle Associates Inc. (RPA) was retained by Karmin Exploration Inc. (Karmin) to

prepare an independent Technical Report on the Aripuanã Zinc Project (Aripuanã Zinc or the

Project) located near Aripuanã, Brazil. The purpose of this report is to provide an update of

the Mineral Resources at the Project following additional drilling completed on the Project since

the previous resource estimate in 2012. This Technical Report conforms to NI 43-101

Standards of Disclosure for Mineral Projects. RPA visited the property from October 16 to 19,

2012 and from January 30 to February 3, 2017.

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

venture between Karmin (30%) and Votorantim Metais Ltda. (70%, Votorantim), with

Votorantim acting as the operator. Karmin also owns 100% of the Aripuanã Gold Project,

which consists of gold and silver mineralization associated with the near surface oxidized

portions of the numerous massive sulphide deposits on the Aripuanã Zinc property. Limited

studies to date have been undertaken on the oxide material. This report deals with the

Aripuanã Zinc Project only.

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 in 2014 and 2015, a new zone connecting the two deposits, the Link Zone, has been

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

therefore included in the Mineral Resources of that deposit.

Table 1-1 summarizes the Mineral Resource estimate for the Project prepared by Votorantim

and reviewed by RPA, based on drill hole data available as of October 20, 2016. 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.

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TABLE 1-1 SUMMARY OF MINERAL RESOURCES – OCTOBER 20, 2016 Karmin Exploration Inc. – Aripuanã Zinc Project

Stratabound Mineralization

Grade Metal Tonnes Zn Pb Cu Au Ag Zn Pb Cu Au Ag

(MT) (%) (%) (%) (g/t) (g/t) (M lb) (M lb) (M lb) (K oz) (M oz) Measured 7.20 6.43 2.40 0.25 0.25 63.9 1,025 382 39.9 58 14.9 Indicated 8.70 5.43 2.09 0.10 0.25 48.0 1,043 402 18.7 71 13.4 Measured and Indicated 15.9 5.89 2.23 0.17 0.25 55.2 2,068 784 58.6 129 28.3

Inferred 11.3 7.43 2.79 0.10 0.38 65.7 1,844.1 692.2 24.2 137 23.8

Stringer Mineralization Tonnes Zn Pb Cu Au Ag Zn Pb Cu Au Ag (MT) (%) (%) (%) (g/t) (g/t) (M lb) (M lb) (M lb) (K Oz) (M Oz)

Measured 1.82 0.27 0.11 1.88 1.42 19.0 10.7 4.6 75.5 83 1.1 Indicated 0.81 0.14 0.07 1.27 1.54 14.5 2.6 1.3 22.7 40 0.4 Measured and Indicated 2.63 0.23 0.10 1.70 1.46 17.6 13.3 5.8 98.2 123 1.5

Inferred 4.28 0.1 0.1 1.0 3.4 11 5.1 7.0 96.0 470 1.5

Stratabound + Stringer Mineralization Tonnes Zn Pb Cu Au Ag Zn Pb Cu Au Ag (MT) (%) (%) (%) (g/t) (g/t) (M lb) (M lb) (M lb) (K Oz) (M Oz)

Measured 9.04 5.19 1.94 0.58 0.49 54.9 1,036 387 115 141 16.0 Indicated 9.52 4.99 1.92 0.20 0.36 45.1 1,046 403 41 111 13.8 Measured and Indicated 18.6 5.09 1.93 0.38 0.42 49.9 2,082 790 157 252 29.8

Inferred 15.5 5.4 2.0 0.4 1.2 51 1,849 699 120 607 25.3 Notes:

1. CIM definitions were followed for Mineral Resources. 2. Mineral Resources are reported using a US$48/t Net Smelter Return (NSR) block cut-off grade. 3. The NSR is calculated based on metal prices of US$1.12 per lb Zn, US$0.84 per lb Pb, US$2.93 per lb

Cu, US$1,233 per ounce Au, and US$18.5 per ounce Ag. 4. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. 5. Numbers may not add due to rounding.

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CONCLUSIONS

Measured and Indicated Mineral Resources for Arex, Link, and Ambrex deposits are estimated

to total 18.6 million tonnes containing 2,082 million pounds of zinc, 790 million pounds of lead,

157 million pounds of copper, 252,000 ounces of gold and 30 million ounces of silver. Inferred

Mineral Resources are estimated to total 15.5 million tonnes containing 1,849 million pounds

of zinc, 699 million pounds of lead, 120 million pounds of copper, 607,000 ounces of gold and

25 million ounces of silver. There are no Mineral Reserves estimated on the property.

Since completion of the 2012 Mineral Resource estimate, Karmin and its joint venture partner

Votorantim have carried out additional drilling on the Ambrex, Link Zone, and Arex deposits

such that the additional drilling density is sufficient to prepare updated Mineral Resource

estimates. There is good exploration potential remaining at depth, and additional exploration

targets have been identified in the Project area, including Babaçú.

Votorantim estimated Mineral Resources for the Ambrex, Link Zone, and Arex Volcanogenic

Massive Sulphide (VMS) deposits using drill hole data available to October 20, 2016. RPA is

of the opinion that the drill hole database is valid and suitable to estimate Mineral Resources

for the Project.

Sampling and assaying are adequately completed and have been carried out using industry

standard quality assurance/quality control (QA/QC) practices. These practices include, but

are not limited to, sampling, assaying, chain of custody of the samples, sample storage, use

of third-party laboratories, standards, blanks, and duplicates.

The metallurgical test program undertaken to date for the Aripuanã Zinc mineralization was

detailed and systematic in approach. To process mineralization at Aripuanã Zinc, material

types should be fed separately to improve copper recovery and to reduce costs particularly

when processing copper stringer mineralization. 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 by-passed.

Overall, RPA finds the Votorantim geological models to be reasonably constructed and

generally representative of the extents and limits of the mineralization. RPA notes, however,

that the mineralization shapes have changed with each model update, suggesting that

although this model is based on a sound geological interpretation and a large body of high

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quality work performed by Votorantim, on a local scale, multiple possible interpretations for the

resources remain, particularly at Ambrex. In addition, RPA notes areas, particularly in Ambrex,

where the wireframes have been extrapolated over large distances, greater than 150 m in

some instances.

RPA considers the estimation procedures employed at Ambrex, Link Zone, and Arex, including

compositing, top-cutting, variography, block model construction, and interpolation to be

reasonable and in line with industry standard practice.

RPA finds the classification criteria to be reasonable, although somewhat aggressive with

respect to depth extension at Ambrex, specifically the extension of stringer zone wireframes.

RECOMMENDATIONS

Drilling activities at the Aripuanã Zinc Project has outlined the presence of significant zinc-

lead-copper-silver-gold deposits that warrant further.

RPA recommends a Phase I budget of $682,000 for studies to support the completion of a

Preliminary Economic Assessment (Table 1-2).

TABLE 1-2 PROPOSED BUDGET Karmin Exploration Inc. – Aripuanã Zinc Project

Item US$ Metallurgical test work 70,000 Engineering studies and Preliminary Economic Assessment 200,000 Operating costs/office 150,000 Tenure Fees and Permits 200,000 Sub-total 620,000 Contingency 62,000 Total 682,000

The recommended Phase 2 budget of US$10 million would be contingent on Phase 1 results.

Work would include additional metallurgical test work, and a Pre-Feasibility Study.

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

feasibility study, and meanwhile Votorantim is fully funding the Project development.

In addition, RPA recommends the following:

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• Carry out additional metallurgical test work to determine equipment specifications for comminution, regrinding, and filtration, to optimize flotation reagent consumption, to optimize Zn/Pb recovery circuits on Ambrex ores, to define methods of water recirculation, and to conduct material variability tests.

• Complete round robin testing of the in-house standards at various laboratories to

establish more reliable expected values.

• Incorporate minimum thickness criteria at Arex, and avoid pinching out wireframes around isolated low grade intercepts.

• Define mineralization envelopes using a Net Smelter Return (NSR) cut-off value as opposed to a single grade variable. Determine an NSR cut-off value for modelling that allows continuity of mineralization, as well as limiting the incorporation of waste in the mineralization envelopes.

• For Mineral Resource estimation purposes, apply wireframe extrapolation limits consistent with the Measured, Indicated, and Inferred classification criteria.

• Apply density weighting during composite and interpolation routines.

• Interpolate grades and density for all domains using dynamic anisotropy to better capture the folded nature of the deposit in the block model.

• Include a more robust analysis of confidence, which considers drill hole orientation and associated impact of geological interpretation, continuity of mineralization above a break-even cut-off grade, and geological confidence in defining limits for classification. Avoid extrapolating classified Mineral Resources to the outer limits of the geological model where not supported by variogram results.

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 22 contiguous Exploration Authorization permits (EP),

mining concessions and EPs in application, covering an area of approximately 740 km2. The

EPs are owned by Dardanelos, a joint venture between Karmin (30%) and Votorantim (70%),

with Votorantim acting as the operator.


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

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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.

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

Votorantim’s participation. Votorantim 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.

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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

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, Votorantim 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 423 diamond drill holes totalling 126,578 m have been completed at the Project since

2004.

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MINERAL RESOURCES Geological interpretation and Mineral Resource estimation were completed by Votorantim and

reviewed by RPA. Modelling and resource estimation for the Ambrex, Link, and Arex deposits

was prepared using all data available as at October 20, 2016.

Wireframes of the stratabound and stringer mineralization for Arex, Ambrex, and the Link Zone

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, and based on cross sections completed by onsite

geologists. Drill hole samples within the models were composited to one metre lengths, and

used to separately estimate blocks of the stringer and stratabound zones of each deposit.

Grade interpolation into blocks was performed using the ordinary kriging algorithms. An NSR

cut-off value of US$48/t, based on mining, processing, and general and administrative costs,

was used for Mineral Resource estimation. Classification into Measured, Indicated, and

Inferred categories was guided by the drill hole density, apparent continuity of the mineralized

zones, and the data quality and completeness.

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2 INTRODUCTION Roscoe Postle Associates Inc. (RPA) was retained by Karmin Exploration Inc. (Karmin) to

prepare an independent Technical Report on the Aripuanã Zinc Project (Aripuanã Zinc or the

Project) located in Aripuanã, Brazil. The purpose of this report is to provide an update of the

Mineral Resources at the Project following additional drilling completed on the Project since

the previous resource estimate in 2012. The Mineral Resource estimate was prepared by

Votorantim Metais Ltda. (Votorantim) and reviewed by RPA. This Technical Report conforms

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

Karmin is a mineral exploration company based in Toronto, Canada. The company is primarily

engaged in the exploration of gold and zinc projects in Peru and Brazil. The company currently

owns 100% of the Aripuanã Gold Project and 30% of the Aripuanã Zinc Project, both located

in western Brazil, and 100% of the Cushuro Gold Project in northern Peru. Karmin’s shares

trade on the Toronto Stock Exchange – Venture (TSX-V) exchange under the symbol KAR.V

and in Peru on the Bolsa de Valores de Lima (BVL) under the symbol KAR.

The Aripuanã Zinc Project is a joint venture between Karmin and Votorantim, a division of the

privately held Brazilian Votorantim Group, which owns 70% of the Project and is the operator.

Votorantim is the fifth largest zinc producer in the world, with two zinc smelters in Brazil and

one in Peru.

Aripuanã Zinc is located within a mineralized massive sulphide district which, in the Project

area, hosts seven known mineralized zones - Arex, Ambrex, Babaçú, Massaranduba, Boroca,

Arpa, and Mocoto – all occurring over a 25 km strike length. To date, the Ambrex and Arex

deposits have been the focus of exploration activities on the property and are the only two

deposits on the property for which Mineral Resources have been estimated. They are

connected by a newly discovered “Link Zone”. The Mineral Resources of the Link Zone are

considered as part of the Ambrex deposit.

SOURCES OF INFORMATION A site visit was carried out by Ms. Valerie Wilson, M.Sc., P.Geo., RPA Senior Geologist, from

October 16 to 19, 2012 and by Mr. Sean Horan, P.Geo., RPA Senior Geologist, from January

30 to February 3, 2017. During the site visits, Ms. Wilson and Mr. Horan reviewed logging and

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sampling methods, inspected core from drill holes, and held discussions with Votorantim

personnel. Ms. Wilson also visited the Votorantim offices in São Paulo, Brazil, on October 22

and 23, 2012.

Discussions were held with personnel from Karmin and Votorantim:

• Mr. David Brace, P. Geo., CEO, Karmin

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

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

• Mr. Jose Antonio Lopes, Resource Manager, Votorantim

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

• Mr. Marcelo Batelochi, Independent Geologist Consultant, MB Soluções em Geologia e Mineração Ltda

This report was prepared by Ms. Wilson and Mr. Horan, who are independent Qualified

Persons (QP) and share responsibility for all sections in this report. 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 Votorantim.

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

report in Section 27 References.

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LIST OF ABBREVIATIONS Units of measurement used in this report conform to the Imperial 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 Karmin. 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 Karmin, Votorantim, and other third

party sources.

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

and Votorantim. RPA has not researched property title or mineral rights for Aripuanã Zinc and

expresses no opinion as to the ownership status of the property.

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

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

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 PROPERTY LOCATION The Aripuanã Zinc Project is located in Mato Grosso State, western Brazil, 700 km northwest

of Cuiabá and 1,200 km northwest of Brasilia (Figure 4-1). The property is located at

approximately 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), and is 25 km from the town of

Aripuanã. The property is accessible from Aripuanã by an unpaved road, and the town is

accessible by road and chartered flights from Cuiabá. The property trends approximately 60

km in a northwest-southeast direction, and ranges between 18 km and 27 km in width. A

property map is shown in Figure 4-2.

MINERAL AND SURFACE RIGHTS IN BRAZIL 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.

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

BRAZIL

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

March 2017

Location Map

Aripuanã Zinc Project

Karmin Exploration Inc.

Mato Grosso State, Brazil

Figure 4-1

4-2

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AMBREX

LINKAREX

59°10'0"W

59°10'0"W

59°20'0"W

59°20'0"W

59°30'0"W

59°30'0"W

10°0'0

"S

10°0'0

"S

10°10'0

"S

10°10'0

"S

8

9

20 21

10

19 15

18

7

1 25

3

4

12

14

13

6

22

16

17

11

ARIPUANÃ LAND TENURE-

Application for Mining Concession

Legend:

Exploration Claim

Exploration Permit

0 5

Kilometres

10 15 20

N

March 2017 Source: 6Karmin Exploration Inc., 201 .

Mineral Dispositions andProperty Map




Figure 4-2

4-3

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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 has 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 they will issue the permit. Before a decision is reached, claim status is set to ‘In Dispute’.

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.

LAND TENURE RPA has relied on documentation supplied by Votorantim and Karmin for a summary of mineral

titles and agreements on ownership of the mining, exploration, water, and land concessions.

The Aripuanã Zinc property contains 22 contiguous EPs, mining concessions and EPs in

application, covering an area of approximately 740 km2. They are listed in Table 4-1 along

with their designated number, area, status, and expiry dates.

The EPs are owned by Mineração Dardanelos Ltda. (Dardanelos), a joint venture between

Karmin (30%) and Votorantim Metais Ltda. (70%, Votorantim), with Votorantim acting as the

operator. Karmin is not required to contribute financially to the Project until the completion of

a bankable feasibility study. In the meanwhile, Votorantim 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.

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The Project area is not within a Natural Heritage Private Reserve (RPPN) or a permanent

conservation area, but is within the Legal Amazon (Votorantim, 2010). All projects within the

Legal Amazon must maintain forest cover over 80% of the total area of the

development/project. Votorantim has indicated that there are no outstanding environmental

liabilities associated with the property.

TABLE 4-1 EXPLORATION AUTHORIZATION PERMITS Karmin Exploration Inc. – Aripuanã Zinc Project

Map Ref. Tenement Area (ha) Owner1 Status Expiry Date

1 866173/1992 1,000 MDL Mining Application2 - 2 866174/1992 1,000 MDL Mining Application2 - 3 866565/1992 975 MDL Mining Application2 - 4 866569/1992 640 MDL Mining Application2 - 5 866570/1992 1,000 MDL Mining Application2 - 6 866386/2003 412 MDL Mining Application3 - 7 867381/1991 1,000 MDL Exploration Permit4 - 8 866235/2007 9,830 MDL Exploration Permit - 2nd Period5 - 9 866236/2007 7,448 MDL Exploration Permit - 2nd Period5 - 10 866148/2017 9,159 MDL Exploration Permit - 2nd Period5 - 11 866148/2017 215 MDL Exploration Permit - 1st Period5 - 12 866051/2015 979 MDL Exploration Permit - 1st Period 21/08/2018 13 866292/2015 839 MDL Exploration Permit - 1st Period 21/08/2018 14 866293/2015 930 MDL Exploration Permit - 1st Period 21/08/2018 15 866812/2008 5,462 VM Exploration Claim - 16 866208/2013 416 MDL Exploration Claim - 17 866050/2015 341 MDL Exploration Claim - 18 866727/2015 4,815 MDL Exploration Claim - 19 866728/2015 6,758 MDL Exploration Claim - 20 866729/2015 9,942 MDL Exploration Claim - 21 866730/2015 9,880 MDL Exploration Claim - 22 866941/2015 682 MDL Exploration Claim - Total 73,723

Notes:

1. MDL: Mineração Dardanelos Ltda; VM: Votorantim Metais Zinco SA 2. Mining application submitted September 16, 2011. Waiting decision. 3. Final EP Report approved by DNPM on December 18, 2012. Mining application submitted. Waiting

decision. 4. Mining Application Postponed. 5. Awaiting new exploration permits – expiry date unavailable.

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ROYALTIES Applicable royalties on the Aripuanã Zinc Project are detailed in Table 4-2.

TABLE 4-2 ROYALTY DATA Karmin Exploration Inc. – 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 Votorantim only.

SURFACE RIGHTS Votorantim 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 Votorantim. Figure 4-3 displays a map of

surface rights currently held by Votorantim in relation to the mineral deposits.

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

March 2017 Source: Karmin Exploration Inc., 2012.

Surface Rights Map




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 has 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, Arupa, 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 (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 constructed 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 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.). 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 Merchant Bank.

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

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

2004 and December 2005, Votorantim 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 Merchant Bank’s interests, raising its interest to 30%.

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Today, Aripuanã Zinc is a jointly held property by Karmin (30%) and Votorantim (70%). Karmin

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

feasibility study. In the meantime, Votorantim is fully funding the Project development. Upon

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

bringing Aripuanã Zinc into production.

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

Zinc Project:

1. A spectrum 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 Votorantim, 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 for Karmin, which are superseded by the Mineral Resource estimate

presented in Section 14 of this report.

PAST PRODUCTION Approximately 350,000 oz 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 The following descriptions are mostly excerpted from AMEC (2007) and Votorantim (2010

2012b, and 2015).

REGIONAL GEOLOGY The Aripuanã deposits are located within the central-southern portion of the Amazonian

Craton, in which Paleoproterozoic- and Mesoproterozoic-aged lithostratigraphic units of the

Rio Negro-Juruena province (1.80 Ga to 1.55 Ga) predominate (Figure 7-1).

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.

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, but 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.

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.March 2017

Regional Geology




Figure 7-1

7-2

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LOCAL GEOLOGY Felsic volcanic rocks predominate in the deposit area, form the footwall units to the

mineralization, and comprise porphyritic, dacitic to rhyolitic lavas with quartz phenocrysts and

feldspar laths set in a fine-grained sericitic matrix. Interbedded felsic lapilli and crystal tuffs

and finely foliated ash tuffs grade upwards into the overlying sediments (Leite et al., 2005 as

cited in AMEC, 2007).

The sedimentary sequence, about 500 m thick, consists of fine to medium grained argillites,

siltstones, arkoses, and greywackes, with interbedded crypto-crystalline exhalites. The

exhalites are finely laminated, and usually occur within discontinuous lenses.

The lithological assemblage generally strikes northwest-southeast, and at surface generally

dips between 35° and 70° to the northeast. Stratigraphic features have been offset by younger

sinistral, east-west wrench faults.

The Aripuanã Sequence is represented by three major meta-volcano-sedimentary units:

• A unit characterized by sub-volcanic syeno- and monzo-granitic rocks deformed with leucocratic portions.

• A basal unit composed of metasediments intercalated with meta-cherts, manganese iron formations, and meta-tuffs.

• An upper sequence of meta-dacites and rhyolites with intercalation of acidic pyroclastic rocks.

The contacts between the superior unit of granitic rocks and remaining units of the Roosevelt

Group are mainly tectonic, marked by proto-mylonitic to mylonitic zones. These occur as

elongated batholiths striking northwest-southeast, in line with the regional structure of the area.

The Serra da Providência granites are represented locally by small granitic plugs in the

surrounding country rock. They are composed of porphyritic syenogranites with mega-crystals

of potassium feldspar in a medium-coarse grained matrix. Hornfels occurs at the contact of

the main intrusive body.

The Caiabís Group, present in the southern part of the area, is represented by the Dardanelos

and Arinos formations. The Dardanelos Formation is predominantly siliciclastic and marked

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by medium to coarse grained sandstones with local polymictic conglomerates at the base,

covering the Roosevelt Group by an erosive and angular unconformable contact. The Arinos

Formation occurs as interbedded basaltic flows and sills in the Dardanelos Formation rocks.

Diabase dikes with a north-south trend are seen cross-cutting all the rocks of the Roosevelt

Group.

DESCRIPTION OF THE DEPOSITS 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 over-thrust 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, but 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 common 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

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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

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 over-thrust 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 over-thrust 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

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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.

Figure 7-2 shows the property geology.

Arpa

Arex

Link Zone

Ambrex

Babaçu

Massaranduba

Recent Sediments

Legend:

Mudstones and Siltstones

Tremolite/Carbonate/Chlorite Alteration Zone

Pyroclastic Rocks (chloritization)

Pyroclastic Rocks

Felsic Volcanic Rocks

Gossan

0 0.5

Kilometres

1 1.5 2

N

Source: 6Karmin Exploration Inc., 201 .March 2017

Property Geology




Figure 7-2

7-7

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

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

disseminated to massive pyrite and pyrrhotite lenses, with well developed sphalerite and

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

and the upper sedimentary units. Discordant, stringer-style pyrrhotite-pyrite-chalcopyrite

mineralization is usually located in the underlying volcanic units or intersects the massive

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

STRATABOUND ZONE The stratabound zones are located at the contact between the underlying metavolcanics and

overlying metasedimentary rocks. They are characterized by noticeable banding, while the

upper proximal facies shows an association with a zone of brecciated carbonates.

The typical sulphide paragenesis is distal sphalerite, pyrite, and galena, grading into

chalcopyrite and pyrrhotite close to the feeder zone. At Ambrex, the main exhalative focus in

the area, there is a diversified sulphide paragenesis, representing mixing of the two types. The

definition of the facies position within the exhalative system is based on the sulphide

paragenesis and its textural/structural association with the mineralized zone. Three distinct

groups have been defined:

• Proximal Facies: Consists of dense, banded pyrite ± minor chalcopyrite and pyrrhotite.

• Top Facies: Characterized by sulphide paragenesis and based on pyrite + sphalerite + galena + chalcopyrite. In regions close to the feeder zone, associated with high temperature formation, there is more chalcopyrite and pyrrhotite, while in the upper part, where there is higher interaction with sea water and consequent reduced temperature, the content of carbonates (of hydrothermal origin) and galena is higher.

• Distal Facies: Characterized by sulphide banding, dominantly sphalerite, with occasional sedimentary depositional characteristics.

STRINGER ZONE Stringer mineralization in the footwall contains chalcopyrite and pyrrhotite, with stockwork and

breccia textures corresponding to hydrothermal feeder zones. The stringer zone contains

copper and gold mineralization. The presence of halos with external sericitic alteration and

intensive chloritic alteration in association with chalcopyrite and pyrrhotite is distinctive of the

stringer zone.

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8 DEPOSIT TYPES The following is summarized from Votorantim (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 Votorantim, 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

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

Target Model




Figure 8-1

8-2

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9 EXPLORATION 1999-2002 EXPLORATION This section is summarized from Votorantim (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 Karmin Exploration Inc. – 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

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.

No specific details were available on the ground geophysical methods.

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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.

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

In 2004, Votorantim became Project operator and commenced a detailed geological,

geochemical, and geophysical exploration program, which included additional drilling

described in Section 10.

Under contract from Votorantim 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

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.

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In 2004, Votorantim 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 as 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.

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-

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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

from 1960 to 2016. Total drilling at the two main deposits, Ambrex, including the Link Zone,

and Arex, consists of 532 diamond drill holes totalling approximately 147,464 m. Drilling at the

other prospects on the property consists of 69 diamond drill holes totalling 30,364 m.

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

20, 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 Karmin Exploration Inc. – Aripuanã Zinc Project

Historical Votorantim (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 57 16,845 19 1,329 210 37,237 21 2,677 307 58,089 Ambrex (incl. Link Zone) 48 17,408 168 68,745 9 3,222 225 89,375 Babaçú 7 2,224 35 17,163 42 19,388 Massaranduba 8 2,184 10 3,433 18 5,618 Total 120 38,661 19 1,329 432 131,937 30 5,899 601 177,829

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 Votorantim database. Diamond drill core diameter was HQ (6.35 mm) size. The

DDI Reflex Fotobor method was used for down hole survey measurements. Most holes were

drilled with azimuths ranging from 180° to 220° and dips 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 Votorantim on the property from 2004 to 2008 and from 2012 to

2016. The main purpose of the drill program from 2004 to 2008 was to explore and delineate

mineralization on the property and from 2012 to 2016, to improve confidence and support and

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

Votorantim drilled a total of 453 diamond drill holes totalling 132,477 m at Aripuanã Zinc from

2004 to 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.

October 20, 2016 is the cut-off date of the Mineral Resource database; all assay results

received on or 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. Down hole surveying is completed with Deviflex and Maxibor tools by the drilling

company at three metre intersections down hole. Duplicate down hole surveys are performed

on each hole. From 2014 and onwards, Votorantim 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

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

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.

225,000

226,000 227,000

8,8

88,0

00

8,8

88,0

00

226,000

225,000 226,000

8,8

88,0

00

8,8

88,0

00

226,000 227,000

A: Arex Deposit

B: Ambrex Deposit and Link Zone

Mudstones and Siltstones

Legend:

Hydrothermal Alteration Zone

Gossan

Pyroclastic rocks (chloritization)

Pyroclastic Rocks

AS

GS

ZH

Chl FT

FT

Felsic VolcanicsFV

0

0

100

100

200 Metres

200 Metres

N

N


Drill Hole Collar Map




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 between 0.5 m and 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.

Sample core is cut in two by technicians with a diamond saw, returning half of split core to the

core box and submitting the other half for sample preparation and analysis. One sample tag

is stapled to the clear plastic sample bag and an additional sample is placed within the bag.

DENSITY ANALYSIS The bulk density is determined by the water displacement method for each sample of drill core

at Aripuanã Zinc. Density measurements are performed by geotechnicians. The entire sample

of core (split) is weighed on 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 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.

SAMPLE PREPARATION Sample preparation was performed by the ACME preparation facility in Goiania, Brazil,

between 2004 and 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 PREP-

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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/IEC 17025 (ALS, 2012), for all

relevant procedures.

Both laboratories are independent of Karmin and Votorantim. 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 between 2004 and 2007 and from 2007 on, by ALS Global.

ALS Global’s facilities in Lima are accredited to ISO/IEC 17025 (ALS, 2012).

The following sample analysis was undertaken at the ACME facilities:

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.

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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 Karmin and Votorantim. 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 hole 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.

Assay Certificates are mailed to the site by ALS Global and emailed to Julio Souza Santos,

Project Manager, as well as Francisco Abreu, Thomas Brenner, and Juliano Ferreira, all

Votorantim 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 Quality assurance (QA) consists of evidence to demonstrate that the assay data has precision

and accuracy within generally accepted limits for the sampling and analytical method(s) used

in order to have confidence in a resource estimate. Quality control (QC) consists of procedures

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used to ensure that an adequate level of quality is maintained in the process of collecting,

preparing, and assaying the exploration drilling samples. In general, QA/QC programs are

designed to prevent or detect contamination and allow assaying (analytical), precision

(repeatability), and accuracy to be quantified. In addition, a QA/QC program can disclose the

overall sampling-assaying variability of the sampling method itself.

QA/QC PROTOCOLS Samples are grouped into batches of 100. Five standards, two blanks, one field, one pulp,

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 samples. 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

Votorantim.

RPA reviewed results from Votorantim’s QA/QC program undertaken from 2004 to 2016 and

is of the opinion that the results are sufficient to support Mineral Resource estimation.

2004–2012 BLANKS Prior to 2012, blank material used was river sand and sandstone sourced from the property.

Subsequent to the 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 ten times the detection

limit of the sample. All other metals reported less than 3% above a value equal to ten times

detection limits. No time based trends were identified.

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FIGURE 11-1 BLANK RESULTS FOR ZINC, LEAD AND COPPER

CERTIFIED REFERENCE MATERIAL Results of the regular submission of certified and uncertified 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 seven different standards

used between 2004 and 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.

Between 2004 and 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 Votorantim’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 Karmin Exploration Inc. – 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 between 2004 and

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 Agundo 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, quantile-

quantile, 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

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Figure 11-4. 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).

FIGURE 11-4 PERCENT RELATIVE DIFFERENCE PLOT: ZINC DUPLICATE SAMPLES

2013-2016 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 ten times the detection limit of the sample. All other metals

reported less than 3% above a value equal to ten 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 and uncertified 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

between 2012 and 2016. As per RPA recommendation, two gold standards have been

implemented since 2012. The following summary describes the standards:

• AP series: four uncertified standards from the Aripuanã Zinc for Zn, Pb, Cu, and Ag

• MA series: two CRMs sourced from Votorantim’s sedex mine, Morro Agundo (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.

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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 standard deviations

(SD) for the various standards are listed in Tables 11-2 and 11-3.

RPA notes that the AP series standard performance has been evaluated based on population

statistics. While, in RPA’s opinion, the upper and lower limits appear reasonable, RPA

recommends round robin testing of the standards at various laboratories to establish more

reliable expected values.

TABLE 11-2 EXPECTED VALUES AND RANGES OF STANDARDS Karmin Exploration Inc. – 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

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TABLE 11-3 EXPECTED VALUES AND RANGES OF STANDARDS Karmin Exploration Inc. – 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 between 2012 and 2016.

Results from the 2012-2015 submissions of the Morro Agundo 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.

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

DUPLICATES Field, pulp, and reject duplicate samples were analyzed using basic statistics, scatter, quantile-

quantile, 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).

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FIGURE 11-9 PERCENT RELATIVE DIFFERENCE PLOT: ZINC DUPLICATE SAMPLES

In RPA’s opinion, the sample preparation, security, and analytical procedures are acceptable

for the purposes of a Mineral Resource estimate.

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12 DATA VERIFICATION 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 Votorantim 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 Votorantim 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 start to finish to the lithology logs and the final assay results. During the site visit in 2017,

RPA compared drill holes BRAPDD0055, BRAPDD0137, and BRAPDD0087 from start to

finish to the lithology logs and the final assay results. Drill hole contacts agreed with 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

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these assays and that further QA/QC checks are 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 major 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.

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 is displayed in Figure 12-1 (Arex) and Figure 12-2 (Ambrex). Samples designated as

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.

In RPA’s opinion, the database is suitable to support a Mineral Resource estimate.

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FIGURE 12-1 DENSITY MEASUREMENTS AT AMBREX BY ROCK UNIT

FIGURE 12-2 DENSITY MEASUREMENTS AT AREX BY ROCK UNIT

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13 MINERAL PROCESSING AND METALLURGICAL TESTING The following information has largely been provided by Votorantim (Votorantim, 2015). RPA

has not reviewed original documentation.

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. Table 13-1 summarizes the evolution

of the key studies and the process technologies under consideration (Votorantim, 2015). The

optimum process route was defined through an advanced metallurgical study.

A simplified block flow diagram of the beneficiation process developed is illustrated in Figure

13-1.

TABLE 13-1 SUMMARY OF STUDIES Karmin Exploration Inc. – Aripuanã Zinc Project

Date Company Technological Studies Comments 2005 Technological Characterization

Laboratory (LCT), Polytechnic School – University of São Paulo

Characterization Analyses

2005 CT3 of Gorceix Foundation, Ouro Preto Characterization Analyses

2008/2009 GRD/Minproc & Mineral Technology

Department of the Technological Centre Foundation of Minas Gerais (CETEC)

Flotation Based on a non-stabilized cyclical test with recovery estimations

2011 Mineral Technology Centre (CETEM) Biolixiviation

2011 University of Alfenas (UNIFAL) Dense Media Separation

(DMS)

2012 ALS Ammtec (ALS), Australia &

Rezende Engenharia Characterization Analyses Comminution Flotation

Cycle tests results stabilized and recovery estimates obtained were consistent

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


Simplified Block FlowDiagram of Process




Figure 13-1

13-2

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METALLURGICAL SAMPLING The first phase of metallurgical sampling and drilling resulted in the collection of representative

samples of the Arex deposit. These samples were used for bench scale flotation tests (batch

and locked cycle tests (LCT)). Process definition tests were performed on Arex samples, as

the Arex material will be mined first for the following reasons:

• Surface mineralization allowing mining with little development and lower costs

• Combined grades higher than Ambrex mineralization

• Higher processing complexity

Ambrex mineralization samples were collected during the second phase of drilling,

composited, and tested to validate the process route established for Arex mineralization.

METALLURGICAL TESTING Based on information presented in the 2015 Votorantim Study, the objectives of the 2012/2013

ALS test program were as follows:

• Develop flowsheets and flotation conditions for the successful treatment of three different Aripuanã material types:

o Copper Stringer material, for high grade copper concentrate

o Stratabound Lead-Zinc material, for separate high grade lead and zinc concentrates

o Mixed Copper-Lead-Zinc material, for separate high grade copper, lead, and zinc concentrates

• Determine achievable metallurgical performance from the three different material types

• Examine the effects of material variability on flotation performance

• Investigate the use of DMS for pre-concentration

• Obtain detailed chemical analysis of concentrate products to determine whether they contain significant levels of penalty elements

• Obtain engineering data associated with comminution, thickening, and filtration

The number of investigative flotation tests conducted on the various composites are listed in

Table 13-2.

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TABLE 13-2 NUMBER OF FLOTATION TESTS Karmin Exploration Inc. – Aripuanã Zinc Project

Composite Batch LCT

Global Copper Stringer 11 1 Global Blend Copper Stringer 2 2

Copper Stringer Variability 4 3 Global Stratabound 9

Stratabound Variability 1 Global Mixed 13

Global Blend Cu-Pb-Zn 11

Larger scale flotation tests were also carried out on Copper Stringer material and Mixed

Copper-Lead-Zinc material to provide concentrate and tailings products for thickening and

filtration tests by Outotec Pty Ltd. Multi-element assays and mineralogical analyses were

carried out on samples of copper concentrate from Copper Stringer material and copper, lead,

and zinc concentrates from Mixed Copper-Lead-Zinc material.

Composites of Arex materials and composites of Ambrex materials were prepared from drill

core samples. Head assays of the various composites are summarized in Table 13-3.

TABLE 13-3 HEAD ASSAYS OF ARIPUANÃ MATERIAL Karmin Exploration Inc. – Aripuanã Zinc Project

Deposit Composite %Zn %Pb %Cu g/t Au g/t Ag

Arex

Global Copper Stringer 0.71 0.08 2.35 1.02 28 Low Grade Copper Stringer 0.44 0.04 1.26 0.59 18 Medium Grade Copper Stringer 0.17 0.04 3.32 2.14 24 High Grade Copper Stringer 2.03 0.26 3.88 1.38 40 Global Blend Copper Stringer (1) 0.60 0.07 1.88 0.84 24 Global Stratabound 6.25 2.34 0.14 0.34 62 Low Grade Stratabound 5.52 2.20 0.09 0.17 52 Medium Grade Stratabound 7.23 2.22 0.13 0.24 68 High Grade Stratabound 8.32 3.14 0.17 0.26 74 Extra-High Grade Stratabound 26.60 9.02 0.32 1.27 196 Global Mixed 8.48 2.75 1.45 0.66 90 Low Grade Mixed 5.26 1.47 1.19 0.41 84 Medium Grade Mixed 10.00 3.03 1.20 0.59 64 High Grade Mixed. 19.60 6.12 3.27 1.55 286 Global Blend Cu-Pb-Zn (2) 5.89 2.06 0.55 0.33 68

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Deposit Composite %Zn %Pb %Cu g/t Au g/t Ag

Ambrex Stringer Composite 1 0.15 0.54 2.07 0.91 24 Stratabound Composite 2 7.17 2.61 0.19 0.27 86 Stratabound Composite 3 6.69 2.56 0.07 0.27 86

Notes:

1) Arex Global Blend Copper Stringer material consists of a blend of 57.1% Arex Global Copper Stringer material and 42.9% Arex Low Grade Copper Stringer material.

2) Arex Global Blend Copper-Lead-Zinc material consists of a blend of 27.8% Arex Global Stratabound material, 33.3% Arex Low Grade Stratabound material, 8.3% Arex Global Mixed material, and 30.5% Arex Low Grade Mixed material.

For copper, lead, and zinc concentrate production for thickening and filtration tests from mixed

material, the following blend was used: 46.7% Arex Global Mixed material and 20.0% Arex

Low Grade Mixed material.

COMMINUTION TESTING Comminution testing consisted of:

• Bulk density, specific gravity and angle of repose measurements of the 13 original Arex composites and the two Ambrex composites.

• SMC Tests1 on the Arex Global Copper Stringer, Stratabound, and Mixed composites, the Arex Extra High Grade Stratabound composite and the Ambrex Stratabound composite.

• Abrasion Index determinations on the same five composites submitted for SMC Testing.

• Bond Ball Mill Work Index determinations on the Arex Global Copper Stringer, Stratabound and Mixed composites, the three Arex Copper Stringer variability composites and the Ambrex Stratabound composite.

Measurements of angle of repose, bulk density, and specific gravity on samples crushed to

minus 22.4 mm are shown in Table 13-4.

Comminution test results for major Aripuanã composites are shown in Table 13-5. The

samples tested are in the medium to soft category of hardness.

1 The SMC Test is a laboratory comminution test which provides a range of information on the breakage characteristics of rock samples for use in the mining and minerals processing industry.

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TABLE 13-4 ARIPUANÃ PHYSICAL DATA Karmin Exploration Inc. – Aripuanã Zinc Project

Bulk Density (t/m3)

Deposit Composite Angle of repose

(degrees) Uncompacted Compacted Specific gravity

Arex

Global Copper Stringer 30.8 1.67 1.86 3.17 Stringer Low Grade 30.3 1.55 1.76 3.07 Stringer Medium Grade 34.8 1.80 2.03 3.34 Stringer High Grade 33.5 1.84 2.12 3.37 Global Stratabound 29.3 1.74 1.96 3.29 Stratabound Low Grade 35.5 1.69 1.92 3.19 Stratabound Medium Grade 30.8 1.71 1.91 3.18 Stratabound High Grade 31.0 1.69 1.87 3.39 Stratabound Extra High Grade 29.5 2.11 2.40 3.92 Global Mixed Composite 30.5 1.96 2.22 3.53 Mixed Low Grade 28.5 1.77 1.97 3.39 Mixed Medium Grade 27.8 1.84 2.06 3.43 Mixed High Grade 29.8 1.98 2.20 3.80

Ambrex Cu Stringer 37.0 1.91 2.19 3.62 Stratabound 35.5 1.83 2.07 3.72

TABLE 13-5 COMMINUTION RESULTS Karmin Exploration Inc. – Aripuanã Zinc Project

Composite

SMC Test Results Abrasion

Index

Ball Mill Work Index

(kWh/t) Dwi

(kWh/t) Mia

(kWh/t) A x b Arex Global Copper Stringer 6.11 12.6 44.9 0.1393 13.4 Arex Global Stratabound 5.34 13.1 62.7 0.0668 11.8 Ambrex Stratabound 5.42 13.2 62.4 0.0948 10.5 Arex Global Mixed 7.17 17.4 58.9 0.0952 11.2

DENSE MEDIA SEPARATION Samples of Arex Global Copper Stringer material, Arex Global Stratabound material, and Arex

Global Mixed material were riffled for DMS testing after crushing to minus 22.4 mm. Each

sample was screened to remove the minus 4.75 mm fraction before DMS testing using an

Ericsson Cone. The - 22.4, + 4.75 mm fraction of Global Stringer material was progressively

separated at specific gravities (SG) of 2.75, 2.85, and 2.95. For the Global Stratabound and

Global Mixed materials, the – 22.4, + 4.75 mm fraction was separated at specific gravities of

2.85, 2.95, and 3.05.

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Each specific gravity fraction from each composite was screened into four fractions using 19.0

mm, 13.2 mm, and 9.5 mm screens. For each of the three original samples, a sub-sample of

each size fraction was prepared and submitted for chemical analysis as well as a sub-sample

of the minus 4.75 mm fraction.

Test results indicate that DMS of the Arex Global Stringer material was unsatisfactory. Losses

of copper, silver, and gold to flotation products were high, even though low proportions of the

material reported to the float products. Assays of the size fractions of float products indicate

that there was no significant improvement in separation with decreasing particle size.

Test results indicate that DMS of the Arex Global Stratabound material was unsatisfactory.

Lead, zinc, silver, and copper losses to flotation products were excessive, although float

products represented only relatively low weight proportions of the material. Lead and silver

assays of the + 19 mm, 2.85 and 2.95 SG flotation fractions were higher than for the

immediately finer fractions, which suggests lead and silver losses could be marginally lowered

by reducing DMS feed size.

For Arex Global Stringer and Stratabound materials, there were excessive losses of valuable

metals from Mixed materials into flotation products, which represented relatively small

proportions of the material. Assays of the size fractions of the flotation products indicated that

no significant improvement in DMS results could be achieved by reducing DMS feed size.

FLOTATION TESTING OF COPPER STRINGER MATERIAL The general procedure for copper flotation was as follows:

• primary grinding, normally to 80% passing (P80) of 125 µm

• talc pre-flotation if required for material of high talc content

• copper rougher flotation at natural pH with a selective thionocarbamate collector, Cytec A3894 and frother, MIBC

• regrinding of the copper rougher concentrate to P80 of 45 µm

• two and sometimes three copper cleaner flotation stages at high pH (10.5 or above) with lime.

In most of the copper rougher and cleaner tests, copper pre-rougher or pre-rougher and pre-

cleaner flotation stages were used to recover a portion of the copper final concentrate without

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regrinding. The objectives of this procedure were to reduce regrinding requirements and to

improve the filtration characteristics of the overall final copper concentrate.

All of the composites contained talc and both talc pre-flotation and talc depression with CMC

(carboxymethyl cellulose) were tested to limit the effects of the talc in the copper flotation

stages. For the Arex Copper Stringer composites, which were relatively low in talc content,

talc depression with CMC was preferred, however, for the Ambrex Copper Stringer composite

with a high talc content, talc pre-flotation was necessary.

The strategy in testing was to achieve a high level of flotation performance from each

composite in a small number of tests. Results of each test or each small set of tests were

evaluated before adjusting conditions to try to improve flotation performance in the subsequent

test.

AREX COPPER STRINGER MATERIAL Twelve flotation tests were carried out on Arex Copper Stringer material. Copper rougher

flotation tests determined that a primary grind size to P80 of 125 µm and rougher flotation at

natural pH was effective for high copper recovery and rougher concentrate grade and were

used in subsequent tests (see Table 13-6).

TABLE 13-6 PRIMARY GRIND AND PH INVESTIGATION Karmin Exploration Inc. – Aripuanã Zinc Project

Assays Recovery (%)

Test Primary

Grind Size, P80 µm

pH Product %Cu ppm Ag Cu Ag

CS1 212 8.6 Ro Conc. 16.3 189 92.9 79.6 CS2 125 8.7 Ro Conc 16.1 210 97.3 - CS3 125 11.0 Ro Conc 18.5 245 93.4 -

The conditions of the copper rougher and cleaner tests and the results are summarized in

Table 13-7.

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TABLE 13-7 FLOTATION TESTING OF AREX COPPER STRINGER MATERIAL Karmin Exploration Inc. – Aripuanã Zinc Project

Assays Recovery (%)

Test Description Product %Cu ppm Ag Cu Ag CS4 Two-stage copper cleaner

test without regrinding with a pre-cleaner flotation stage carried out on pre-rougher concentrate to produce final concentrate

Pre-Clnr Conc

24.5 254 51.2 36.5

CS5 Two stages of copper cleaner flotation similar to Test CS4 but with talc flotation ahead of copper rougher flotation and regrinding of the combined copper rougher concentrate

Total Conc 24.0 248 76.8 54.4

CS5 Talc flotation test Talc Conc 5.8 80 2.8 2.6

CS6 Two stages of copper cleaner flotation similar to Test CS5 including regrinding, but with CMC added for talc depression and no talc pre-flotation

Pre-Clnr Conc

26.4 326 32.4 26.9

CS7 LCT using similar procedures and conditions to Test CS6, but with a further pre-cleaner stage after regrinding to produce a final copper concentrate

Total Conc 25.9 319 85.3 70.7

Pre-Clnr Conc

31.8 324 27.2 18.9

CS8 Two-stage copper cleaner flotation test with regrinding of the total rougher concentrate. As in Tests CS6 and CS7 there was no talc pre-flotation stage and CMC was used for talc depression.

Total Conc 28.7 336 82.8 66.1

Final Conc 26.3 268 88.9 82.7

CS9 Two-stage copper cleaner flotation test using a similar procedure to Test CS7, but with cleaner flotation at pH 11.8 instead of pH 11.0.

Final Conc+Cyc 6 Recycle

25.2 261 91.0 86.0

Clnr Conc 25.5 285 89.9 73.9

CS10 Two-stage copper cleaner flotation test using a similar procedure to Test CS6, but with no regrinding and cleaner flotation at pH 11.8.

Ro Conc 18.5 218 95.1 82.6

Pre-Clnr Conc

29.8 305 23.8 19.2

CS11 Talc flotation test. Sodium metabisulphite (400 g/t) was added as a depressant for copper minerals ahead of talc rougher flotation. In the reverse cleaner flotation

Talc Conc 1.5 20 1.7 1.5

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Assays Recovery (%)

Test Description Product %Cu ppm Ag Cu Ag stage, 25 g/t CMC was added to depress talc.

CS12 Pre-rougher flotation was carried out to examine the possibility of recovering copper concentrate of final concentrate grade in the initial flotation stage. In this test, flotation was carried out for 1.6 minutes with the addition of 10 g/t A3894, 20 g/t MIBC and 125 g/t CMC.

Pre-Ro Conc

29.8 286 72.8 53.8

The key conclusions from the copper rougher and cleaner tests are summarized below:

• Control of talc flotation in the copper flotation stages was necessary by pre-flotation or depression.

• Talc depression with CMC was preferred to avoid copper loss and to simplify the flowsheet.

• Regrinding of rougher concentrate was required to achieve high copper recovery and concentrate grade.

• The recovery of a portion of the copper as unground pre-cleaner concentrate did not adversely affect flotation results.

• There was no advantage in increasing pH in the copper cleaner stages from 11.0 to 11.8.

• Results of Tests CS7 and CS8 gave an indication of the results achievable from the Arex Global Stringer Composite.

• Talc pre-flotation results were greatly improved by the procedure used in Test CS11.

• Results of Test CS12 indicated that much of the copper can be recovered into a high grade copper concentrate in a single flotation stage after primary grinding.

AREX GLOBAL BLEND COPPER STRINGER MATERIAL Based on the expected grades from the Arex reserve, an Arex Global Blend Stringer composite

was prepared and additional flotation tests were conducted. The flotation test conditions and

results for the Arex Global Blend Stringer composite are shown in Table 13-8.

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TABLE 13-8 FLOTATION TESTING OF AREX GLOBAL BLEND STRINGER MATERIAL

Karmin Exploration Inc. – Aripuanã Zinc Project

Assays Recovery (%)

Test Description Product %Cu ppm Ag Cu Ag GBCS1 Copper rougher and

cleaner test similar to Test CS6 with pre-rougher and pre-cleaner flotation stages

Pre-Clnr Conc

28.2 314 24.1 20.4

Total Conc 26.7 313 75.7 67.5

GBCS2 Locked cycle copper rougher and cleaner flotation with pre-rougher and pre-cleaner stages similar to CS6

Final Conc 28.9 309 87.2 -


26.7 296 91.6 -

GBCS3 Locked cycle copper rougher and cleaner flotation with regrinding of total rougher concentrate

Final Conc 26.8 275 89.3 74.0


25.4 267 91.8 77.8

GBCS4 A pre-rougher flotation test similar to CS12

Pre-Ro Conc

28.7 294 75.9 52.6

The conclusions from flotation testing of the Arex Global Blend Stringer materials were:

• Test GBCS1 produced high grade copper concentrates, but copper recovery was low due to copper reporting to intermediate products.

• LCT results for Tests GBCS2 and GBCS3 indicated that high grade copper concentrate can be produced with relatively high copper recovery. Comparison of Tests GBCS2 and GBCS3 showed that there is no advantage in regrinding the total copper rougher concentrate.

• Results from Test GBCS4 indicated that a high proportion of the copper can be recovered into a high grade copper concentrate in a single flotation stage after primary grinding.

VARIABILITY TESTS ON AREX COPPER STRINGER MATERIAL Variability testing to investigate the behaviour of Arex Copper Stringer low and high grade

materials was also conducted, and the test conditions and results are presented in Table 13-

9.

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TABLE 13-9 VARIABILITY TESTS ON AREX COPPER STRINGER MATERIAL Karmin Exploration Inc. – Aripuanã Zinc Project

Assays Recovery (%)

Test Description Product %Cu ppm Ag Cu Ag VCSH1 Tests on High Grade

composite to examine pre-rougher followed by pre-cleaner flotation

Pre-Clnr Conc 22.7 150 68.6 49.9

Pre-Clnr Conc+ Ro Conc

14.8 122 97.9 88.8

VCSH2 Tests on High Grade composite to examine pre-rougher flotation alone

Pre-Ro Conc1 30.9 186 64.8 39.5

Total Pre-Ro Conc 28.3 186 86.2 57.5

VCSM1 Tests on Medium Grade composite to examine pre-rougher and pre-cleaner flotation

Pre-Clnr Conc 26.9 156 72.0 59.1

Pre-Ro Conc 28.2 - 93.2 -

VCSM2 Tests on Medium Grade composite to examine pre-rougher and pre-cleaner flotation and LCT performance

Final Conc 28.6 155 92.5 69.1


23.7 142 96.3 79.8

VCSM3 Tests on Medium Grade composite to examine pre-rougher and pre-cleaner flotation and LCT performance

Final Conc 28.2 175 87.8 72.0


26.5 171 92.8 79.0

VCSL1 Tests on Low Grade composite to examine LCT performance

Final Conc 28.5 336 91.6 80.6


25.1 303 94.5 85.2

VCSL2 Tests on Low Grade composite to examine LCT performance and pre-rougher flotation

Pre-Ro Conc 30.5 260 73.5 53.9

The conclusions from variability testing of the Arex Copper Stringer materials are:

• In Tests VCSH1 and VCSM1, pre-rougher and rougher flotation were performed followed by regrinding the rougher concentrate and combining the pre-rougher concentrate and rougher concentrate. Pre-cleaner flotation was then performed on the combined pre-rougher and reground rougher concentrate. This procedure produced an unsatisfactorily low grade concentrate from the High Grade composite.

• Pre-rougher flotation from the High Grade and Low Grade composites in Tests VCSH2 and VCSL2, respectively produced high grade copper concentrates with high copper recoveries.

• Results obtained from Medium and Low Grade Copper Stringer composites in Tests VCSM2 and VCSM3 were at least as favourable as results from LCT on the Global and Global Blend Copper Stringer composites.

• Pre-rougher flotation in Tests VCSM2 and VCSM3 resulted in high grade copper concentrates at relatively high copper recoveries.

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AMBREX COPPER STRINGER MATERIAL Flotation testing of the Ambrex Copper Stringer composite was also conducted and considered

as a variability test. The test conditions and results are presented in Table 13-10.

TABLE 13-10 FLOTATION TESTS ON AMBREX COPPER STRINGER MATERIAL


Assays Recovery (%)

Test Description Product %Cu ppm Ag Cu Ag

Tests without talc pre-flotation AMCS1 Primary grind to P80 of 125

µm, copper rougher flotation

Ro Conc 10.7 1.3 85 93.1

AMCS2 Primary grind to P80 of 106 µm, copper rougher and cleaner flotation with regrinding of total rougher concentrate and attempted lead flotation from copper rougher tailings

Cu Clnr Conc

13.5 0.8 84 70.9

Pb Rougher

3.2 9.7 166 6.2

Tests with talc pre-flotation AMCS3 Primary grind to P80 of 106

µm, rougher and two-stage cleaner with regrinding of total rougher concentrate. Adjustments made to talc flotation time and additions of CMC and collector in copper flotation.

Talc Conc 0.7 10 3.2 4.2

Cu 2nd Clnr Conc

24.2 167 81.9 55.3

AMCS4 Primary grind to P80 of 106 µm, rougher and two-stage cleaner with regrinding of total rougher concentrate. Adjustments made to talc flotation time and additions of CMC and collector in copper flotation.

Talc Conc 0.6 10 3.1 4.8

Cu 2nd Clnr Conc

26.2 180 81.1 52.2

AMCS5 Primary grind to P80 of 106 µm, rougher and two-stage cleaner with regrinding of total rougher concentrate. Adjustments made to talc flotation time and additions of CMC and collector in copper flotation.

Talc Conc 0.5 10 2.4 4.6

Cu 2nd Clnr Conc

27.1 212 89.4 63.9

AMCS6 Similar to AMCS5 but with primary grind to P80 of 125 µm

Talc Conc 0.7 10 3.7 3.1

Cu 2nd Clnr Conc

29.8 220 82.6 37.9

Cu 1st Clnr Conc

26.7 221 88.7 45.8

AMCS7 Talc Conc 0.6 12 3.2 5.4

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Assays Recovery (%)

Test Description Product %Cu ppm Ag Cu Ag Similar to AMCS6 but with pre-rougher and pre-cleaner stages to produce final copper concentrate

Cu Pre-Clnr Conc

31.7 160 35.7 16.4

Cu Pre-Clnr + 2CC

28.9 211 86.2 57.6

Cu Pre-Clnr + 1CC

26.1 212 90.8 67.3

AMCS8 LCT using AMCS7 procedure

Talc Conc 0.8 10 3.9 5.4

Cu Pre-Clnr + 2CC

30.2 190 83.7 54.9

Cu Pre-Clnr + 2CC + Recycle Products

29.0 206 87.8 65.2

The conclusions from flotation testing of the Ambrex Copper Stringer materials are:

• Talc pre-flotation was necessary for treatment.

• Use of copper pre-rougher and pre-cleaner flotation stages to produce final concentrate without regrinding had no adverse effect on copper flotation performance.

• It may be possible to improve copper flotation performance marginally by reducing the primary grind size from P80 of 125 µm to 106 µm.

FLOTATION TESTING OF MIXED MATERIALS The main objective was to develop in a small number of tests a flowsheet to recover the copper,

lead, and zinc into separate high grade concentrates at high recoveries. Two different

approaches were used for recovering copper and lead: bulk copper-lead flotation followed by

copper-lead separation and sequential copper and lead flotation. Talc flotation was necessary

before copper and lead flotation.

Initially, flotation testing was carried out on the Global Mixed Composite, however, testing of

this composite was terminated and continued on the Global Blend Copper-Lead-Zinc

composite which better represented the mixed material to be expected from the Arex deposit.

AREX GLOBAL MIXED MATERIAL A total of 13 flotation tests were carried out on the Arex Global Mixed composite before

termination of testing and the test conditions and results are presented in significant detail in

the 2015 Votorantim Study. The main conclusions from testing the Arex Global Mix composite

are as follows:

• Talc flotation was required ahead of copper lead and zinc flotation, because talc cannot be effectively depressed.

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• Sequential copper and lead flotation was more effective than bulk copper-lead flotation, followed by copper-lead separation for recovering copper and lead.

• Using the sequential copper, lead and zinc flowsheet, it was possible to recover some of the copper and zinc into relatively high grade concentrates in pre-rougher flotation stages.

• High grade lead concentrate could be produced by pre-rougher and pre-cleaner flotation stages without regrinding.

• Although conditions were not optimized, test results showed that relatively high recoveries of copper, lead, and zinc were achieved from material into high grade concentrates.

AREX GLOBAL BLEND COPPER-LEAD-ZINC MATERIAL Based on the expected grades from the Arex deposit, an Arex Global Blend Copper-Lead-Zinc

composite was prepared and additional flotation tests were conducted. The flotation test

conditions and results are presented in significant detail in the 2015 Votorantim Study. The

conditions had been identified in previous testing of the Arex Global Mixed material and the

sequential flotation of talc, copper, lead, and zinc was optimized through LCT. The LCT test

conditions and results are summarized in Table 13-11, below.

The main conclusions from flotation testing of the Arex Global Blend Copper-Lead-Zinc

composite are as follows:

• Copper, lead, and zinc flotation results were improved by reducing the primary grind size from P80 of 106 µm to P80 of 75 µm.

• High grade zinc concentrate can be produced from lead circuit tailings in a zinc pre-rougher flotation stage.

• At a primary grind size of P80 of 75 µm, very good copper flotation results were achieved without regrinding, although the recovery of zinc to copper concentrate was slightly higher without regrinding.

• Lead flotation results were lower without regrinding, while the effect of regrinding on zinc flotation results requires further investigation.

• Results of Test GBCPZ8 indicated that the metallurgical performance was achievable.

• Use of untreated process water for flotation resulted in high losses of valuable metals to the talc concentrate because of contained residual collector.

• Process water was effectively treated with activated carbon.

• The addition of 600 g/t of copper sulphate can be reduced by 20% without significantly affecting zinc flotation results.

TABLE 13-11 LCT OF AREX GLOBAL BLEND COPPER-LEAD-ZINC MATERIAL Karmin Exploration Inc. – Aripuanã Zinc Project

Assays Recovery (%)

Test Description Product %Cu %Pb %Zn ppm Ag Cu Pb Zn AgGBCPZ5 Zinc pre-rougher flotation was

carried out and the pre-rougher concentrate was combined with the reground zinc rougher concentrate. A pre-cleaner flotation stage was conducted on the combined products to produce a final zinc concentrate. Two zinc cleaning stages were performed on the pre-cleaner tailings. In each of the copper, lead and zinc sections, the second cleaner tailings and cleaner scavenger products were recycled to first cleaner feed.

Cu Conc 26.7 0.5 1.4 451 59.6 0.3 0.3 9.4

Pb Conc 2.4 45.8 7.6 1009 16.4 88.3 4.9 63.9

Zn Conc 0.2 0.4 54.1 38 3.0 1.7 82.9 5.7

GBCPZ6 Adjustments to Test GBCPZ5: slightly increased collector addition to copper cleaner circuit to improve copper recovery, elimination of lead cleaner-scavenger to improve lead concentrate grade, and zinc pre-rougher concentrate to final concentrate to simplify the zinc circuit.

Cu Conc 31.2 0.6 1.6 522 56.9 0.3 0.3 8.8

Pb Conc 3.1 49.3 7.6 1117 18.3 88.1 4.8 61.6

Zn Conc 0.3 0.7 51.4 48 3.9 2.8 79.5 6.5

GBCPZ7 Same procedure and conditions as Test GBCPZ6, but at a primary grind size of P80 = 75 µm.

Cu Conc 27.4 0.8 2.2 576 72.8 0.6 0.6 14.2

Pb Conc 1.7 52.3 7.4 1015 10.1 88.6 4.5 57.3

Zn Conc 0.2 0.4 53.0 39 2.6 1.8 77.8 5.3

GBCPZ8 Same procedure and conditions as Test GBCPZ7, but with a stronger frother in zinc cleaner flotation to reduce zinc loss to cleaner tailings.

Cu Conc 28.8 1.0 2.0 795 66.7 0.6 0.5 16.2

Pb Conc 1.9 52.8 7.9 1087 11.7 88.6 4.6 57.7

Zn Conc 0.3 0.5 53.0 45 4.4 2.5 83.9 6.4

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Karm

in E

xplo

ration

Inc. – A

ripu

anã Z

inc P

roject, P

roject #2567

Tech

nical R

epo

rt NI 43-101 – M

arch 1, 2017

Pag

e 13-16

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FLOTATION TESTING OF STRATABOUND MATERIALS Testing of the Arex Global Stratabound material focused initially on recovering high grade lead

and zinc concentrates. Because of the significant copper content of this composite (0.14%

Cu), the scope of testing was extended to examine recovery of a copper concentrate product

from the composite sample. Following reassessment of expected production from the Arex

deposit, testing of the Arex Global Stratabound material was terminated and continued on the

Global Blend Copper-Lead-Zinc composite. One flotation test was conducted on the Arex High

Grade Stratabound material to briefly examine copper, lead, and zinc flotation.

AREX GLOBAL STRATABOUND MATERIAL Several flotation tests were carried out on the Arex Global Stratabound composite before

termination of testing and the test conditions and results are presented in significant detail in

the 2015 Votorantim Study. The main conclusions from the testing of the Arex Global

Stratabound composite are as follows:

• Talc pre-flotation was required to prevent dilution of the lead concentrate with talc.

• It was necessary to recover copper into a separate concentrate product in order to produce a high grade lead concentrate.

• Approximately half of the copper in the composite could be recovered into a saleable copper concentrate product, allowing the production of a high grade lead concentrate.

• Sequential copper and lead flotation was the most effective procedure for producing separate copper and lead concentrates.

• Lead flotation performance was improved by rougher concentrate regrinding - regrinding to P80 of 30 µm produced better results than regrinding to P80 of 45 µm.

• The sodium isopropyl xanthate collector was found to be more effective than the Cytec 3418A collector for lead flotation, while the Cytec A208 collector proved more effective than sodium isobutyl xanthate for zinc flotation.

Despite the discontinuation of Arex Stratabound development, Ambrex material is essentially

a Zinc-Lead Stratabound material, with very low copper grades. Therefore, Stratabound

flotation development continued with Ambrex Stratabound samples.

AMBREX STRATABOUND MATERIAL

Two flotation tests were initially conducted on Ambrex Stratabound Composite 2 material.

Because the copper content of this composite was excessive, a more representative sample,

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Ambrex Stratabound Composite 3 was prepared. Fourteen additional flotation tests were then

conducted on Ambrex Stratabound Composite 3 material.

The flotation test conditions and results on Ambrex Stratabound Composite 3 material are

presented in significant detail in the 2015 Votorantim Study. The conditions had been identified

in previous testing of the Arex Stratabound composite and the sequential flotation of talc, lead,

and zinc was optimized through LCT. The LCT test conditions and results are summarized in

Table 13-12, below, and compared with batch flotation Test AMSB4. Test AMSB16 produced

lower lead and zinc results than Test AMSB4. It appears that fine regrinding of the lead

cleaner-scavenger concentrate was inappropriate, possibly resulting in overgrinding of lead

minerals and producing fine iron sulphide particles which were difficult to depress.

The main conclusions from flotation testing of the Ambrex Stratabound material were as

follows:

• Talc pre-flotation was required for effective lead and zinc flotation.

• High lead recovery into a high grade lead concentrate was difficult and the main reasons for poor lead flotation results were very fine association of galena with other minerals and difficulty in depressing iron sulphide minerals.

• Lead flotation performance could be improved slightly by the use of sodium cyanide as a depressant in place of sodium metabisulphite.

• Lead flotation performance could be improved marginally by further regrinding after rougher concentrate regrinding to P80 of 30 µm, however, lead flotation results are sensitive to overgrinding.

• High zinc recovery into a relatively high grade zinc concentrate was achieved by rougher flotation, regrinding of the total zinc rougher concentrate, and two cleaning stages.

• The production of high grade zinc concentrate from a zinc pre-rougher flotation stage may not be possible.

TABLE 13-12 BATCH AND LCT OF AMBREX STRATABOUND COMPOSITE 3 MATERIAL Karmin Exploration Inc. – Aripuanã Zinc Project

Assays Recovery (%)

Test Description Product %Pb %Zn ppm Ag Pb Zn Ag

Batch AMSB4 Talc rougher flotation and lead and zinc

rougher and cleaner flotation. The total lead and zinc rougher concentrates were reground.

Talc Conc 1.7 2.3 64 2.7 1.5 3.0

Pb 2nd Clnr Conc 48.5 7.7 1541 77.3 4.8 72.8

Zn 2nd Clnr Conc 2.7 50.3 93 11.9 88.6 12.3

LCT

AMSB16 Similar test conditions to those in Test AMSB4, with the exception of an additional regrind stage on the lead cleaner-scavenger concentrate.

Talc rougher flotation after primary grind to P80 of 75 µm.

Lead rougher flotation followed by regrinding of the total lead rougher concentrate to P80 of 30 µm. Lead cleaner and cleaner-scavenger flotation were carried out on the regrind product. The lead cleaner concentrate was upgraded in the second cleaning stage to produce final concentrate. The lead cleaner-scavenger concentrate was reground to P80 of 18 µm and directed to the first cleaning stage of the next cycle.

Zinc rougher flotation, regrinding of the total zinc rougher concentrate and two cleaner flotation stages.

Talc Conc 1.7 2.2 67 2.8 1.4 3.2

Pb Conc 48.4 7.1 1869 65.5 3.6 70.2

Zn Conc 2.6 49.0 86 12.0 85.6 11.0

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Karm

in Exploration Inc. – Aripuanã Zinc Project, Project #2567

Technical Report N

I 43-101 – March 1, 2017

Page 13-19

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SUMMARY OF FLOTATION TESTING Based on the flotation test program completed to date, the concentrate grade and recovery

achieved from processing Stringer and Stratabound materials are summarized in Tables 13-

13 and 13-14, respectively.

TABLE 13-13 CONCENTRATE GRADES AND RECOVERY FOR STRINGER MATERIALS


Deposit Cu Grade (%) Cu Recovery (%) Ag Recovery (%) Arex 25.4 91.8 77.8

Ambrex 29.0 87.8 65.2

TABLE 13-14 CONCENTRATE GRADES AND RECOVERY FOR STRATABOUND MATERIALS


Deposit Metal/Concentrate Grade (%) Metal Recovery (%) Ag Recovery (%)

Arex Cu 28.8 66.7 16.2 Pb 52.8 88.6 57.7 Zn 53.0 83.9 6.4

Ambrex (2) Cu (1) -- -- --

Pb 48.5 77.3 72.8 Zn 50.3 88.6 12.3

Notes:

(1) Very low feeding grade (2) Based on test results from Test AMSB4, not LCT Test AMSB16.

MULTI-ELEMENT ANALYSES OF CONCENTRATES Multi-element chemical analysis were conducted on concentrate samples produced from the

flotation tests listed in Table 13-15 and the analyses are reported and shown in detail in the

2015 Votorantim Study.

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TABLE 13-15 FLOTATION CONCENTRATES FOR MULTI-ELEMENT ANALYSES


Composite Test Concentrate Global Blend Copper Stringer GBSC3 Copper Cu Conc 1 Medium Grade Copper Stringer VCSM3 Copper Cu Conc 2 Global Blend Copper-Lead-Zinc GBCPZ5 Copper Cu Conc 3 Global Blend Copper-Lead-Zinc GBCPZ8 Copper Cu Conc 4 Global Blend Copper-Lead-Zinc GBCPZ5 Lead Pb Conc 1 Global Blend Copper-Lead-Zinc GBCPZ8 Lead Pb Conc 2 Global Blend Copper-Lead-Zinc GBCPZ5 Zinc Zn Conc 1 Global Blend Copper-Lead-Zinc GBCPZ8 Zinc Zn Conc 2

No deleterious elements that could have a significant effect on potential extraction were

identified.

THICKENING TESTS (OUTOTEC) Thickener test work was conducted on concentrate and tailings samples to determine

flocculant type and dosage, overflow (O/F) clarity, underflow (U/F) density, and U/F yield

stress. A 99 mm diameter Supaflo High Rate Thickener test rig was used for testing. The

BASF Magnafloc 10 flocculant was selected as single flocculant for all samples for the dynamic

test work, based on Outotec’s experience with similar projects.

The results from the thickening test work are summarized in Table 13-16 and showed that the

materials can be effectively thickened to more than the specified targets by high rate

thickening.

TABLE 13-16 SOLIDS LOADING AND UNDERFLOW DENSITY FOR OVERFLOW CLARITY < 100 MG/L


Parameters Cu Conc Pb Conc Zn Conc Talc Conc Cu Tails Zn Tails Solids loading (t/m2h)

0.25 0.25 0.25 1.00 1.50 1.50

Feed density (% solids) 21 20 21 14 21.5 23

U/F density (% solids) 71-80 78-81 76-79 47-50 62-65 65-68

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FILTRATION TESTS (OUTOTEC) Belt Filter test work was conducted on a range of tailings samples. If the moisture target was

not met for the tailings samples, then Fast operating Filter Press (FFP) technology was to be

tested. Also, Pressure Filter (PF) test work was conducted on various concentrates to

determine the moisture content of the cake, cake thickness, maximum filtration rate, and cake

handling. A Buchner funnel test kit and Labox 100 were used for testing and the test results

are summarized in Table 13-17.

TABLE 13-17 FILTRATION TEST RESULTS Karmin Exploration Inc. – Aripuanã Zinc Project

Material Feed Density (%) Flow (kg/m2h) Moisture (%) Filter Type

Cu Conc 1 70 1288 12.0 Press 21 539 11.3 Press

Cu Conc 2 75 1205 11.1 Press 21 543 10.3 Press

Pb Conc 76 1638 13.9 Press 20 478 11.1 Press

Zn Conc 77 1276 11.9 Press 21 411 10.7 Press

Talc 50 376 11.8 Press 25 258 11.8 Press

Zn Tailings 67 1102 15.0 Belt Zn Tailings U/F 70 6190 11.3 Belt

Zn Tailings + Talc 60 797 15.8 Belt Zn Tailing O/F + Talc 58 374 15.0 Press

Cu Tailings 65 806 15.9 Belt Cu Tailings O/F 53 174 14.9 Press Cu Tailings U/F 53 5300 14.4 Belt

CONCLUSIONS AND RECOMMENDATIONS 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.

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.

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Additional test work should be carried out to determine equipment specifications for

comminution, regrinding, and filtration, to optimize flotation reagent consumption, to optimize

Zn/Pb recovery circuits on Ambrex materials, to define methods of water recirculation, and to

conduct variability tests.

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14 MINERAL RESOURCE ESTIMATE Geological interpretation and Mineral Resource estimation were completed by Votorantim and

reviewed by RPA. Modelling and resource work for Ambrex, Link, and Arex was prepared

using all data available at October 20, 2016. Documentation to support the Arex, Ambrex, and

the Link Zone Mineral Resource estimates was provided in Lopes (2016). While the Link Zone

is discussed separately, the Mineral Resource results for the Link Zone are grouped with

Ambrex. The Votorantim resource modelling work and results were verified and accepted by

RPA. Table 14-1 summarizes Mineral Resources at the Project.

TABLE 14-1 SUMMARY OF MINERAL RESOURCES – OCTOBER 20, 2016 Karmin Exploration Inc. – Aripuanã Zinc Project


Grade Metal Tonnes Zn Pb Cu Au Ag Zn Pb Cu Au Ag

(MT) (%) (%) (%) (g/t) (g/t) (M lb) (M lb) (M lb) (K Oz) (M Oz) Measured 7.20 6.43 2.40 0.25 0.25 63.9 1,025 382 39.9 58 14.9 Indicated 8.70 5.43 2.09 0.10 0.25 48.0 1,043 402 18.7 71 13.4 Measured and Indicated 15.9 5.89 2.23 0.17 0.25 55.2 2,068 784 58.6 129 28.3

Inferred 11.3 7.43 2.79 0.10 0.38 65.7 1,844 692 24.2 137 23.8

Stringer Mineralization Tonnes Zn Pb Cu Au Ag Zn Pb Cu Au Ag (MT) (%) (%) (%) (g/t) (g/t) (M lb) (M lb) (M lb) (K Oz) (M Oz)

Measured 1.82 0.27 0.11 1.88 1.42 19.0 10.7 4.6 75.5 83 1.1 Indicated 0.81 0.14 0.07 1.27 1.54 14.5 2.6 1.3 22.7 40 0.4 Measured and Indicated 2.63 0.23 0.10 1.70 1.46 17.6 13.3 5.8 98.2 123 1.5

Inferred 4.28 0.1 0.1 1.0 3.4 11 5.1 7.0 96.0 470 1.5

Stratabound + Stringer Mineralization Tonnes Zn Pb Cu Au Ag Zn Pb Cu Au Ag (MT) (%) (%) (%) (g/t) (g/t) (M lb) (M lb) (M lb) (K Oz) (M Oz)

Measured 9.04 5.19 1.94 0.58 0.49 54.9 1,036 387 115 141 16.0 Indicated 9.52 4.99 1.92 0.20 0.36 45.1 1,046 403 41 111 13.8 Measured and Indicated 18.6 5.09 1.93 0.38 0.42 49.9 2,082 790 157 252 29.8

Inferred 15.5 5.4 2.0 0.4 1.2 51 1,849 699 120 607 25.3 Notes:

1. CIM definitions were followed for Mineral Resources. 2. Mineral Resources are reported using a US$48/t NSR block cut-off grade.

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3. The NSR is calculated based on metal prices of US$1.12 per lb Zn, US$0.84 per lb Pb, US$2.93 per lb Cu, US$1233 per ounce Au, and US$18.5 per 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.

RESOURCE DATABASE Votorantim maintains the resource database in GeoExplo software. RPA received data from

Votorantim 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 Maptek’s

Vulcan software version 9.0 (Vulcan), Datamine Studio RM version 1.2.47.0 and Aranz’s

Leapfrog Geo software version 3.1.1 for review.

Section 12, Data Verification, describes the resource database verification steps made by

RPA. RPA is of the opinion that the drill hole database is valid and suitable to estimate Mineral

Resources for the Project.

GEOLOGICAL INTERPRETATION

AREX, AMBREX AND LINK ZONE Wireframes of the stratabound and stringer mineralization for Arex, Ambrex, and Link Zone

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

Votorantim and 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. Compared to the previous estimate reviewed

by RPA in 2012, significantly more information supporting the interpretation has been collected

including the incorporation of structural data from oriented core.

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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 folds to dip 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.

Mineralization at Arex strikes at approximately 110o 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 between two metres and

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 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

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.

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Figure 14-1 shows a 3D perspective view of the wireframes and Figures 14-2, 14-3, and 14-4

show example sections of Ambrex, Arex, and Link Zones, 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-sediments and meta-

volcanics 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 Votorantim is low when compared

with the NSR cut-off value and has caused the inclusion of low grade samples.

A total of 26 and 23 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 22

and 21 individual wireframes were constructed over Arex to represent the stratabound and

stringer zones, respectively.

Overall, RPA finds the wireframes to be reasonably constructed, however, RPA notes that the

mineralization shapes have changed with each model update, suggesting that although this

model is based on a sound geological interpretation and a large body of high quality work

performed by Votorantim, on a local scale, multiple possible interpretations for the resources

remain, particularly at Ambrex. In addition, RPA notes areas, particularly in Ambrex, where

the mineralization wireframes have been extrapolated over large distances, greater than 150

m in some instances. RPA makes the following recommendations with regard to geological

modelling:


• Define mineralization envelopes using an NSR-cut-off value as opposed to a single grade variable. Determine an NSR cut-off value for modelling that allows continuity of mineralization as well as limiting the incorporation of waste in the mineralization envelopes.

• For Mineral Resource estimation purposes, apply mineralization wireframe extrapolation limits consistent with the Measured, Indicated, and Inferred classification criteria.

AmbrexLink Zone

Arex

Drill Hole Trace

Stratabound

Legend:

Stringer

1000 Metres

March 2017 Source: RPA, 2017.

3D Isometric View ofGeological Wireframes




Figure 14-1

14-5

ww

w.rp

acan

.co

m

< 1

Legend:

Zn % (Right)Cu % (Left)

2 - 3

1 - 2

3 - 5

5 -10

10 - 15

>15

Stratabound

Legend:

Stringer

0 10 50

Metres

20 30 40


Surface

Drill Hole Trace

Ambrex Geological Model




Figure 14-2

14-6

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< 1

Legend:


2 - 3

1 - 2

3 - 5

5 -10

10 - 15

>15

Stratabound

Legend:

Stringer

0 10 50

Metres

20 30 40


Surface

Drill Hole Trace

Arex Geological Model




Figure 14-3

14-7

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< 1

Legend:


2 - 3

1 - 2

3 - 5

5 -10

10 - 15

>15

Stratabound

Legend:

Stringer

0 10 50

Metres

20 30 40


Surface

Drill Hole Trace

Link ZoneGeological Model




Figure 14-4

14-8

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STATISTICAL ANALYSIS Assay values located inside the individual wireframes were tagged with domain identifiers.

Basic statistics by area are summarized in Table 14-2. Values have been length weighted.

TABLE 14-2 BASIC STATISTICS OF RESOURCE ASSAYS Karmin Exploration Inc. – Aripuanã Zinc Project

Area Zone Element No. Samples No.

Absent Min Max Mean Var Stdev CV

Arex

Stra

tabo

und Zn (%) 4806 145 0.01 48.88 5.14 49.36 7.03 1.37

Pb (%) 4806 145 0.00 34.40 1.87 9.29 3.05 1.63 Au (g/t) 4226 725 0.00 10.56 0.24 0.38 0.62 2.57 Ag (g/t) 4791 160 0.01 2180.00 50.96 10581.49 102.87 2.02

Strin

ger Zn (%) 2989 48 0.00 21.00 0.21 1.13 1.06 5.04

Pb (%) 2989 48 0.00 27.50 0.08 0.36 0.60 7.44 Au (g/t) 2956 81 0.00 56.00 1.25 9.27 3.04 2.44 Ag (g/t) 2962 75 0.05 536.00 15.90 1009.15 31.77 2.00

Ambr

ex

Stra

tabo

und Zn (%) 9878 88 0.00 60.90 4.85 40.71 6.38 1.32

Pb (%) 9878 88 0.00 42.81 1.79 9.66 3.11 1.74 Au (g/t) 7806 2160 0.00 6.22 0.19 0.12 0.34 1.81 Ag (g/t) 9878 88 0.05 1240.00 42.70 7070.44 84.09 1.97

Strin

ger Zn (%) 2615 78 0.00 14.50 0.20 0.97 0.99 5.00

Pb (%) 2615 78 0.00 7.95 0.08 0.15 0.39 4.64 Au (g/t) 2607 86 0.00 138.90 1.29 31.36 5.60 4.36 Ag (g/t) 2605 88 0.05 605.00 10.01 415.60 20.39 2.04

Link

Zon

e

Stra

tabo

und Zn (%) 2760 96 0.00 45.65 4.65 54.42 7.38 1.59

Pb (%) 2760 96 0.00 28.20 1.72 10.00 3.16 1.84 Au (g/t) 2717 139 0.00 16.95 0.29 0.77 0.88 3.08 Ag (g/t) 2739 117 0.25 746.00 34.80 4393.59 66.28 1.90

Strin

ger Zn (%) 1812 0 0.00 4.34 0.03 0.03 0.18 6.17

Pb (%) 1812 0 0.00 2.91 0.02 0.01 0.11 6.97 Au (g/t) 1812 0 0.00 68.90 0.71 6.81 2.61 3.67 Ag (g/t) 1812 0 0.25 211.00 3.66 64.68 8.04 2.20

COMPOSITING Sample lengths range between 0.5 m and 1.5 m within the wireframe models. Most samples

are one metre in length. Given these distributions, and considering the width of mineralization,

one metre composite lengths were chosen, using target compositing. Target compositing

distributes each drill hole intercept into equal parts, keeping as close as possible to the target

length of one metre. Resource composites for both deposits range in length between 0.5 m

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and 1.49 m. Where iron and gold assays were not taken, the values were ignored in the

compositing process. This is also true for missing silver values within the Ambrex deposit. All

other missing values were assigned a value of zero during the compositing process. RPA

considers this compositing technique to be appropriate but recommends that composite

samples be density weighted in future. Basic statistics of composites by deposit are

summarized in Table 14-3.

TABLE 14-3 BASIC STATISTICS OF RESOURCE COMPOSITES Karmin Exploration Inc. – Aripuanã Zinc Project

Area Type Grade Count Minimum Maximum Mean Stdev Variance CV

Arex

Stra

tabo

und Zn (%) 2624 0.00 47.51 4.86 6.27 39.27 1.29

Pb ((%) 2624 0.00 20.60 1.77 2.69 7.24 1.52 Cu (%) 2624 0.00 16.09 0.32 1.00 1.01 3.14 Au (g/t) 2624 0.00 8.64 0.20 0.49 0.24 2.47 Ag (g/t) 2624 0.00 1550.71 48.07 91.49 8371.21 1.90

Strin

ger

Zn (%) 1597 0.00 16.73 0.22 0.92 0.84 4.23 Pb ((%) 1597 0.00 11.27 0.08 0.44 0.19 5.32 Cu (%) 1597 0.00 20.44 1.45 2.28 5.18 1.57 Au (g/t) 1597 0.00 56.00 1.20 2.71 7.32 2.26 Ag (g/t) 1597 0.00 373.09 15.39 28.24 797.36 1.83

Ambr

ex

Stra

tabo

und Zn (%) 5115 0.00 46.78 4.78 5.89 34.69 1.23

Pb ((%) 5115 0.00 29.53 1.76 2.81 7.89 1.59 Cu (%) 5115 0.00 3.19 0.06 0.13 0.02 2.23 Au (g/t) 5115 0.00 5.36 0.15 0.30 0.09 2.00 Ag (g/t) 5115 0.00 1035.49 42.10 75.73 5735.41 1.80

Strin

ger

Zn (%) 1436 0.00 12.83 0.19 0.90 0.81 4.79 Pb ((%) 1436 0.00 6.47 0.08 0.35 0.12 4.39 Cu (%) 1436 0.00 10.96 0.67 0.99 0.98 1.49 Au (g/t) 1436 0.00 126.95 1.22 4.86 23.64 3.98 Ag (g/t) 1436 0.00 492.86 9.49 18.07 326.40 1.90

Link

Zon

e

Stra

tabo

und Zn (%) 1424 0.00 43.44 4.58 6.85 46.86 1.50

Pb ((%) 1424 0.00 21.00 1.69 2.90 8.39 1.71 Cu (%) 1424 0.00 10.83 0.13 0.62 0.38 4.67 Au (g/t) 1424 0.00 15.05 0.28 0.79 0.62 2.84 Ag (g/t) 1424 0.00 696.65 34.01 60.32 3639.01 1.77

Strin

ger

Zn (%) 910 0.00 3.14 0.03 0.17 0.03 5.63 Pb ((%) 910 0.00 1.93 0.02 0.09 0.01 5.90 Cu (%) 910 0.00 5.62 0.37 0.61 0.37 1.66 Au (g/t) 910 0.00 44.09 0.71 1.98 3.90 2.78 Ag (g/t) 910 0.25 140.14 3.66 6.91 47.79 1.89

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CUTTING HIGH GRADE VALUES Where the assay distribution is skewed positively, erratic high grade assay values can have a

disproportionate effect on the average grade of a deposit. One method of treating these

outliers in order to reduce their influence on the average grade is to cut or cap them at a

specific grade level. In the absence of production data to calibrate the cutting level, inspection

of the assay distribution can be used to estimate a “first pass” cutting level.

AMBREX Top cutting was applied to selected variables by Votorantim prior to compositing at Ambrex.

Chosen top-cuts were based on a review of histograms, probability plots, and decile analysis,

which were prepared for individual wireframes.

RPA reviewed the resource assays within the wireframe domains using histograms, decile

analysis, and visual inspection of high grade values on vertical sections. RPA considers

Votorantim’s treatment of high grade values at Ambrex to be acceptable. Table 14-4 outlines

the top cuts applied to the assays within individual wireframes (‘corpos’) at Ambrex.

TABLE 14-4 CAPPING VALUES AT AMBREX Karmin Exploration Inc. – Aripuanã Zinc Project

Corpo Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Corpo Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t)

Stratabound Stringer

1 1 1 101 2 10 25 102 3 0.35 103 4 40 15 0.23 104 5 3.5 0.12 40 108 0.15 60 6 11 5 0.5 75 109 7 30 10 0.15 0.5 110

11 0.5 114 12 5 3 45 116 13 4 117 0.35 3.8 14 1.2 2 118 2 9 15 6 119 16 9 3 122 0.4 17 0.65 2 126 18 6 6 0.45 0.7 128 19 10 2.5 141 20 15 8 0.15 0.9 130 143

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Corpo Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Corpo Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Stratabound Stringer

21 1.2 2.3 154 22 0.55 1 290

AREX Top cutting was applied to selected variables by Votorantim prior to compositing at Arex.

Chosen top-cuts were based on a review of histograms, probability plots, and decile analysis,

which were prepared for individual wireframes, or wireframe groups.

RPA reviewed the resource assays within selected wireframe domains using histograms,

decile analysis, and visual inspection of high grade values on vertical sections. RPA considers

Votorantim’s treatment of high grade values at Arex to be acceptable. Table 14-5 outlines the

top cuts applied to the assays within individual wireframes (‘corpos’) at Arex.

TABLE 14-5 CAPPING VALUES AT AREX Karmin Exploration Inc. – Aripuanã Zinc Project

Corpo Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Corpo Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t)

Stratabound Stringer

1 1.3 160 101 1 4.42 2 3 0.1 115 150 171 3 80 151 171 4 0.45 152 171 5 153 171 6 3 0.8 0.04 160 5 2 116 7 1.35 161 5 2 116 8 104 0.5 9 0.165 105 0.8 0.4 10 106 1.5 5.5 50 107 51 108 0.3 3.3 52 109 0.8 53 110 0.2 4.3 10 54 111 55 112 0.6 7 56 113 57 114 59 115 12 116 0.025 13 117

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Corpo Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Corpo Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t) Stratabound Stringer

15 17 0.25 0.25

LINK ZONE Top cutting was applied to selected variables by Votorantim prior to compositing at Link Zone

stratabound. The stringer mineralization assays in Link Zone were not capped. Chosen top-

cuts were based on a review of histograms, probability plots, and decile analysis, which were

prepared for individual wireframes, or wireframe groups.

RPA reviewed the resource assays within selected wireframe domains using histograms,

decile analysis, and visual inspection of high grade values on vertical sections. RPA considers

Votorantim’s treatment of high grade values at the Link Zone to be acceptable. Table 14-6

outlines the top cuts applied to the assays within individual wireframes (‘corpos’) at the Link

Zone.

TABLE 14-6 CAPPING VALUES AT LINK ZONE Karmin Exploration Inc. – Aripuanã Zinc Project

Corpo Zn (%) Pb (%) Cu (%) Au (g/t) Ag (g/t)

30 17.0 10.0 1.0 2.5 358.0 31 6.0 3.0 1.5 1.0 45.0 32 30.0 1.0 178.0 33 22.0 5.5 5.0 428.0 34 8.0 5.0 1.0 133.0 35 21.0 11.0 2.5 5.0 187.0

BLOCK MODEL Votorantim generated a unified block model for Ambrex, Arex, and the Link Zone using

Datamine Studio Version 3 software. The block model was constructed along mineralization

and topography wireframe boundaries. Individual block model parameters are discussed

below. The parent block size was chosen as 10 m x 5 m x 5 m, with a variable sub-block size

to a minimum of 1.0 m x 0.125 m x 0.25 m. A summary of block model parameters is shown

in Table 14-7.

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TABLE 14-7 AMBREX BLOCK MODEL PARAMETERS Karmin Exploration Inc. – Aripuanã Zinc Project

Block Model Parameter Value

X

Minimum (mE) 224400 Block dimension (m) 10 Number of parent blocks 297 Length (m) 2,970 Min. sub-block (m) 1

Y

Minimum (mN) 8,886,800 Block dimension (m) 5 Number of parent blocks 440 Length (m) 2,200 Min. sub-block (m) 0.125

Z

Minimum (elev) -600 Block dimension (m) 5 Number of parent blocks 200 Length (m) 1,000 Min. sub-block (m) 0.25

Rotation none

The block model contains the following information:

• Topography

• Estimated grades of Zn, Pb, Cu, Au, Ag, Fe, MgO, and S within the mineralized domains using ordinary kriging (OK).

• Estimated tonnes for each block

• Estimated density for each block

• The pass in which the block was estimated

• The resource classification of each block

• Calculated NSR for each block

• Material type flag

• Wireframe code, stringer/stratabound code, and area code (Arex, Ambrex, and Link Zone)

The parent block size is approximately equal to one half to one fifth of the drill hole spacing.

RPA is of the opinion that the block size is appropriate.

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VARIOGRAPHY

AMBREX Variograms for zinc, lead, copper, silver, and gold were modelled in the stratabound zone

based upon one metre capped composites within wireframe groupings, using Geovariance’s

Isatis software. Stratabound groupings were based upon geological context, continuity affinity,

mineralization, and grade distribution. Variogram orientations for each group considered

geological context and structural trend. Wireframe groupings and variogram orientations are

listed in Table 14-8. A single variogram for each variable within the stringer zone at Ambrex

was modelled.

TABLE 14-8 AMBREX WIREFRAME GROUPING FOR VARIOGRAPHY Karmin Exploration Inc. – Aripuanã Zinc Project

Group Total No. Comps

Azimuth (º)

Dip (º)

Dip Direction

Plunge (º)

Plunge Direction Corpo No. Comps

STRATABOUND

1 252 305 40 NE

5 26 6 104 9 46 12 51 19 25

2 1,838 305 40 NE

1 747 4 163 8 88 10 252 11 588

3 1,395 300 80 NE 5 NW

30 238 31 193 32 208 33 521 34 154 35 81

41 119 295 80 NE 60 NW 13 28 15 11 18 80

5 101 Omnidirectional 3 101 6 121 Omnidirectional 7 121

72 311 292 70 NE 17 92 20 219

8 872 302 75 NE 2 872

9 947 305 75 NE 21 243 22 704

STRINGER all 2,507 Omnidirectional - -

Notes:

1. Omnidirectional variogram applied to silver and gold. 2. Omnidirectional variogram applied to gold.

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The maximum modelled range of the spherical, three or four structure, variogram models

constructed by Votorantim for zinc, lead, and silver using capped composites within the

stratabound zone at Ambrex are shown graphically in Figure 14-5. Link Zone variograms have

been included in the Ambrex grouping. Examples of variogram models completed by

Votorantim are shown in Figures 14-6 and 14-7.

FIGURE 14-5 MAXIMUM VARIOGRAM RANGE MODELLED WITHIN THE STRATABOUND ZONE AT AMBREX IN EACH GROUP FOR ZINC, LEAD AND

SILVER

Note: Long variogram tails greater than 200 m were not included in graph, but extended to 2,250 m in some cases.

0

20

40

60

80

100

120

140

160

180

200

1 3 5 7 9 1 3 5 7 9 1 3 5 7 9

Zn (%) Pb (%) Ag (g/t)

Axi

s Le

ngth

(m)

Variogram Group

Major Axis (m) Semi-major Axis (m) Minor Axis (m)

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FIGURE 14-6 AMBREX STRATABOUND ZONE GROUP 2 ZINC VARIOGRAM MODEL

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FIGURE 14-7 AMBREX STRATABOUND ZONE GROUP 2 LEAD VARIOGRAM MODEL

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AREX Variograms for zinc, lead, copper, silver, and gold were modelled in the stratabound and

stringer zones based upon one metre capped composites within wireframe groupings, using

Geovariance’s Isatis software. Groupings were based upon geological context, continuity

affinity, mineralization, and grade distribution. Variogram orientations for each group

considered geological context and structural trend. Wireframe groupings and variogram

orientations are listed in Table 14-9.

TABLE 14-9 AREX WIREFRAME GROUPING FOR VARIOGRAPHY Karmin Exploration Inc. – Aripuanã Zinc Project

Group Total Azimuth Dip Dip Plunge Plunge Corpo No. Comps No. Comps (º) (º) Direction (º) Direction STRATABOUND

1 1,319 274 45 NE 12 NW

1 138 3 9 12 4 13 54 15 3 16 22 51 902 52 102 53 39 57 3 59 43

2 681 280 64 NE 12 NW

4 55 17 36 50 496 54 46 55 34 56 14

3 139 280 64 NE 12 NW 2 36 5 48 8 55

4 48 282 52 NE 12 NW 6 20 7 28

5 242 287 59 NE 12 NW 9 34 10 208

STRINGER

10 335 290 57 NE 12 NW

113 5 150 330 108 44 111 10 115 17 153 79

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Group Total Azimuth Dip Dip Plunge Plunge Corpo No. Comps No. Comps (º) (º) Direction (º) Direction

11 150 280 65 NE 12 NW

108 44 111 10 115 17 153 79

12 344 276 57 NE 12 NW

104 53 107 9 114 23 117 16 151 243

13 303 278 53 NE 12 NW 105 129 106 81 152 93

14 203 283 56 NE 12 NW 109 24 110 146 116 33

15 250 287 51 NE 12 NW 101 186 112 64

16 253 285 48 NE 12 NW 160 233 161 20

The maximum modelled range of the spherical, three or four structure, variogram models

constructed by Votorantim for zinc, lead, and silver using capped composites within the

stratabound and stringer zones at Arex are shown graphically in Figures 14-8 and 14-9.

Examples of variogram models completed by Votorantim are shown in Figures 14-10 and 14-

11.

RPA reviewed all variogram models for Ambrex and Arex and completed individual variogram

models for specific wireframes for comparison. In general, the variogram models were

completed to a good standard, however, the long tails modelled in the semi-major and minor

directions may cause some undue influence in those directions during interpolation. RPA

recommends a simplification of the variography in future updates, completing variography on

economically relevant variables only, looking for consensus in the models between related

variables, and applying the findings and results of more populous groups to groups with smaller

sample pools which create experimental variograms that are difficult to model with confidence.

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FIGURE 14-8 MAXIMUM VARIOGRAM RANGE MODELLED WITHIN THE STRINGER ZONE AT AREX IN EACH GROUP FOR COPPER AND GOLD


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FIGURE 14-9 MAXIMUM VARIOGRAM RANGE MODELLED WITHIN THE STRATABOUND ZONE AT AREX IN EACH GROUP FOR ZINC, LEAD AND

SILVER


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FIGURE 14-10 AREX STRATABOUND ZONE GROUP 1 ZINC VARIOGRAM MODEL

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FIGURE 14-11 AREX STRINGER ZONE GROUP 12 COPPER VARIOGRAM MODEL

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INTERPOLATION PARAMETERS

AMBREX Grade interpolation was performed on a parent block basis using ordinary kriging (OK) and an

octant search strategy. The interpolation employed multiple passes, with progressively larger

search ellipses. Search ellipse size was based on variography with each successively larger

pass approximately equal to 80%, 100%, and 200% of the variogram model for each element

in each wireframe, with some modifications made following review of the interpolation results.

A larger, fourth pass was employed to allow the interpolation of all remaining blocks.

Figure 14-12 outlines the search ellipse dimensions employed in the stratabound zone at

Ambrex and Table 14-10 outlines the OK interpolation parameters. For all zones except for

the Link Zone, search ellipses were aligned with variogram orientation which in turn were in

line with wireframe form. In the Link Zone, dynamic anisotropy with angles extracted from the

mineralization wireframes was used to orient the search ellipse. The major direction was set

to the dynamic anisotropy dip direction.

TABLE 14-10 AMBREX STRATABOUND INTERPOLATION PARAMETERS Karmin Exploration Inc. – Aripuanã Zinc Project

Pass 1 2 3

Minimum number of composites 6 6 1 Maximum number of composites 16 16 12 Maximum number of composites per octant 2 2 - Maximum consecutive empty sectors 3 3 - Maximum number of composites per drill hole 2 2 - Minimum number of drill holes 3 3 1

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FIGURE 14-12 SEARCH ELLIPSE DIMENSIONS EMPLOYED IN THE STRATABOUND ZONE AT AMBREX

PASS 1

PASS 2

PASS 3

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Table 14-11 outlines the OK interpolation parameters employed in the stringer zone at Ambrex.

Unlike the stratabound zone, a single orientation, striking 295º, dipping 65º and plunging 12º

NW was employed over the entire zone, and all composites within the stringer zone were

considered together.

TABLE 14-11 AMBREX STRINGER INTERPOLATION PARAMETERS Karmin Exploration Inc. – Aripuanã Zinc Project

Pass 1 2 3

Major axis dimension (m) 115 115 500 Semi-major axis dimension (m) 45 45 500 Minor axis dimension (m) 15 15 100 Minimum number of composites 6 4 1 Maximum number of composites 32 32 32 Optimum number of composites per octant 6 6 6 Maximum consecutive empty sectors 3 7 7 Maximum number of composites per drill hole 6 6 6 Minimum number of drill holes 1 1 1

Measured density values in the stringer and stratabound zones at Ambrex were interpolated

into the block model using OK, and hard boundaries between wireframes.

RPA considers the interpolation plan at Ambrex to be reasonable but recommends

interpolating grades and density using dynamic anisotropy to better capture the folded nature

of the deposit in the block model in future updates.

AREX Grade interpolation was performed on a parent block basis using OK. The interpolation

employed multiple passes, with progressively larger search ellipses. Search ellipse size was

based on variography with each successively larger pass approximately equal to 80%, 100%,

and 200% of the variogram model for each element in each wireframe. A fourth pass was

employed to allow the interpolation of all remaining blocks.

The minimum search ellipse size in the stringer and stratabound zones were adjusted to 20 m

x 20 m x 15 m and 25 m x 25 m x 15 m, respectively, in pass 1 and 50 m x 50 m x 30 m for

both material types in pass 2, regardless of variogram results. This was to allow the smaller

interpolation passes to incorporate the results of the closely spaced drilling, and to account for

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small orientation changes in the wireframe. Interpolation parameters employed at Arex are

detailed in Table 14-12.

TABLE 14-12 AREX STRATABOUND AND STRINGER INTERPOLATION PARAMETERS


Pass 1 2 3 Minimum number of composites 6 6 4 Maximum number of composites 16 16 24 Maximum number of composites per octant 2 4 12 Maximum consecutive empty sectors 2 2 7 Maximum number of composites per drill hole 4 4 12 Minimum number of drill holes 2 2 1

Although grouped for the purposes of variography, the search ellipses employed at Arex were

adjusted to best reflect the orientation of the individual wireframe morphologies. The search

ellipse dimensions employed in each pass at Arex are displayed graphically in Figures 14-13

and 14-14.

Measured density values in the stringer and stratabound zones at Arex were interpolated into

the block model using OK, and hard boundaries between wireframes.

RPA considers the interpolation plan at Arex to be reasonable but recommends interpolating

grades and density using dynamic anisotropy to better capture the folded nature of the deposit

in the block model in future updates.

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FIGURE 14-13 SEARCH ELLIPSE DIMENSIONS EMPLOYED IN THE STRATABOUND ZONE AT AREX

PASS 1

PASS 2

PASS 3

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FIGURE 14-14 SEARCH ELLIPSE DIMENSIONS EMPLOYED IN THE STRINGER ZONE AT AREX

PASS 1

PASS 2

PASS 3

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NET SMELTER RETURN CUT-OFF VALUE NSR factors were developed by RPA 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 factors have been derived from metallurgical test

work on the Aripuanã Zinc property, smelter terms from comparable projects, and information

provided by Votorantim. 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.

Metal prices and exchange rate:

US$1.12 per pound of zinc US$0.84 per pound of lead US$2.93 per pound of copper US$1,233 per ounce of gold US$18.50 per ounce of silver US$1.00 equals R3.00

Metal prices used for reserves are based on consensus, long term forecasts from banks,

financial institutions, and other sources. For resources, metal prices used are slightly higher

than those for reserves.

Metallurgical recoveries are based on preliminary metallurgical testing, and are summarized

by zone and deposit:

Arex Stratabound Copper Concentrate

20% Au recovery to Cu concentrate 16% Ag recovery to Cu concentrate 68% Cu recovery to Cu concentrate grading 29% copper

Lead Concentrate

47% Au recovery to Pb concentrate 58% Ag recovery to Pb concentrate 89% Pb recovery to Pb concentrate grading 53% lead

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Zinc Concentrate

6% Ag recovery to Zn concentrate 84% Zn recovery to Zn concentrate grading 53% zinc

Arex Stringer Copper Concentrate


Ambrex Stratabound Lead Concentrate

52% Au recovery to Pb concentrate 73% Ag recovery to Pb concentrate 77% Pb recovery to Pb concentrate grading 49% lead

Zinc Concentrate

12% Ag recovery to Zn concentrate 89% Zn recovery to Zn concentrate grading 50% zinc

Ambrex Stringer Copper Concentrate


Standard smelting and refining charges were applied to the various concentrates. It was

assumed that the concentrates would be marketed internationally.

The net revenue from each metal was calculated and then, based upon the assumed head

grade, an NSR factor was generated. The NSR factors represent revenue ($) per unit metal

(per % Zn, for example) in the head grade and are independent of resource grade. Votorantim

generated the NSR factors shown in Table 14-13 which were then used to calculate the NSR

for any set of metal grades.

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TABLE 14-13 NSR FACTORS Karmin Exploration Inc. – Aripuanã Zinc Project

Metal Units Arex Ambrex

Stratabound Stringer Stratabound Stringer Au US$ per g Au 12.88 21.19 13.20 18.13 Ag US$ per g Ag 0.38 0.34 0.38 0.26 Cu US$ per % Cu 30.97 41.05 - 40.62 Pb US$ per % Pb 6.86 - 5.28 - Zn US$ per % Zn 10.03 - 9.99 -

These NSR factors were multiplied by block grades to calculate an NSR value ($ per tonne)

for each block in the block model, which was compared directly to the unit operating costs

required to mine that block. For the purposes of developing an NSR cut-off value, a total unit

operating cost of US$48.00 per tonne 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 Table 14-14.

TABLE 14-14 SENSITIVITY TO NSR CUT-OFF GRADE Karmin Exploration Inc. – Aripuanã Zinc Project

NSR>0 NSR>12 NSR>24 NSR>36 NSR>48 NSR>60 NSR>72M&I Inferred M&I Inferred M&I Inferred M&I Inferred M&I Inferred M&I Inferred M&I Inferred

AREX

Stra

tabo

und

Tonnes (Mt) 5.15 1.51 5.14 1.51 4.77 1.50 4.26 1.48 3.71 1.44 3.18 1.30 2.69 1.11

Zn (%) 5.49 5.48 5.50 5.48 5.83 5.48 6.29 5.54 6.83 5.64 7.43 5.93 8.04 6.32

Pb (%) 1.92 2.13 1.92 2.13 2.05 2.13 2.22 2.15 2.44 2.19 2.69 2.29 2.94 2.41

Cu (%) 0.37 0.21 0.37 0.21 0.40 0.21 0.43 0.21 0.47 0.21 0.50 0.22 0.52 0.22

Au (g/t) 0.24 0.43 0.24 0.43 0.26 0.43 0.28 0.43 0.30 0.44 0.32 0.46 0.34 0.49

Ag (g/t) 54.61 38.21 54.72 38.21 58.50 38.26 64.25 38.56 70.97 38.90 78.46 39.92 86.87 40.86 AMBREX

Tonnes (Mt) 16.16 16.98 16.14 16.76 15.81 14.96 14.38 12.14 12.23 9.91 9.64 8.17 7.48 6.69

Zn (%) 4.77 5.18 4.78 5.24 4.85 5.73 5.15 6.67 5.60 7.66 6.23 8.65 6.90 9.69

Pb (%) 1.81 1.90 1.81 1.92 1.84 2.11 1.96 2.48 2.17 2.87 2.46 3.24 2.79 3.69

Cu (%) 0.07 0.07 0.07 0.07 0.07 0.08 0.07 0.08 0.08 0.08 0.08 0.08 0.09 0.09

Au (g/t) 0.21 0.29 0.21 0.29 0.21 0.32 0.22 0.34 0.24 0.37 0.26 0.40 0.28 0.44

Ag (g/t) 41.65 45.92 41.70 46.47 42.40 51.29 45.43 60.47 50.42 69.40 57.65 78.36 65.51 89.59 AREX

Strin

ger

Tonnes (Mt) 3.73 1.88 3.72 1.87 3.60 1.84 3.14 1.52 2.63 1.19 2.15 0.94 1.70 0.67

Zn (%) 0.18 0.03 0.18 0.03 0.18 0.03 0.20 0.04 0.23 0.04 0.26 0.04 0.29 0.05

Pb (%) 0.08 0.06 0.08 0.06 0.08 0.06 0.09 0.07 0.10 0.09 0.12 0.11 0.13 0.14

Cu (%) 1.31 0.51 1.32 0.52 1.35 0.52 1.50 0.58 1.70 0.65 1.91 0.70 2.17 0.76

Au (g/t) 1.22 2.64 1.23 2.65 1.25 2.68 1.34 3.09 1.46 3.63 1.59 4.21 1.75 5.25

Ag (g/t) 13.82 7.28 13.84 7.30 14.21 7.39 15.73 8.37 17.61 9.46 19.61 10.16 21.84 11.20 AMBREX

Tonnes (Mt) 7.76 7.18 6.10 4.68 3.10 2.23 1.66

Zn (%) 0.09 0.09 0.09 0.06 0.06 0.06 0.06

Pb (%) 0.07 0.07 0.07 0.07 0.07 0.06 0.05

Cu (%) 0.70 0.75 0.85 0.97 1.16 1.30 1.42

Au (g/t) 1.62 1.74 1.99 2.44 3.33 4.29 5.40

Ag (g/t) 8.09 8.65 9.38 10.32 11.40 11.77 11.81

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Karm

in Exploration Inc. – Aripuanã Zinc Project, Project #2567

Technical Report N

I 43-101 – March 1, 2017

Page 14-34

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CLASSIFICATION Definitions for resource categories used in this report are consistent with those defined by CIM

(2014) and incorporated by reference into 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. There are no Mineral Reserves on the property.

AMBREX AND LINK ZONE Mineral Resources at Ambrex and the Link Zone were classified as Measured, Indicated, or

Inferred based on drill hole spacing and the apparent continuity of mineralization. Drill hole

spacing to support classification was based on variogram model ranges at 80%, 100%, and

200% of the variogram sill for Measured, Indicated, and Inferred, respectively, with

adjustments in the case of long variogram tails (Table 14-15). Classification was then modified

to reflect local confidence in the geological interpretation and resultant block model.

TABLE 14-15 AMBREX CLASSIFICATION CRITERIA Karmin Exploration Inc. – Aripuanã Zinc Project

Classification Mineralization Drill hole spacing (m)

Measured Stratabound 25 x 25 Indicated Stratabound 50 x 50 Inferred Stratabound /Stringer 100 x 100

At Ambrex and the Link Zone, all stringer mineralization was assigned a classification of

Inferred due to geological uncertainty and continuity of mineralization. Some modelled

stratabound areas at depth and in the north of Ambrex, as well as the stringer mineralization,

appear to be aggressively classified with respect to drill hole spacing. RPA notes, however,

that this apparent extension of Inferred material is supported by a robust geological model and

some of these areas constitute regions for Mineral Resource expansion with additional drilling.

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Additionally, some areas of low continuity of mineralization above the break-even cut-off grade,

as well as areas with a strong reliance on down-dip drill holes, were included in the Mineral

Resources.

AREX Mineral Resources at Arex were classified as Measured, Indicated, or Inferred based on drill

hole spacing and apparent continuity of mineralization. Drill hole spacing to support

classification was based on variogram model ranges at 80%, 100%, and 200% of the

variogram sill for Measured, Indicated, and Inferred, respectively, with adjustments and

restrictions in the case of long variogram tails (Table 14-16). Classification was modified to

reflect confidence in the geological interpretation and resultant block model.

TABLE 14-16 AREX CLASSIFICATION CRITERIA Karmin Exploration Inc. – Aripuanã Zinc Project

Classification Mineralization Drill hole spacing (m)

Measured Stratabound 25 x 25 Stringer 20 x 20

Indicated Stratabound & Stringer 50 x 50 Inferred Stratabound & Stringer 100 x 100

The final classification designation for Ambrex, Arex, and the Link Zone is shown in Figure 14-

15.

RPA is satisfied with the classification criteria at Aripuanã Zinc but recommends the inclusion

of a more robust analysis of confidence, which considers drill hole orientation and associated

impact of geological interpretation, continuity of mineralization above a break-even cut-off

grade, and geological confidence in defining limits for classification. RPA recommends limiting

Mineral Resources to no further than twice the variogram model range.

225500 E

400 E

lev

226000 E 226500 E 227000 E 227500 E

225500 E 226000 E 226500 E 227000 E 227500 E

200 E

lev

Drill Hole Trace

0 E

lev

-200 E

lev

-400 E

lev

400 E

lev

200 E

lev

0 E

lev

-200 E

lev

-400 E

lev

Arex AmbrexLink

Measured

Classification:

Inferred

Indicated

0 100 500

Metres

200 300 400


Resource ClassificationLongitudinal Section




Figure 14-15

14-3

7

ww

w.rp

acan

.co

m

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VALIDATION RPA has reviewed various modelling aspects of the Ambrex, Link Zone and Arex stratabound

and stringer zones. RPA’s observations and comments from the model validation are provided

below.

Mineralization solids were checked for conformity to drill hole data, continuity, similarity

between sections, overlaps, appropriate terminations between holes and into undrilled areas,

and minimum mining thicknesses. The wireframe solids were generally snapped to drill hole

intervals, are reasonably consistent, continuous, and generally representative of the extents

and limits of the mineralization.

The mineralization solids were found to pinch out surrounding low grade drill hole intercepts at

Arex, and some intercepts included were found to be less than a theoretical minimum mining

width of two metres. At Ambrex, wireframes were extrapolated further than one half the drill

hole spacing in some areas, particularly at depth.

Capping statistics were reviewed for a series of individual zones and compared to the statistics

of capping groups defined by Votorantim. RPA is satisfied with the chosen caps.

Compositing routines were checked to confirm that composites started and stopped at the

intersections with the wireframes and that the composite coding is consistent with the

wireframes. RPA is satisfied with the compositing routines and finds the composites

appropriate for Mineral Resource estimation.

Contact plots were prepared for selected mineralization domains and confirmed the

appropriateness of hard boundaries between the domains during estimation. At Arex,

however, where some mineralization domains meet, sharing of composites may have been

appropriate.

Visual inspection and comparison of drill hole composites against mineralized solids were

carried out for a number of sections within the stratabound and stringer zones at Ambrex and

Arex. The mineralized solids were found to conform reasonably well to the drill hole composite

grades, although some evidence of smoothing was present. A cross section for each

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mineralization type and deposit comparing composite and block gold grades is shown in

Figures 14-16 to 14-19.

RPA reviewed the variogram models for selected mineralization groups and prepared

variogram models representing selected individual mineralization domains for comparison.

RPA found the trend of the Votorantim variogram models to be consistent with the RPA

models, however, Votorantim consistently resolved longer ranges in all directions than was

observed in the RPA models based on a single domain. RPA recommends a simplification of

the variography in future updates, completing variography on economically relevant variables

only, looking for consensus in the models between related variables, and applying the findings

and results of more populous groups to groups with smaller sample pools which create

experimental variograms that are difficult to model with confidence. RPA validated the grades

estimated in the block models prepared by Votorantim using basic statistics, visual inspection,

volumetric comparison, swath plots, and a re-estimation of a portion of both the Arex and

Ambrex stratabound zones using inverse distance to the power of three, dynamic anisotropy,

and smaller search ellipses. The grades of re-estimated areas were found to be within 10%.

Visual comparison of vertical sections and plan views found good correlation between the

estimated block grades and supporting composite grades.

RPA reviewed the classification criteria and found them to be reasonable, although somewhat

aggressive with respect to depth extension at Ambrex, specifically the extension of stringer

zone wireframes. RPA notes that classification criteria do not consider continuity of

mineralization above the cut-off grade, and that this should be considered in future updates.

Section Line

Ambrex

Link

Arex

0 L

-50 L

-100 L

50 L

8,8

87,2

50 N

8,8

87,3

00 N

8,8

87,2

00 N

8,8

87,1

50 N

0 L

-50 L

-100 L

50 L

Legend:

Stratabound Mineralization Stringer Mineralization

< 1.0

Zinc (%)

2.0 - 3.0

10.0 - 15.0

1.0 - 2.0

3.0 - 5.0

> 15.0

5.0 - 10.0

0 10 50

Metres

20 30 40


West Facing Vertical CrossSection Comparing Block and

Composite Zinc Grades at Ambrex




Figure 14-16

14-40

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Ambrex

Link

Arex

Section Line

200 L

150 L

250 L

8,8

88,1

00 N

8,8

88,1

50 N

8,8

80,0

50 N

8,8

88,0

00 N

200 L

150 L

250 L

100 L

50 L

100 L

50 L

0 L 0 L

-50 L

-100 L

-50 L

-100 L

Legend:


Stringer Mineralization

< 1.0

Zinc (%)

2.0 - 3.0

10.0 - 15.0

1.0 - 2.0

3.0 - 5.0

> 15.0

5.0 - 10.0

0 50

Metres

25 75 100


West Facing Vertical CrossSection Comparing Block andComposite Zinc Grades at Link




Figure 14-17

14-41

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Ambrex

Link

Arex

Section Line

8,8

88,4

50 N

8,8

88,3

00 N

200 L

150 L

50 L

100 L

200 L

150 L

50 L

100 L

8,8

88,3

50 N

8,8

88,4

00 N

< 1.0

Zinc (%)

2.0 - 3.0

10.0 - 15.0

1.0 - 2.0

3.0 - 5.0

> 15.0

5.0 - 10.0

Legend:



0 10 50

Metres

20 30 40



Composite Zinc Grades at Arex




Figure 14-18

14-42

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Ambrex

Link

Arex

Section Line

8,8

88,4

50 N

8,8

88,3

00 N

200 L

150 L

50 L

100 L

200 L

150 L

50 L

100 L

8,8

88,3

50 N

8,8

88,4

00 N

< 0.25

Copper (%)

0.50 - 1.00

2.00 - 5.00

0.25 - 0.50

1.00 - 1.50

> 5.00

1.50 - 2.00

Legend:



0 10 50

Metres

20 30 40



Composite Copper Grades at Arex




Figure 14-19

14-43

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MINERAL RESOURCES Votorantim estimated Mineral Resources for the Ambrex, Arex, and Link Zone VMS deposits

using drill hole data available to October 20, 2016. The effective date represents the date of

receipt of the final assay results from 2016 drilling used in the estimates.

RPA reviewed the drill hole database, modelling, and estimation methods used by Votorantim,

and found them to be reasonable and acceptable. Measured and Indicated Mineral Resources

for Arex, Link, and Ambrex deposits are estimated to total 18.6 million tonnes containing 2,082

million pounds of zinc, 790 million pounds of lead, 157 million pounds of copper, 252,000

ounces of gold, and 25 million ounces of silver. Inferred Mineral Resources are estimated to

total 15.5 million tonnes containing 1,849 million pounds of zinc, 699 million pounds of lead,

120 million pounds of copper, 607,000 ounces of gold, and 25 million ounces of silver. There

are no Mineral Reserves estimated on the property.

Table 14-1 provides a summary of the Aripuanã Zinc Mineral Resources and Table 14-17

summarizes the Aripuanã Zinc Mineral Resources by area and type of mineralization.

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TABLE 14-17 MINERAL RESOURCES BY AREA – OCTOBER 20, 2016 Karmin Exploration Inc. – Aripuanã Zinc Project

AREX

Mineralization Category Tonnes Zn Pb Cu Au Ag Zn Pb Cu Au Ag

(MT) (%) (%) (%) (g/t) (g/t) (M lb) (M lb) (M lb) (K Oz) (M Oz)

Stra

tabo

und

Measured 3.2 6.88 2.50 0.48 0.30 74.8 485 176 34.1 30.5 7.7 Indicated 0.5 6.56 2.10 0.37 0.32 46.6 73 23 4.2 5.2 0.8

Measured and Indicated 3.7 6.83 2.44 0.47 0.30 71.0 559 200 38.3 35.7 8.5

Inferred 1.4 5.64 2.19 0.21 0.44 38.9 179 69 6.7 20.4 1.8

Strin

ger

Measured 1.8 0.27 0.11 1.88 1.42 19.0 11 5 75.5 83.2 1.1 Indicated 0.8 0.14 0.07 1.27 1.54 14.5 3 1 22.7 39.9 0.4


Inferred 1.2 0.04 0.09 0.65 3.63 9.5 1 2 17.1 138.5 0.4 AMBREX AND LINK ZONE

Tonnes Zn Pb Cu Au Ag Zn Pb Cu Au Ag (MT) (%) (%) (%) (g/t) (g/t) (M lb) (M lb) (M lb) (K Oz) (M Oz)

Stra

tabo

und

Measured 4.0 6.08 2.32 0.07 0.21 55.3 539 206 5.9 27.6 7.1

Indicated 8.2 5.36 2.09 0.08 0.25 48.0 970 378 14.5 65.6 12.7


Inferred 9.9 7.66 2.87 0.08 0.37 69.4 1674 626 17.5 116.7 22.1 Stringer Inferred 3.1 0.06 0.07 1.16 3.33 11.4 4 5 78.9 331.9 1.1

Notes:

1. CIM definitions were followed for Mineral Resources. 2. Mineral Resources are reported using a US$48/t NSR block cut-off grade. 3. The NSR is calculated based on metal prices of US$1.12 per lb Zn, US$0.84 per lb Pb, US$2.93 per lb

Cu, US$1233 per ounce Au, and US$18.5 per ounce Ag. 4. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. 5. Numbers may not add due to rounding. 6. Link Zone Mineral Resources are included in the Ambrex tabulation.

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COMPARISON WITH PREVIOUS ESTIMATE A summary of the changes to Mineral Resources since the previous estimate is given in Table

14-18.

The changes to Mineral Resources can be attributed to the following:

• Application of a cut-off grade for reporting (previously all material within wireframes was reported)

• Additional 109 drill holes completed since the previous estimate

• Enhanced understanding of litho-structural controls on the mineralization and re-interpretation

• Extrapolation of wireframes, particularly at depth at Ambrex

• Changes to classification criteria and designation of categories

• Discovery and delineation of the Link Zone

• Improved exclusion of internal waste in wireframes

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TABLE 14-18 COMPARISON WITH PREVIOUS ESTIMATE Karmin Exploration Inc. – Aripuanã Zinc Project

Tonnes Zn Pb Cu Au Ag Zn Pb Cu Au Ag (MT) (%) (%) (%) (g/t) (g/t) (Mlb) (Mlb) (Mlb) (OZ) (KOZ)

October 20, 2016 Stratabound

Measured and Indicated 15.9 5.89 2.23 0.17 0.25 55.2 2068 784 59 128,853 28,283

Inferred 11.3 7.41 2.78 0.10 0.38 65.5 1853 695 24 137,053 23,899 Stringer

Measured and Indicated 2.6 0.23 0.10 1.70 1.46 17.6 13 6 98 123,134 1486.6

Inferred 5.7 0.14 0.08 1.40 2.47 14.3 17 11 177 455,032 2,622

September 12, 2012 Stratabound

Measured and Indicated 17.8 4.15 1.48 0.16 0.19 36.7 1623 581 63 111,000 21,050

Inferred 13.1 5.31 1.86 0.13 0.30 42.3 1539 534 35 115,000 17,783 Stringer

Measured and Indicated 1.4 0.39 0.11 2.11 0.97 22.0 12 3 63 42,000 968.0

Inferred 1.9 0.31 0.11 1.92 0.93 19.4 13 4 78 55,000 1,157

Difference (%) Stratabound

Measured and Indicated -10% 42% 51% 6% 30% 50% 27% 35% -7% 16% 34%

Inferred -13% 39% 49% -27% 25% 55% 20% 30% -31% 19% 34% Stringer

Measured and Indicated 88% -41% -8% -20% 50% -20% 11% 95% 56% 193% 54%

Inferred 201% -56% -22% -27% 167% -26% 33% 165% 127% 727% 127%

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15 MINERAL RESERVE ESTIMATE This section is not applicable.

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16 MINING METHODS This section is not applicable.

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17 RECOVERY METHODS This section is not applicable.

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18 PROJECT INFRASTRUCTURE This section is not applicable.

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19 MARKET STUDIES AND CONTRACTS This section is not applicable.

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20 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR COMMUNITY IMPACT Information in this report section is based largely on available data from the 2015 Votorantim

Study. RPA has not reviewed original documentation.

An Environmental & Social Impact Assessment (ESIA) is required for the project. An

environmental review of the Project consists of a full description and assessment of the area

before Project implementation and considers the availability of baseline information and

potential impacts to the following:

• Physical medium – climate, air/quality, noise, geology, geomorphology, soil, and surface water resources.

• Biological medium and natural ecosystems – fauna and flora (species indicative of environmental quality, scientific and economic value, or rare and endangered), and permanent preservation areas.

• Socioeconomic medium – soil use and occupation, water uses, archaeological, historical and cultural sites and monuments, indigenous peoples, community relations, local economy, education, housing, sanitation, and health.

Mitigating measures planned for each area include:

• Physical medium o Environment risk management programs: water and effluents, hazardous

cargo, emissions, waste, Project reclamation and closure, and labour safety o Monitoring Programs: noise levels, vibration, climate and air quality, water and

effluents o Environmental education programs o Erosion control plan o Disturbed area recovery plan

• Biological medium – Fauna

o Programs: disturbed area recovery, fauna monitoring, environmental education, monitoring of heavy metals in fish tissue, monitoring of heavy metals and miscellaneous wastes in surface waters, environmental risk management, and waste management

o Actions: fauna disturbance/rescue, ornithophilous plant rescue, equipment and vehicle maintenance, habitat maintenance, speed limit control, hunting, collection and adverse interaction prohibition and restraint

• Biological medium – Flora o Implementation of PBAs – Basic Environmental Program and its plans o Implementation of water excess intake and drainage o Environmental education program

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o Compensation (defined by the permitting agency) o Surface and subsurface water monitoring plan

• Socioeconomic medium

o Implementation of PBAs o Migrant support o Local development o Compensations (defined by law, permitting agency)

A stream-to-steam inventory of effluents, emissions, and waste is presented in the 2015

Votorantim Study.

ENVIRONMENTAL STUDIES Environmental studies will be conducted in accordance with Project assessments and

mitigation measures as outlined above.

Regarding acid mine drainage, an analysis of results has concluded that waste samples are

not potentially acid forming. Their mineralogy does not comprise of sulphides and tests on

acid mine drainage formation potential have not indicated any potential.

As for Stratabound flotation tailings, no potential for acid generation has been found. These

flotation tailings contain a small quantity of sulphides and tests have shown high potential for

neutralization of any acid generated due to the presence of dolomite. The waste generated in

mining may contain other materials and therefore, acid generation needs to be fully

investigated. The waste/effluent management plan must include a level of acid generation

monitoring.

Regarding ore samples (both Stringer and Stratabound) and Stringer flotation tailings have

shown potential for acid generation, which requires further study. The low grade Stringer

flotation tailings samples have indicated lower potential for acid generation.

Based on preliminary analysis, Stratabound waste and tailings would be more suitable for use

as backfill, since they do not have acidity formation potential. According to the classification

of samples in compliance with ABNT 10.004, Stratabound tailings samples are considered

hazardous, due to lead in leached samples being present above established limits.

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Considering that cement will be added to render the waste inert, it is highly important to extend

acid drainage formation potential tests (static and kinetic) to cemented tailings according to

the proportion that will be intended for use as backfill in future studies.

PROJECT PERMITTING In order to obtain a Preliminary Permit, the State Environment Secretariat (SEMA) requires

Rural Environmental Registration (CAR), a water intake grant, and an archaeological study

approved of by IPHAN (Instituto do Patrimônio Histórico e Artístico Nacional) be provided. The

water intake grant was requested and approved in October 2013. An archaeological study

was developed in 2008, but requires additional information due to a change in the legislation.

The CAR has already been requested, with the registration of some approved lands. Table

20-1 lists the Project lands and current status.

TABLE 20-1 LIST OF PROJECT LANDS Karmin Exploration Inc. – Aripuanã Zinc Project

Land Landowner Situation

1 Anglo American

Two lands, transfer processed, registration number obtained, CAR performed

2 VMZ Two under tenure, two with registration number obtained, CAR performed

3 VMZ Six lands recently purchased from Mr. Gentil Zanin,

four with entitlement, and two with registration number obtained

4 Ronaldo One land (tenure), under negotiation

A clearing and grubbing permit must be requested along with the Installation Permit, following

granting of the Preliminary Permit. For example, permits will also be necessary for the

following: fuel station, transmission line, and concentrate transportation. Other grants, e.g.,

mine water level lowering, will also be required. The granted Installation Permit must be

submitted to DNPM (Departamento Nacional de Produção Mineral) for the mine grant. Table

20-2 shows the list of permits required for Project construction and operation.

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TABLE 20-2 LIST OF PERMITS Karmin Exploration Inc. – Aripuanã Zinc Project

Document Type Permit Scope Agency

Responsible Permit Preliminary Permit (registered) SEMA Permit Water intake grant (obtained) SEMA Permit CAR SEMA

Authorization IPHAN IPHAN Permit Project Installation Permit SEMA Permit Preliminary Permit and Installation Permit for transmission

line within project premises SEMA

Permit Clearing and grubbing permit SEMA Permit Underground water lowering grant SEMA Permit Preliminary Permit and Installation Permit for fuel station SEMA

Authorization Fauna capture IBAMA Permit Lead concentrate port handling permit (Santos or

Paranaguá) CETESB or

FATMA Permit Preliminary Permit and Installation Permit for transmission

line to project premises SEMA

Permit Road and bridge adaptation permitting for Municipal Road SEMA Permit Road and Bridge adaptation permitting for State Road (MT) SEMA

Authorization Fire Department authorization Military Police Fire Department

Authorization Explosive storage Army Grants Mine grant DNPM Permit Project Operation Permit SEMA Permit Operation Permit for fuel station SEMA

Authorization Facility Approval Certificate (CAI), compliance with NR2 MT

MINE CLOSURE REQUIREMENTS Details on mine closure and reclamation requirements were not available for review in the

2015 Votorantim Study.

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21 CAPITAL AND OPERATING COSTS This section is not applicable.

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22 ECONOMIC ANALYSIS This section is not applicable.

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23 ADJACENT PROPERTIES There are no known properties adjacent to Aripuanã Zinc.

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24 OTHER RELEVANT DATA AND INFORMATION No additional information or explanation is necessary to make the Technical Report

understandable and not misleading.

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25 INTERPRETATION AND CONCLUSIONS Measured and Indicated Mineral Resources for Arex, Link and Ambrex deposits are estimated

to total 18.6 million tonnes containing 2,082 million pounds of zinc, 790 million pounds of lead,

157 million pounds of copper, 252,000 ounces of gold and 30 million ounces of silver. Inferred

Mineral Resources are estimated to total 15.5 million tonnes containing 1,849 million pounds

of zinc, 699 million pounds of lead, 120 million pounds of copper, 607,000 ounces of gold and

25 million ounces of silver. There are no Mineral Reserves estimated on the property.

Since completion of the 2012 Mineral Resource estimate, Karmin and its joint venture partner

Votorantim have carried out additional drilling on the Ambrex, Link Zone, and Arex deposits

such that the additional drilling density is sufficient to prepare updated Mineral Resource

estimates. There is good exploration potential remaining at depth, and additional exploration

targets have been identified in the Project area, including Babaçú.

Votorantim estimated Mineral Resources for the Ambrex, Link Zone, and Arex VMS deposits

using drill hole data available to October 20, 2016. RPA is of the opinion that the drill hole

database is valid and suitable to estimate Mineral Resources for the Project.

Sampling and assaying are adequately completed and have been carried out using industry

standard QA/QC practices. These practices include, but are not limited to, sampling, assaying,

chain of custody of the samples, sample storage, use of third-party laboratories, standards,

blanks, and duplicates.

The metallurgical test program undertaken to date for the Aripuanã Zinc mineralization was

detailed and systematic in approach. To process mineralization at Aripuanã Zinc, material

types should be fed separately to improve copper recovery and to reduce costs particularly

when processing copper stringer mineralization. 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 by-passed.

Overall, RPA finds the Votorantim geological models to be reasonably constructed and

generally representative of the extents and limits of the mineralization. RPA notes, however,

that the mineralization shapes have changed with each model update, suggesting that

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although this model is based on a sound geological interpretation and a large body of high

quality work performed by Votorantim, on a local scale, multiple possible interpretations for the

resources remain, particularly at Ambrex. In addition, RPA notes areas, particularly in Ambrex,

where the wireframes have been extrapolated over large distances, greater than 150 m in

some instances.

RPA considers the estimation procedures employed at Ambrex, Link Zone, and Arex, including

compositing, top-cutting, variography, block model construction, and interpolation to be

reasonable and in line with industry standard practice.

RPA finds the classification criteria to be reasonable, although somewhat aggressive with

respect to depth extension at Ambrex, specifically the extension of stringer zone wireframes.

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26 RECOMMENDATIONS Drilling activities at the Aripuanã Zinc Project has outlined the presence of significant zinc-

lead-copper-silver-gold deposits that warrant further.

RPA recommends a Phase I budget of $682,000 for studies to support the completion of a

Preliminary Economic Assessment (Table 26-1).

TABLE 26-1 PROPOSED BUDGET Karmin Exploration Inc. – Aripuanã Zinc Project

Item US$ Metallurgical test work 70,000 Engineering studies and Preliminary Economic Assessment 200,000 Operating costs/office 150,000 Tenure Fees and Permits 200,000 Sub-total 620,000 Contingency 62,000 Total 682,000

The recommended Phase 2 budget of US$10 million would be contingent on Phase 1 results.

Work would include additional metallurgical test work, and a Pre-Feasibility Study.


feasibility study, and meanwhile Votorantim is fully funding the Project development.

In addition, RPA recommends the following:

• Carry out additional metallurgical test work to determine equipment specifications for comminution, regrinding, and filtration, to optimize flotation reagent consumption, to optimize Zn/Pb recovery circuits on Ambrex ores, to define methods of water recirculation, and to conduct material variability tests.

• Complete round robin testing of the in-house standards at various laboratories to

establish more reliable expected values.


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• Define mineralization envelopes using an NSR-cut-off value as opposed to a single grade variable. Determine an NSR cut-off value for modelling that allows continuity of mineralization, as well as limiting the incorporation of waste in the mineralization envelopes.

• For Mineral Resource estimation purposes, apply wireframe extrapolation limits consistent with the Measured, Indicated, and Inferred classification criteria.

• Apply density weighting during composite and interpolation routines.

• Interpolate grades and density for all domains using dynamic anisotropy to better capture the folded nature of the deposit in the block model.

• Include a more robust analysis of confidence, which considers drill hole orientation and associated impact of geological interpretation, continuity of mineralization above a break-even cut-off grade, and geological confidence in defining limits for classification. Avoid extrapolating classified Mineral Resources to the outer limits of the geological model where not supported by variogram results.

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27 REFERENCES ALS (2012). Corporate Brochure www.alsglobal.com (accessed January 21, 2012) AMEC (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 DNPM (2000). Mining in Brazil – Basic Information for the Investor

http://www.dnpm.gov.br/assets/galeriadocumento/MiningInformation/guide.htm (accessed January 28, 2012)

Galley, A.G., Hannington, M.D., and Jonasson, I.R. (2007) Volcanogenic massive sulphide

deposits, in Goodfellow, W.D., ed., Mineral Deposits of Canada: A Synthesis of Major Deposit-Types, District Metallogeny, the Evolution of Geological Provinces, and Exploration Methods: Geological Association of Canada, Mineral Deposits Division, Special Publication No. 5, p. 141-161

Lopes, J.A., Ferreira, T., and Batelochi, M.A., 2016: Aripuanã Project, Mineral Resource

Report. A report prepared by Votorantim Metais, Mineral Exploration Department, 203p. Votorantim Metais (2009). Relatório de Avaliação de Recursos Projeto Aripuanã edited by

José Antonio Lopes (March 2009) Votorantim Metais (2010). Projeto Aripuanã Estudo de Viabilidade Econômica Votorantim Metais (2012a). Historical Exploration, prepared for RPA by Julio Santos

(December 1, 2012) Votorantim Metais (2012b). Reporte Técnico Estimativa de Recursos - Alvo Arex prepared by

Jorge Augusto Basilio Fernandes (December 2012) Votorantim Metais (2012c). Confidential document prepared by Bruno Tomaselli (November

2012) Votorantim Metais (2015), Technical Report, FEL 2 Study, Location: Aripuanã, MT,

Commodity: Zn, Pb, Cu, Rev. 00, internal report. Votorantim (2009). Relatorio de Avaliacao de Recursos Projeto Aripuanã Gerencia de

Exploração Mineral: Gerência de Planejamento de Longo Prazo reviewed by Jose Antoni Lopes (internal)

http://www.alsglobal.com/

http://www.dnpm.gov.br/assets/galeriadocumento/MiningInformation/guide.htm

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28 DATE AND SIGNATURE PAGE This report titled “Technical Report on the Aripuanã Zinc Project, Mato Grosso State, Brazil”

and dated March 1, 2017, was prepared and signed by the following authors:

(Signed and Sealed) “Valerie G. Wilson” Dated at Toronto, ON Valerie G. Wilson, M.Sc., P.Geo. March 1, 2017 Senior Geologist (Signed and Sealed) “Sean Horan” Dated at Toronto, ON Sean Horan, P.Geo. March 1, 2017 Senior Geologist

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29 CERTIFICATE OF QUALIFIED PERSON VALERIE G. WILSON I, Valerie G. Wilson, P.Geo., as an author of this report entitled “Technical Report on the Aripuanã Zinc Project, Mato Grosso State, Brazil” prepared for Karmin Exploration Inc. and dated March 1, 2017, do hereby certify that: 1. I am a Senior Geologist with Roscoe Postle Associates Inc. of Suite 501, 55 University Ave

Toronto, ON M5J 2H7. 2. I am a graduate of the Camborne School of Mines, University of Exeter in 2010 with a

Master’s degree in Mining Geology and a graduate of the University of Victoria in 2006 with a Bachelor’s degree in Geoscience.

3. I am registered as a Professional Geologist in the Province of Ontario (Reg. 2113). I have

worked as a geologist for a total of 8 years since my graduation. My relevant experience for the purpose of the Technical Report is: • Exploration geologist on a variety of gold and base metal projects in Canada,

Norway, and Sweden. • Mineral Resource estimation work and reporting on numerous mining and exploration

projects around the world. 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 from October 16, 2012 to October 19, 2012 6. I share responsibility with my co-author for all sections 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 prepared a previous Technical Report, dated January 29, 2013, 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. 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 1st day of March, 2017 (Signed and Sealed) “Valerie G. Wilson” Valerie G. Wilson, P.Geo.

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SEAN HORAN I, Sean Horan, P.Geo., as an author of this report entitled “Technical Report on the Aripuanã Zinc Project, Mato Grosso State, Brazil” prepared for Karmin Exploration Inc. and dated March 1, 2017, do hereby certify that 1. I am a 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 over 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 from January 30, 2017 to February 3, 2017. 6. I share responsibility with my co-author for all sections 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 1st day of March, 2017 (Signed and Sealed) “Sean Horan” Sean Horan, P.Geo.

karmin exploration inc. technical report on the …

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