NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

to be held on June 13, 2011

and

MANAGEMENT INFORMATION CIRCULAR

with respect to a proposed

ARRANGEMENT

involving

CAPSTONE MINING CORP.

and

FAR WEST MINING LTD.

May 12, 2011

These materials are important and require your immediate attention. They require Capstone’s shareholders to make important decisions. If you are in doubt as to how to make such decisions, please contact your professional advisers. If you have questions, you may contact Capstone’s proxy solicitation agent, Laurel Hill Advisory Group, by email at assistance@laurelhill.com or by telephone at 1-877-304-0211 (toll free within Canada or the U.S.) or 416-304-0211 (for collect calls outside Canada and the U.S.).

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May 12, 2011

Dear Capstone Shareholder:

As you are aware, on April 17, 2011, Capstone Mining Corp. (“Capstone”) announced that it had entered into an arrangement agreement (the “Arrangement Agreement”) with Far West Mining Ltd. (“Far West”), pursuant to which, and subject to the terms and conditions of the Arrangement Agreement, Capstone will acquire all of the issued and outstanding common shares of Far West in accordance with an arrangement of Far West under the Business Corporations Act (British Columbia) (the “Arrangement”). Assuming the Arrangement becomes effective, each Far West shareholder will be entitled to elect to receive, in exchange for each Far West share held (i) 1.825 shares of Capstone and Cdn.$1.00 in cash, (ii) 2.047 shares of Capstone and Cdn.$0.001 in cash, or (iii) Cdn.$9.19 in cash, subject to proration on the basis of an aggregate maximum cash amount of approximately Cdn.$79 million, and provided that no Far West shareholder that elects option (iii) above will receive less than Cdn.$1.00 in cash per Far West share.

Capstone has also agreed to form a long-term strategic relationship with Korea Resources Corporation (“KORES”) for the development of Far West’s Santo Domingo project. Concurrent with the completion of the Arrangement, KORES (through an affiliated company) will (i) acquire a 30% interest in the entity that will own the Santo Domingo project for cash consideration of approximately Cdn.$210 million to Capstone, and (ii) subscribe for an approximate 11% interest in Capstone, at a price of Cdn.$4.3526 per share, to become Capstone’s largest shareholder for aggregate cash consideration of approximately Cdn.$170-183 million (the “KORES Subscription”).

In connection with the Arrangement, Capstone has called the special meeting of shareholders to consider a resolution to approve the issuance of (i) the Capstone common shares forming the consideration to be paid to Far West shareholders, and (ii) the Capstone common shares to be issued in connection with the KORES Subscription (the “Share Issuance Resolution”). The special meeting of Capstone shareholders is being held concurrently with the meeting of Far West securityholders, which has been called to consider the Arrangement.

AFTER CAREFUL CONSIDERATION OF THE ARRANGEMENT AND THE TRANSACTIONS CONTEMPLATED WITH KORES, THE CAPSTONE BOARD OF DIRECTORS HAS RECOMMENDED THAT SHAREHOLDERS VOTE IN FAVOUR OF THE SHARE ISSUANCE RESOLUTION.

In order to become effective, the Share Issuance Resolution must be approved by at least a majority of the votes cast by Capstone shareholders, either present in person or by proxy at the special meeting. Pursuant to the listing rules of the Toronto Stock Exchange, a listed company is generally required to obtain shareholder approval in connection with an acquisition transaction where the number of securities issued or issuable in payment of the purchase price for the acquisition (including any securities issued or issuable upon a concurrent private placement upon which the acquisition is contingent or otherwise linked) exceeds 25% of the number of securities of the listed issuer which are outstanding, on a non-diluted basis, prior to the date of closing of the transaction.

In order to become effective, among other things, the Arrangement requires the approval of the securityholders of Far West. The Arrangement is also subject to court approval. Assuming that all of the conditions to the Arrangement are satisfied, Capstone expects the Arrangement to become effective on or about June 16, 2011.

Capstone shareholders are requested to complete and return the enclosed form of proxy to ensure that your Capstone common shares will be represented at the special meeting, whether or not you are personally able to attend. If you have questions, you may contact the proxy solicitation agent, Laurel Hill Advisory Group, by email at assistance@laurelhill.com or by telephone at 1-877-304-0211 (toll free within Canada or the U.S.) or 416-304-0211 (for collect calls outside Canada and the U.S.).

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The Arrangement will be a transformative transaction for Capstone and will create a mid-tier copper producer focused in the Americas forming a combined portfolio of high quality operating mines and a strong pipeline of copper production growth in mining friendly jurisdictions. Thank you for your continued support of Capstone.

Sincerely, “Darren M. Pylot” Darren M. Pylot President, Chief Executive Officer & Director

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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that a special meeting of shareholders (the “Meeting”) of Capstone Mining Corp. (“Capstone” or the “Company”) will be held at the Terminal City Club, 837 West Hastings Street, Vancouver British, on June 13, 2011 at 2:00 p.m. (Vancouver time) to:

(1) consider, and if deemed advisable, to approve, with or without variation, an ordinary resolution, the full text of which is attached as Schedule A to the accompanying management information circular (the “Circular”) of Capstone, approving:

a) the issuance of up to approximately 161.5 million Capstone common shares (the “Capstone Shares”), which includes the Capstone Shares issuable to the shareholders of Far West Mining Ltd. (“Far West”) and the Capstone Shares issuable upon exercise of (i) Capstone options which replace outstanding options of Far West, and (ii) Capstone warrants which replace outstanding warrants of Far West, in each case, in connection with a court-approved plan of arrangement of Far West under the Business Corporations Act (British Columbia), pursuant to which Far West will become a subsidiary of Capstone, in accordance with the arrangement agreement dated April 15, 2011 between Capstone and Far West, all as more particularly set forth in the Circular; and

b) the issuance of up to approximately 42.1 million Capstone Shares to an affiliate of Korea Resources Corporation (“KORES”) for aggregate gross proceeds of approximately Cdn.$183 million in connection with the formation a long-term strategic relationship between Capstone and KORES for the development of Far West’s Santo Domingo project; and

(2) transact such other business as may properly come before the Meeting or any adjournment or postponement thereof.

This Notice is accompanied by the Circular, which provides additional information relating to the matters to be

dealt with at the Meeting and forms part of this Notice of Meeting.

Shareholders who are unable to attend the Meeting are requested to complete, date, sign and return the enclosed form of proxy so that as large a representation as possible may be had at the Meeting.

The Board of Directors of the Company has passed a resolution to fix the close of business (Vancouver time) on May 11, 2011 as the record date for the determination of the registered holders of Capstone Shares that will be entitled to receive notice of and vote at the Meeting, and any adjournment or postponement of the Meeting. Proxies to be used or acted upon at the Meeting must be deposited with the Company’s transfer agent by 2:00 p.m. (Vancouver time) on June 9, 2011, or not less than 48 hours (excluding Saturdays, Sundays and holidays) before the commencement of any adjournment or postponement of the Meeting. The time limit for the deposit of proxies may be waived by the Chair of the Meeting without notice.

DATED at Vancouver, British Columbia this 12th day of May, 2011.

By Order of the Board of Directors

“John J. Kim” John J. Kim Corporate Secretary

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TABLE OF CONTENTS

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS.................................................................................................. iii TABLE OF CONTENTS ........................................................................................................................................................ iv NOTICE TO UNITED STATES SECURITYHOLDERS...................................................................................................... vi STATEMENTS REGARDING FORWARD-LOOKING INFORMATION......................................................................... vii INFORMATION CONCERNING FAR WEST ................................................................................................................... viii INFORMATION CONCERNING KORES.......................................................................................................................... viii REPORTING CURRENCIES AND ACCOUNTING PRINCIPLES................................................................................... viii CURRENCY EXCHANGE RATE INFORMATION .......................................................................................................... viii Q & A ON THE ARRANGEMENT, VOTING RIGHTS AND SOLICITATION OF PROXIES.......................................... 1 GLOSSARY OF TERMS ........................................................................................................................................................ 7 SELECTED CAPSTONE UNAUDITED PRO FORMA FINANCIAL INFORMATION................................................... 14 GENERAL PROXY INFORMATION.................................................................................................................................. 14

Solicitation of Proxies ........................................................................................................................................................ 14 Appointment and Revocation of Proxies............................................................................................................................ 15 Voting of Proxies and Exercise of Discretion .................................................................................................................... 15 Notice to Non-Registered (Beneficial) Shareholders ......................................................................................................... 15

VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES......................................................... 16 BUSINESS OF THE MEETING ........................................................................................................................................... 17

Record Date........................................................................................................................................................................ 17 Outstanding Shares............................................................................................................................................................. 18

THE ARRANGEMENT......................................................................................................................................................... 18 General ............................................................................................................................................................................... 18 When the Arrangement Becomes Effective ....................................................................................................................... 18 Plan of Arrangement .......................................................................................................................................................... 18 Fractional Shares ................................................................................................................................................................ 20 Arrangement Consideration ............................................................................................................................................... 20 TSX Listings ...................................................................................................................................................................... 20 Background to the Arrangement ........................................................................................................................................ 20 Recommendation of the Board........................................................................................................................................... 22 Reasons for the Arrangement ............................................................................................................................................. 22 Fairness Opinion ................................................................................................................................................................ 24 Voting Support Agreements ............................................................................................................................................... 24 Approvals ........................................................................................................................................................................... 29 Dissenting Shareholder Rights ........................................................................................................................................... 30 Issuance of Capstone Securities ......................................................................................................................................... 30

THE ARRANGEMENT AGREEMENT ............................................................................................................................... 30 General ............................................................................................................................................................................... 30 Conditions .......................................................................................................................................................................... 30 Representations and Warranties ......................................................................................................................................... 33 Covenants ........................................................................................................................................................................... 33 Far West Covenants Regarding Non-Solicitation............................................................................................................... 34 Capstone Opportunity to Match ......................................................................................................................................... 35 Termination ........................................................................................................................................................................ 36 Termination Fees................................................................................................................................................................ 37 Directors’ and Officers’ Insurance ..................................................................................................................................... 39

KORES TRANSACTIONS ................................................................................................................................................... 39 General ............................................................................................................................................................................... 39 About KORES.................................................................................................................................................................... 40 Santo Domingo Project ...................................................................................................................................................... 40 KORES Subscription.......................................................................................................................................................... 42

RISK FACTORS.................................................................................................................................................................... 42 CAPSTONE UPON COMPLETION OF THE ARRANGEMENT....................................................................................... 44

Overview ............................................................................................................................................................................ 44 Organization Chart ............................................................................................................................................................. 45 Directors and Officers ........................................................................................................................................................ 45 Description of Share Capital .............................................................................................................................................. 45

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Capstone Debentures.......................................................................................................................................................... 46 Selected Capstone Unaudited Pro Forma Financial Information ....................................................................................... 46 Post-Arrangement Shareholdings and Principal Shareholders ........................................................................................... 47

INFORMATION CONCERNING CAPSTONE ................................................................................................................... 48 Overview ............................................................................................................................................................................ 48 Share Capital of Capstone .................................................................................................................................................. 48 Price Range and Trading Volumes of Capstone Shares ..................................................................................................... 48 Price Range and Trading Volumes of Capstone Debentures.............................................................................................. 49 Prior Sales .......................................................................................................................................................................... 49 Consolidated Capitalization ............................................................................................................................................... 52 Capstone Documents Incorporated by Reference and Further Information ....................................................................... 52

INFORMATION CONCERNING FAR WEST .................................................................................................................... 53 Overview ............................................................................................................................................................................ 53 Santo Domingo Project ...................................................................................................................................................... 53 Share Capital of Far West .................................................................................................................................................. 64 Price Range and Trading Volume of Far West Shares ....................................................................................................... 65 Prior Sales .......................................................................................................................................................................... 66 Consolidated Capitalization ............................................................................................................................................... 67 Far West Documents Incorporated by Reference and Further Information........................................................................ 67

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS..................................................................... 68 INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON ................................................................... 68 AUDITOR.............................................................................................................................................................................. 68 EXPERTS OF CAPSTONE AND FAR WEST..................................................................................................................... 68 ADDITIONAL INFORMATION .......................................................................................................................................... 68 DIRECTORS’ APPROVAL .................................................................................................................................................. 69 CONSENTS ........................................................................................................................................................................... 70 SCHEDULE A SHARE ISSUANCE RESOLUTION......................................................................................................... A-1 SCHEDULE B ARRANGEMENT AGREEMENT ............................................................................................................ B-1 SCHEDULE C UNAUDITED PRO FORMA FINANCIAL STATEMENTS.................................................................... C-1 SCHEDULE D FAIRNESS OPINION OF SCOTIA CAPITAL INC. ................................................................................ D-1

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NOTICE TO UNITED STATES SECURITYHOLDERS

NEITHER THE ARRANGEMENT NOR THE SECURITIES ISSUABLE IN CONNECTION WITH THE ARRANGEMENT HAVE BEEN APPROVED OR DISAPPROVED BY THE SEC OR THE SECURITIES REGULATORY AUTHORITIES IN ANY STATE, NOR HAS THE SEC OR THE SECURITIES REGULATORY AUTHORITIES IN ANY STATE PASSED UPON THE FAIRNESS OR MERITS OF THE ARRANGEMENT OR UPON THE ADEQUACY OR ACCURACY OF THE INFORMATION CONTAINED IN THIS CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.

The securities to be issued under the Arrangement have not been registered under the U.S. Securities Act and are being issued in reliance on the exemption from registration set forth in Section 3(a)(10) of the U.S. Securities Act on the basis of the approval of the Court which will consider, among other things, the fairness of the terms and conditions of the Arrangement to holders of Far West Securities. See “The Arrangement - Issuance of Capstone Securities” in this Circular.

Capstone is a corporation existing under the laws of the Province of British Columbia. The proxy solicitation rules under the U.S. Exchange Act are not applicable to Capstone or this solicitation, and, accordingly, this solicitation is not being effected in accordance with such rules. This solicitation of proxies is not subject to the requirements of Section 14(a) of the U.S. Exchange Act. Securityholders should be aware that disclosure requirements under Canadian securities laws may be different from requirements under the U.S. Exchange Act.

Information concerning the properties and operations of Far West and Capstone has been prepared in accordance with the requirements of Canadian securities laws, which differ from the requirements of United States securities laws. Unless otherwise indicated, all mineral reserve and mineral resource estimates included or incorporated by reference in this Circular have been prepared in accordance with NI 43-101 and the Canadian Institute of Mining, Metallurgy and Petroleum definitions and classification system. NI 43-101 is a rule developed by the Canadian Securities Administrators which establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects.

Canadian standards, including NI 43-101, differ significantly from the requirements of the SEC, and mineral reserve and mineral resource information contained or incorporated by reference in this Circular may not be comparable to similar information disclosed by United States companies. In particular, and without limiting the generality of the foregoing, the term “resource” does not equate to the term “reserve”. Under United States standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. The SEC’s disclosure standards normally do not permit the inclusion of information concerning “measured mineral resources”, “indicated mineral resources” or “inferred mineral resources” or other descriptions of the amount of mineralization in mineral deposits that do not constitute “reserves” by United States standards in documents filed with the SEC. United States investors should also understand that “inferred mineral resources” have a great amount of uncertainty as to their existence and as to their economic and legal feasibility. It cannot be assumed that all or any part of an “inferred mineral resource” will ever be upgraded to a higher category. Under Canadian rules, estimates of “inferred mineral resources” may not form the basis of feasibility or pre-feasibility studies except in rare cases. Disclosure of “contained tonnes” in a mineral resource estimate is permitted disclosure under NI 43-101 provided that the grade or quality and the quantity of each category is stated; however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC standards as in place tonnage and grade without reference to unit measures. The requirements of NI 43-101 for identification of “reserves” are also not the same as those of the SEC, and reserves reported in compliance with NI 43-101 may not qualify as “reserves” under SEC standards. Accordingly, information contained in this Circular and the documents incorporated by reference herein containing descriptions of mineral deposits may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the U.S. federal securities laws and the rules and regulations thereunder.

Financial statements included or incorporated by reference in this Circular have been prepared in accordance with Canadian generally accepted accounting principles, which differ from U.S. generally accepted accounting principles in certain material respects, and thus they may not be comparable to financial statements of U.S. companies. Shareholders should be aware that the transaction described in this Circular may have tax consequences in both the United States and Canada. Such consequences for shareholders who are resident in, or citizens of, the United States may are described fully in this Circular.

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The enforcement by securityholders of civil liabilities under U.S. securities laws may be affected adversely by the fact that each of Capstone and Far West is incorporated or organized outside the United States, that some or all of their respective directors and officers and the experts named in this Circular are not residents of the United States and that all or a substantial portion of their respective assets and said persons may be located outside the United States. As a result, it may be difficult or impossible for U.S. securityholders to effect service of process within the United States upon Capstone or Far West, their respective officers and directors or the experts named herein, or to realize against them upon judgments of courts of the United States predicated upon civil liabilities under the federal securities laws of the United States or “blue sky” laws of any state within the United States. In addition, U.S. securityholders should not assume that the courts of Canada: (a) would enforce judgments of United States courts obtained in actions against such persons predicated upon civil liabilities under the federal securities laws of the United States or “blue sky” laws of any state within the Unites States; or (b) would enforce, in original actions, liabilities against such persons predicated upon civil liabilities under the federal securities laws of the United States or “blue sky” laws of any state within the United States.

STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

This Circular, the pro forma financial statements of Capstone and certain of the material incorporated by reference into this Circular contain “forward-looking information” within the meaning of Canadian securities legislation and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, “forward-looking statements”). These forward-looking statements are made as of the date of this document or as of the date of the document from which they are incorporated by reference.

Forward-looking statements relate to future events or future performance and reflect Capstone and Far West management’s expectations or beliefs regarding future events and include, but are not limited to, statements with respect to the timing and implementation of the proposed transaction, the integration of Capstone and Far West following the transaction, estimation of mineral reserves and mineral resources, availability of cash flow to fund capital requirements, the timing and amount of estimated future production, availability of project financing, and success of mining and development operations. Assumptions upon which such forward-looking statements are based include that Capstone and Far West will be able to satisfy the conditions in the Arrangement Agreement, that the required approvals will be obtained from the shareholders of each of Capstone and Far West, that all third party, court, regulatory and governmental approvals to the transaction will be obtained, tax treatment of the transaction and that all other conditions to completion of the transaction will be satisfied or waived. Many of these assumptions are based on factors and events that are not within the control of Capstone or Far West and there is no assurance they will prove to be correct.

In certain cases, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “potential”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved” or the negative of these terms or comparable terminology. By their very nature forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Capstone and Far West to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others: the conditions to the Arrangement not being satisfied; a “market overhang” could adversely affect the market price of Capstone Shares after completion of the Arrangement; risks related to the integration of Capstone’s and Far West’s businesses; mineral resource estimates may prove to be inaccurate; Capstone may not realize the benefits of its growth projects; capital requirements and operating risks associated with expanded operations and an expanded portfolio of growth projects; risks related to operating in jurisdictions which are new to Capstone; risks related to actual results of current exploration and development activities; changes in project parameters as plans continue to be refined; future prices of metals; possible variations in mineral reserves, grade or recovery rates; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; as well as those factors detailed from time to time in Capstone’s and Far West’s interim and annual financial statements and management’s discussion and analysis of those statements, all of which are filed and available for review on SEDAR at www.sedar.com. Although each of Capstone and Far West have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Capstone and Far West provide no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

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INFORMATION CONCERNING FAR WEST

Except as otherwise indicated, the information concerning Far West contained in the Circular has been taken from or is based upon Far West’s publicly available documents and records on file with Canadian securities regulatory authorities and other public sources. Although Capstone has no knowledge that would indicate that any statements contained herein concerning Far West taken from or based upon such documents and records are untrue or incomplete, neither Capstone nor any of its directors or officers assumes any responsibility for the accuracy or completeness of such information, including any of Far West’s financial statements or Far West’s mineral reserve and mineral resource estimates, or for any failure by Far West to disclose events or facts which may have occurred or which may affect the significance or accuracy of any such information but which are unknown to Capstone. Capstone has limited means of verifying the accuracy or completeness of any of the information contained herein that is derived from Far West’s publicly available documents or records or whether there has been any failure by Far West to disclose events that may have occurred or may affect the significance or accuracy of any information.

For further information regarding Far West, please refer to Far West’s filings with the Canadian Securities Administrators which may be obtained through the SEDAR website at www.sedar.com.

INFORMATION CONCERNING KORES

Except as otherwise indicated, the information concerning KORES contained in the Circular has been taken from or is based upon public sources. Although Capstone has no knowledge that would indicate that any statements contained herein concerning KORES taken from or based upon such materials are untrue or incomplete, neither Capstone nor any of its directors or officers assumes any responsibility for the accuracy or completeness of such information or for any failure by KORES to disclose events or facts which may have occurred or which may affect the significance or accuracy of any such information but which are unknown to Capstone. Capstone has limited means of verifying the accuracy or completeness of any of the information contained herein that is derived from KORES’ publicly available information or whether there has been any failure by KORES to disclose events that may have occurred or may affect the significance or accuracy of any information.

For further information regarding KORES, please refer to KORES’ website at eng.kores.or.kr.

REPORTING CURRENCIES AND ACCOUNTING PRINCIPLES

Unless otherwise indicated, all references to “$” or “dollars” in the Circular refer to United States dollars and all references to “Cdn.$” in the Circular refer to Canadian dollars. Capstone’s financial statements included herein and incorporated by reference are reported in United States dollars and are prepared in accordance with Canadian generally accepted accounting principles. Far West’s financial statements included herein and incorporated by reference are reported in Canadian dollars and are prepared in accordance with Canadian generally accepted accounting principles.

CURRENCY EXCHANGE RATE INFORMATION

The following table sets forth the high and low exchange rates for one U.S. dollar expressed in Canadian dollars for each period indicated, the average of the exchange rates for each period indicated and the exchange rate at the end of each such period, based upon the noon buying rates provided by the Bank of Canada:

Year Ended December 31 (Cdn.$) 2010 2009 2008

High 1.0778 1.3000 1.2969 Low 0.9946 1.0292 0.9719

Rate at end of period 0.9946 1.0466 1.2246 Average rate for period 1.0299 1.1420 1.0660

On May 11, 2011, the exchange rate for one U.S. dollar expressed in Canadian dollars based upon the noon buying rates provided by the Bank of Canada was Cdn.$0.9582.

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CAPSTONE MINING CORP.

MANAGEMENT INFORMATION CIRCULAR

Q & A ON THE ARRANGEMENT, VOTING RIGHTS AND SOLICITATION OF PROXIES

This management information circular (“Circular”) is dated May 12, 2011 and, unless otherwise stated, the information in this Circular is as of May 12, 2011.

What is this document?

This Circular is a management information circular sent to shareholders in advance of a special meeting of shareholders (the “Meeting”) as set out in the Notice of Special Meeting of Shareholders (the “Notice of Meeting”). This Circular provides additional information respecting the business of the Meeting, Capstone Mining Corp. (“Capstone” or the “Company”), Far West Mining Ltd. (“Far West”) and KOREA Resources Corporation (“KORES”). For ease of reference, a glossary of capitalized terms used in this Circular can be found starting at page 7. References in this Circular to the Meeting include any adjournment or postponement that may occur. A form of proxy or voting instruction form accompanies this Circular.

Why is the Meeting being held?

The Meeting is being held in order to approve the issuance of common shares of Capstone (“Capstone Shares”) in connection with the Arrangement and the issuance of Capstone Shares in connection with the KORES Subscription. Pursuant to the listing rules of the TSX, a listed company is generally required to obtain shareholder approval in connection with an acquisition transaction where the number of securities issued or issuable in payment of the purchase price for the acquisition (including any securities issued or issuable upon a concurrent private placement upon which the acquisition is contingent or otherwise linked) exceeds 25% of the number of securities of the listed issuer which are outstanding, on a non-diluted basis, prior to the date of closing of the transaction. As the Arrangement and the KORES Subscription (as hereinafter defined) will result in Capstone issuing in excess of 25% of the outstanding Capstone Shares, Shareholder approval is required. It is a condition of the acquisition of Far West that the Share Issuance Resolution be approved by a simple majority (50% plus one vote) of votes cast at the Meeting by Shareholders, present in person or by proxy.

Who is eligible to vote?

Holders of Capstone Shares at the close of business (Vancouver time) on May 11, 2011 (the “Record Date”) and their duly appointed representatives are eligible to vote.

Who is soliciting my proxy?

Proxies are being solicited in connection with this Circular by the management of the Company. Costs associated with the solicitation will be borne by the Company. The solicitation will be made primarily by mail, but proxies may also be solicited personally by regular employees of the Company to whom no additional compensation will be paid. In addition, the Company has retained the services of Laurel Hill Advisory Group to solicit proxies for the Company for a Cdn.$20,000 program management fee and a Cdn.$20,000 success fee plus disbursements and other expenses.

What is the Arrangement?

The Arrangement involves the acquisition of all of the issued and outstanding Far West Shares by Capstone, pursuant to which each Far West Shareholder will be entitled to elect to receive, in exchange for each Far West Share held (i) 1.825 Capstone Shares and Cdn.$1.00 in cash, (ii) 2.047 Capstone Shares and Cdn.$0.001 in cash, or (iii) Cdn.$9.19 in

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cash, subject to proration on the basis of an aggregate maximum cash amount of approximately Cdn.$79 million, and provided that no Far West shareholder that elects option (iii) above will receive less than Cdn.$1.00 in cash per Far West Share. The Arrangement is being carried out pursuant to the terms of the Arrangement Agreement and will be conducted in accordance with a court-approved Plan of Arrangement under the BCBCA. As a result of the Arrangement and upon completion of the transactions contemplated between Capstone and KORES, Far West will become a subsidiary of Capstone, owned (indirectly) 70% by Capstone and 30% by KORES Sub.

Why is Capstone proposing to acquire Far West?

Capstone is proposing to acquire Far West because Capstone believes that the Arrangement represents a highly compelling transaction, delivering fully-funded growth from Far West’s Santo Domingo project. The Santo Domingo project is favourably located with access to nearby infrastructure and ongoing studies continue to demonstrate the potential for significant copper and iron production over a long mine life. The Arrangement is consistent with Capstone’s strategy of building a mid-tier copper producer focused in the Americas with a portfolio of high quality operating mines and a strong pipeline of copper production growth in mining friendly jurisdictions. See the section of the Circular entitled “The Arrangement – Reasons for the Arrangement”.

What approvals are required for the Share Issuance Resolution?

In order to become effective, the Share Issuance Resolution must be approved by a simple majority (50% plus one vote) of the votes cast at the Meeting by Shareholders, present in person or by proxy.

When does Capstone expect the Arrangement to be effective?

Capstone expects to complete the Arrangement in June, 2011. As the Arrangement is conditional upon the receipt of a number of regulatory, court and securityholder approvals, the exact timing of completion of the Arrangement cannot be predicted, but it is expected to be on or about June 16, 2011.

What does Capstone’s board of directors think of the Arrangement?

After careful consideration of the Arrangement and the transactions contemplated with KORES, the Board has RECOMMENDED that Shareholders VOTE IN FAVOUR of the Share Issuance Resolution.

Has Capstone received a fairness opinion in connection with the Arrangement?

In connection with the Arrangement, the Board received a written opinion from Scotia Capital Inc. to the effect that, as of April 15, 2011 and based upon and subject to the various assumptions, explanations, qualifications and limitations set forth in their opinion, the Arrangement is fair, from a financial point of view, to Capstone. The full text of the opinion can be found at Schedule D to this Circular. See the section of the Circular entitled “The Arrangement - Fairness Opinion”.

What other conditions must be satisfied to complete the Arrangement?

The Arrangement is conditional upon the receipt of, among other things, the approval of the Share Issuance Resolution by a simple majority (50% plus one vote) of votes cast at the Meeting by Shareholders, present in person or by proxy, the approval of the Arrangement Resolution by at least two-thirds of the votes cast by Far West Securityholders at the Far West Meeting, completion of the transactions contemplated between Capstone and KORES and receipt of the Final Order from the Court. See the sections of the Circular entitled “The Arrangement Agreement - Conditions”, “The Arrangement - Approvals” and “The Arrangement - Regulatory Matters”.

Am I entitled to dissent rights?

No. Capstone Shareholders are not entitled to dissent rights in connection with the actions to be taken at the Meeting.

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How many Capstone Shares could be issued pursuant to the Arrangement?

In connection with the Arrangement, Capstone could issue up to approximately 161.5 million Capstone Shares, based on the number of Far West securities outstanding as at April 15, 2011 (as represented to Capstone by Far West in the Arrangement Agreement) and assuming that: (i) all of the Far West Shares outstanding (as at April 15, 2011) are acquired upon completion of the Arrangement, (ii) all Far West Shareholders elect the Share Alternative (as hereinafter defined), (iii) all holders of Far West Options elect to duly exercise all such Far West Options for Far West Shares prior to the Effective Time and elect the Share Alternative, and (iv) all holders of Far West Warrants elect to duly exercise all such Far West Warrants for Far West Shares prior to the Effective Time and elect the Share Alternative. In addition, and subject to the assumptions above, up to approximately 42.1 million Capstone Shares could be issued to KORES Sub in connection with the KORES Subscription.

How does Capstone intend to pay for the Arrangement?

Capstone has agreed to permit Far West Shareholders to elect to receive, in exchange for each Far West Share held (i) 1.825 Capstone Shares and Cdn.$1.00 in cash, (ii) 2.047 Capstone Shares and Cdn.$0.001 in cash, or (iii) Cdn.$9.19 in cash, subject to proration on the basis of an aggregate maximum cash amount of approximately Cdn.$79 million, and provided that no Far West shareholder that elects option (iii) above will receive less than Cdn.$1.00 in cash per Far West Share. Capstone intends to fund the aggregate cash amount to be paid to Far West Shareholders from cash on hand. The issuance of the Consideration Shares to Far West Shareholders requires Capstone Shareholder Approval.

Far West Shareholders will not be entitled to fractional Capstone Shares in connection with the Arrangement. Where the consideration owing to such a Far West Shareholder would otherwise result in a fractional Capstone Share being issued, the Far West Shareholder will receive a cash payment in lieu of the fractional share amount. See the sections of the Circular entitled “The Arrangement - Fractional Shares” and “The Arrangement - Arrangement Consideration”.

How will the Arrangement affect my ownership and voting rights as a Shareholder of Capstone?

Assuming that: (i) all of the Far West Shares outstanding as at April 15, 2011 are acquired upon completion of the Arrangement, (ii) all Far West Shareholders elect the Full Proration Alternative (as hereinafter defined), (iii) all holders of Far West Options elect to receive Replacement Options rather than exercise their Far West Options in advance of the successful completion of the Arrangement, and (iv) all holders of Far West Warrants elect to receive Replacement Warrants rather than exercise their Far West Warrants in advance of the successful completion of the Arrangement, Capstone would issue an aggregate of approximately 158 million Capstone Shares in connection with the Arrangement and the KORES Subscription, which would result in there being up to a total of approximately 362 million Capstone Shares issued and outstanding (based on the number of Capstone Shares outstanding as at May 11, 2011) immediately following the completion of the Arrangement and the KORES Subscription, with Shareholders holding in the aggregate approximately 56% of the outstanding Capstone Shares, former Far West Shareholders holding approximately 33% of the outstanding Capstone Shares and KORES Sub holding approximately 11% of the outstanding Capstone Shares (each on a non-diluted basis). As a result of this issuance, the Shareholders’ ownership and voting interests in Capstone will be diluted, relative to their current proportional ownership and voting interest in Capstone.

The number of Capstone Shares to be issued depends on the elections of the holders of Far West Shares and depends on the number of Far West Options and Far West Warrants that are exercised prior the Effective Time. Depending on these factors, Shareholders could be more or less diluted.

Are there risks I should consider in connection with the Arrangement?

Yes. A number of risk factors that you should consider in connection with the Arrangement are described in the section of this Circular entitled “Risk Factors”.

How do I vote?

If you are a registered Shareholder, you may vote your Capstone Shares in person at the Meeting or you may sign the enclosed form of proxy appointing the persons named in the proxy or some other person you choose, who need not be a Shareholder, to represent you as a proxyholder and vote your shares at the Meeting.

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If your Capstone Shares are held in an account with a bank, trust company, securities broker, trustee or other nominee, please refer to the answer to the question “How do I vote if my Capstone Shares are held in the name of a nominee (a bank, trust company, securities broker, trustee or other)?”

How do I vote my Capstone Shares in person?

If you are a registered Shareholder and plan to attend the Meeting on June 13, 2011, and wish to vote your Capstone Shares in person, do not complete the enclosed form of proxy, as your vote will be taken and counted at the Meeting. Please register with the Company’s transfer agent and registrar, Computershare Investor Services Inc., upon arrival at the Meeting. If your Capstone Shares are held in an account with a nominee, please see the answer to the question “How do I vote if my Capstone Shares are held in the name of a nominee (a bank, trust company, securities broker, trustee or other)?”

How do I know if I am a “registered” Shareholder or a “beneficial” Shareholder?

A holder of Capstone Shares may own such shares in one or both of the following ways:

1. If a Shareholder is in possession of a physical share certificate, such Shareholder is a “registered Shareholder” and his or her name and address are known to Capstone through the Transfer Agent.

2. If a Shareholder owns Capstone Shares through a bank, broker or other nominee, such Shareholder is a “beneficial Shareholder” and he or she will not have a physical share certificate. Such Shareholder will have an account statement from his or her bank or broker as evidence of his or her Capstone Share ownership.

A registered Shareholder may vote a proxy in his or her own name at any time by telephone, internet or by mail, in accordance with the instructions appearing on the enclosed form of proxy and/or a registered Shareholder may attend the Meeting and cast a ballot. Because a registered Shareholder is known to Capstone and its Transfer Agent, his or her account can be confirmed and his or her vote recorded or changed if such registered Shareholder has previously voted. This procedure prevents a Shareholder from voting his or her Capstone Shares more than once. Only the registered Shareholder’s latest voting instructions received by the Company prior to the deadline for the deposit of proxies will be valid.

Most Shareholders are “beneficial owners” who are non-registered Shareholders. Their Capstone Shares are registered in the name of an intermediary, such as a bank, trust company, securities broker, trustee, custodian or other nominee who holds the shares on their behalf, or in the name of a clearing agency in which the intermediary is a participant (such as CDS Clearing and Depository Services Inc.). Intermediaries have obligations to forward Meeting materials to the non-registered holders, unless otherwise instructed by the holder (and as required by regulation in some cases, despite such instructions).

What constitutes a quorum at the Meeting?

A quorum for the Meeting shall be at least two persons present and holding or representing by proxy not less than 5% of the total number of issued and outstanding Capstone Shares having voting rights at the Meeting. No business shall be transacted at the Meeting unless the requisite quorum is present at the commencement of the Meeting. If a quorum is present at the commencement of the Meeting, a quorum shall be deemed to be present during the remainder of the Meeting.

What happens if I sign the enclosed form of proxy?

Signing the enclosed form of proxy gives authority to Darren M. Pylot or Richard R. Godfrey (the “Named Proxyholders”) to vote your Capstone Shares at the Meeting in accordance with your instructions. A Shareholder who wishes to appoint another person (who need not be a Shareholder) to represent the Shareholder at the Meeting may either insert the person’s name in the blank space provided in the form of proxy or complete another proper form of proxy.

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What do I do with my completed form of proxy?

The completed proxy must be deposited at the office indicated on the enclosed envelope no later than 2:00 p.m. (Vancouver time) on June 9, 2011, or not less than 48 hours (excluding Saturdays, Sundays and holidays) before the commencement of any adjournment or postponement of the Meeting. The time limit for the deposit of proxies may be waived by the Chair of the Meeting without notice.

If I change my mind, can I take back my proxy once I have given it?

A Shareholder who has voted by proxy may revoke it any time prior to its use. To revoke a proxy, a registered Shareholder may deliver a written notice to the registered office of the Company at 9th Floor - 999 West Hastings Street, Vancouver, British Columbia V6C 2W2; Attention: Corporate Secretary, or at the offices of Computershare Investor Services Inc., 100 University Avenue, 11th Floor, Toronto, Ontario, M5J 2Y1 at any time up to 2:00 p.m. (Vancouver time) on the last business day before the Meeting or any adjournment or postponement of the Meeting. A proxy may also be revoked on the day of the Meeting or any adjournment of the Meeting by a registered Shareholder by delivering written notice to the chair of the Meeting. In addition, the proxy may be revoked by any other method permitted by applicable law. The written notice of revocation may be executed by the Shareholder or by an attorney who has the Shareholder’s written authorization. If the Shareholder is a corporation, the written notice must be executed by its duly authorized officer or attorney.

How will my Capstone Shares be voted if I give my proxy?

If you appoint the Named Proxyholders as your proxyholders, the Capstone Shares represented by the form of proxy will be voted or withheld from voting, in accordance with your instructions as indicated on the form, on any ballot that may be called for. In the absence of instructions from you, such Capstone Shares will be voted FOR the Share Issuance Resolution.

What if amendments are made to these matters or other business is brought before the Meeting?

The accompanying form of proxy confers discretionary authority on the Named Proxyholders with respect to any amendments or variations to the matters identified in the Notice of Meeting or other matters that may properly come before the Meeting and the named proxies in your properly executed proxy will vote on such matters in accordance with their judgment. At the date of this Circular, management of Capstone is not aware of any such amendments, variations or other matters which are to be presented for action at the Meeting.

How many Capstone Shares are entitled to vote?

As at May 11, 2011, there were 203,992,540 Capstone Shares outstanding, each Capstone Share carrying the right to one vote per Capstone Share.

Who are the principal Shareholders of the Company?

To the knowledge of the directors and executive officers of the Company, other than Pala Investments Holdings Limited which is the holder of 37,727,000 Capstone Shares (representing approximately 18.5% of the issued and outstanding Capstone Shares as at May 11, 2011), as of the date of this Circular, there is no person or company that beneficially owns, directly or indirectly, or exercises control or direction over, voting securities of the Company carrying 10% or more of the voting rights attached to any class of voting securities of the Company. See the Section of the Circular entitled, “Voting Securities and Principal Holders of Voting Securities”.

How do I vote if my Capstone Shares are held in the name of a nominee (a bank, trust company, securities broker, trustee or other)?

Only registered Shareholders of Capstone Shares, or the persons they appoint as proxies, are permitted to attend and vote at the Meeting. If your Capstone Shares are held in an account with a bank, trust company, securities broker, trustee or other financial institution, they will not be registered in your name and instead will be registered in the name of a nominee. As required by Canadian securities legislation, you will have received from your nominee either a request for voting instructions or a form of proxy for the number of Capstone Shares you hold unless you have instructed the nominee otherwise. The purpose of this procedure is to permit beneficial Shareholders to direct the voting of the Capstone Shares

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they beneficially own. Each nominee has its own signing and return instructions, which you should carefully follow to ensure your Capstone Shares will be voted. If you are a beneficial Shareholder and wish to:

• vote in person at the Meeting; or

• change voting instructions given to your nominee; or

• revoke voting instructions given to your nominee and vote in person at the Meeting,

follow the instructions given by your nominee or contact your nominee to discuss what procedure to follow. You may also contact the proxy solicitation agent, Laurel Hill Advisory Group, by email at assistance@laurelhill.com or by telephone at 1-877-304-0211 (toll free within Canada or the U.S.) or 416-304-0211 (for collect calls outside Canada and the U.S.).

What if I have other questions?

If you have questions, you may contact the proxy solicitation agent, Laurel Hill Advisory Group, by email at assistance@laurelhill.com or by telephone at 1-877-304-0211 (toll free within Canada or the U.S.) or 416-304-0211 (for collect calls outside Canada and the U.S.).

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GLOSSARY OF TERMS

“Acquisition Proposal” means, other than the transactions contemplated by the Arrangement Agreement and other than any transaction involving only a party to the Arrangement Agreement and/or one or more of its subsidiaries, any offer, proposal or inquiry from any person or group of persons, whether or not in writing and whether or not delivered to the shareholders of a party to the Arrangement Agreement, after the date of the Arrangement Agreement relating to: (a) any acquisition or purchase, direct or indirect, of: (i) assets of that party and/or one or more of its subsidiaries that, individually or in the aggregate, constitute 20% or more of the consolidated assets of that party and its subsidiaries, taken as a whole, or which in the case of Capstone, contribute 20% or more of the consolidated revenue of Capstone and its subsidiaries, taken as a whole, or (ii) 20% or more of any voting or equity securities of that party or any one or more of its subsidiaries that, individually or in the aggregate, constitute 20% or more of the consolidated assets of that party and its subsidiaries, taken as a whole or, in the case of Capstone, contribute 20% or more of the consolidated revenues of Capstone and its subsidiaries, taken as a whole; (b) any take-over bid, tender offer or exchange offer that, if consummated, would result in such person beneficially owning 20% or more of any class of voting or equity securities of that party; (c) a plan of arrangement, merger, amalgamation, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving that party and/or any of its subsidiaries whose assets, individually or in the aggregate, constitute 20% or more of the consolidated assets of that party and its subsidiaries, taken as a whole, or, in the case of Capstone, whose revenues, individually or in the aggregate, constitute 20% or more of the consolidated revenues of Capstone and its subsidiaries, taken as a whole; or (d) any other transaction, the consummation of which would or could reasonably be expected to impede, interfere with, prevent or delay the transactions contemplated in the Arrangement Agreement or which would or could reasonably be expected to materially reduce the benefit to a party to the Arrangement Agreement under the Arrangement Agreement or the Arrangement;

“AcquisitionCo” means 0908113 B.C. Ltd., a corporation incorporated under the laws of British Columbia as a wholly-owned subsidiary of Capstone;

“AcquisitionCo Shareholders Agreement” means the Shareholders Agreement to be entered into among KORES, KORES Sub, Capstone and AcquisitionCo in respect of AcquisitionCo;

“Arrangement” means the arrangement of Far West under Section 288 of the BCBCA on the terms and subject to the conditions set out in the Plan of Arrangement, subject to any amendments or variations thereto made in accordance with Section 8.4 of the Arrangement Agreement or the Plan of Arrangement or made at the direction of the Court in the Final Order (provided that any such amendment or variation is acceptable to both Far West and Capstone, each acting reasonably);

“Arrangement Agreement” means the arrangement agreement dated April 15, 2011 between Far West and Capstone, as the same may be amended, supplemented or otherwise modified in accordance with the terms therein, a copy of which is attached as Schedule B to the Circular;

“Arrangement Resolution” means the special resolution of the Far West Securityholders approving the Plan of Arrangement which is to be considered at the Far West Meeting;

“Authorization” means any authorization, order, permit, approval, grant, licence, registration, consent, clearance, right, notification, condition, franchise, privilege, certificate, judgment, writ, injunction, award, determination, direction, decision, decree, bylaw, rule or regulation, whether or not having the force of law, and includes any environmental permit;

“BCBCA” means the Business Corporations Act (British Columbia) and the regulations made thereunder, as now in effect and as they may be promulgated or amended from time to time;

“beneficial Shareholder” or “beneficial owner” means a non-registered Shareholder or, more specifically, a Shareholder that holds its/his/her Capstone Shares through an intermediary such as a bank, broker or other nominee;

“Board” means, the board of directors of Capstone, as the same is constituted from time to time;

“Capstone” or the “Company” means Capstone Mining Corp., a corporation incorporated under the laws of British Columbia;

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“Capstone Change in Recommendation” has the meaning given to that term in the section of the Circular entitled, “The Arrangement Agreement - Termination”;

“Capstone Confidentiality Agreement” means the confidentiality agreement between Capstone and Far West dated March 28, 2011, pursuant to which Capstone has provided confidential information about its business to Far West;

“Capstone Debentures” means the outstanding convertible debentures of Capstone described in the section of the Circular entitled, “Capstone Upon Completion of the Arrangement - Debentures”;

“Capstone Locked-Up Shareholders” means each of the directors and executive officers of Capstone;

“Capstone Material Adverse Effect” means any one or more changes, effects, events, occurrences or states of fact, either individually or in the aggregate, that is, or would reasonably be expected to be, material and adverse to the (x) assets, liabilities (including any contingent liabilities that may arise through outstanding, pending or threatened litigation or otherwise), business, operations, results of operations, capital, property, obligations (whether absolute, accrued, conditional or otherwise) or financial condition of Capstone and its subsidiaries taken as a whole, or (y) the continued ownership, development and operation of the (i) the Cozamin Polymetalic Mine, Mexico, (ii) the Minto Copper-Gold Mine, Yukon, and (iii) the Kutcho Copper-Zinc-Gold-Silver project, Northwestern British Columbia, other than changes, effects, events, occurrences or states of fact resulting from: (a) a change in the market price of the Capstone Shares following and reasonably attributable to the public announcement of the execution of the Arrangement Agreement and the transactions contemplated thereby; (b) any changes affecting the global copper mining industry generally; (c) any change in the market price of copper; (d) any change in applicable laws or GAAP; or (e) general economic, financial, currency exchange, securities or commodity market conditions in Canada or the United States; provided, however, that with respect to clauses (b), (c), (d) or (e), such change does not relate primarily to Capstone and its subsidiaries, taken as a whole, or do not have a disproportionate effect on Capstone and its subsidiaries, taken as a whole, compared to other companies of similar size operating in the copper mining industry; and references in the Arrangement Agreement to dollar amounts are not intended to be and shall not be deemed to be illustrative or interpretative for purposes of determining whether a “Capstone Material Adverse Effect” has occurred;

“Capstone Options” means the outstanding options to purchase Capstone Shares granted pursuant to the stock option plan of Capstone;

“Capstone Securities” means the Capstone Shares, Replacement Options, and Replacement Warrants;

“Capstone Shareholder Approval” means the approval by the Capstone Shareholders by ordinary resolution of the issuance of the Consideration Shares, Option Shares, Warrant Shares and KORES Shares at the Capstone Meeting, in accordance with the policies of the TSX;

“Capstone Shares” means common shares in the capital of the Company;

“Capstone Voting Support Agreements” means the voting support agreements (including all amendments thereto) between Far West and each of the Capstone Locked-up Shareholders, setting forth the terms and conditions upon which they have agreed, among other things, to vote their Capstone Shares in favour of the Arrangement;

“Capstone Termination Fee Event” has the meaning given to that term in the section of the Circular entitled, “The Arrangement Agreement - Termination Fees”;

“Cash Alternative” has the meaning given to that term in the section of the Circular entitled “The Arrangement – Plan of Arrangement”;

“Cash Maximum” has the meaning given to that term in the section of the Circular entitled, “The Arrangement – Plan of Arrangement”; “Circular” means this management information circular dated May 12, 2011;

“Conditional Exercise Notice” means a notice of exercise that is conditional upon completion of the Arrangement and that is validly given under the Far West Option Plan with respect to the exercise of Far West Options that are currently vested or vest upon a change of control pursuant to the Far West Option Plan;

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“Consideration” means the consideration to be received by the Far West Shareholders pursuant to the Plan of Arrangement as consideration for their Far West Shares, consisting of, at the election of the Far West Shareholder, in exchange for each Far West share held (i) 1.825 Capstone Shares and Cdn.$1.00 in cash, (ii) 2.047 Capstone Shares and Cdn.$0.001 in cash, or (iii) Cdn.$9.19 in cash, subject to proration on the basis of the Cash Maximum and provided that no Far West Shareholder that elects option (iii) above, will receive less than Cdn.$1.00 in cash per Far West Share;

“Consideration Shares” means the Capstone Shares to be issued to Far West Shareholders pursuant to the Arrangement;

“Court” means the Supreme Court of British Columbia;

“Depositary” means Computershare Investor Services Inc.;

“Dissent Rights” means the rights of dissent exercisable by the Far West Shareholders in respect of the Arrangement;

“Dissenting Shares” means the Far West Shares held by Far West Shareholders who duly exercise Dissent Rights with respect to such Far West Shares;

“Effective Date” means the effective date of the Arrangement, being the second business day after the date upon which all conditions precedent (excluding conditions that, by their terms, cannot be satisfied until the Effective Date) to the completion of the Arrangement as set out in the Arrangement Agreement have been satisfied or waived in accordance with the Arrangement Agreement, or such other date as may be agreed to by the parties to the Arrangement Agreement, and such parties shall execute a certificate confirming the Effective Date, not to be unreasonably withheld;

“Effective Time” has the meaning given to that term in the Plan of Arrangement;

“Far West” means Far West Mining Ltd., a corporation incorporated pursuant to the laws of British Columbia;

“Far West Board” means the board of directors of Far West as the same is constituted from time to time;

“Far West Circular” means the notice of the Far West Meeting and accompanying management information circular, dated May 12, 2011, including all schedules, appendices and exhibits thereto and enclosures therewith, to be sent to the Far West Securityholders in connection with the Far West Meeting, as amended, supplemented or otherwise modified from time to time;

“Far West Confidentiality Agreement” means the confidentiality agreement between Capstone and Far West dated November 5, 2010, pursuant to which Far West has provided confidential information about its business to Capstone;

“Far West Locked-up Shareholders” means QuadraFNX, certain Pacific Road Resources funds, Seaman Family Trust and each of the directors and executive officers of Far West, who together hold 17,831,435 Far West Shares, 4,068,000 Far West Options and 7,992,821 Far West Warrants;

“Far West Material Adverse Effect” means any one or more changes, effects, events, occurrences or states of fact, either individually or in the aggregate, that is, or would reasonably be expected to be, material and adverse to the (x) assets, liabilities (including any contingent liabilities that may arise through outstanding, pending or threatened litigation or otherwise), business, operations, results of operations, capital, property, obligations (whether absolute, accrued, conditional or otherwise) or financial condition of Far West and its subsidiaries taken as a whole, or (y) the continued ownership, development and operation of the Santo Domingo Project, in each case other than changes, effects, events, occurrences or states of fact resulting from: (a) a change in the market price of the Far West Shares following and reasonably attributable to the public announcement of the execution of the Arrangement Agreement and the transactions contemplated thereby, (b) any changes affecting the global copper or iron mining industries generally, (c) any change in the market price of copper or iron; (d) any change in applicable laws or GAAP; or (e) general economic, financial, currency exchange, securities or commodity market conditions in Canada or the United States; provided however that with respect to clauses (b), (c), (d) or (e), such change does not relate primarily to Far West and its subsidiaries, taken as a whole, or does not have a disproportionate effect on Far West and its subsidiaries, taken as a whole, compared to other companies of similar size operating in the copper or iron mining industries; and references in the Arrangement Agreement to dollar amounts are not intended to be and shall not be deemed to be illustrative or interpretative for purposes of determining whether a “Far West Material Adverse Effect” has occurred;

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“Far West Meeting” means the special meeting of Far West Securityholders, including any adjournment or postponement thereof, to be called and held in accordance with the Interim Order to consider the Arrangement Resolution;

“Far West Option Plan” means the stock option plan of Far West, approved by the Far West Board on March 26, 2007 and by Far West Shareholders on May 9, 2007 and on May 13, 2010;

“Far West Optionholders” means the holders of Far West Options;

“Far West Options” means the outstanding options to purchase Far West Shares granted under the Far West Option Plan;

“Far West Securities” means Far West Shares, Far West Options, and Far West Warrants;

“Far West Securityholder Approval” means approval by the Far West Securityholders at the Far West Meeting of the Arrangement Resolution;

“Far West Securityholders” means Far West Shareholders, Far West Optionholders and Far West Warrantholders;

“Far West Shareholder Rights Plan” means the Far West shareholder rights plan agreement dated March 25, 2004, as amended March 17, 2008;

“Far West Shareholders” means the holders of Far West Shares;

“Far West Shares” means the common shares in the authorized share capital of Far West;

“Far West Termination Fee Event” has the meaning given to that term in the section of the Circular entitled “The Arrangement Agreement - Termination Fees”;

“Far West Voting Support Agreements” means the voting support agreements (including all amendments thereto) between Capstone and each of the Far West Locked-up Shareholders, setting forth the terms and conditions upon which they have agreed, among other things, to vote their Far West Securities in favour of the Arrangement Resolution;

“Far West Warrantholders” means the holders of Far West Warrants;

“Far West Warrants” means outstanding warrants to purchase Far West Shares;

“Final Order” means the final order of the Court, after a hearing upon the fairness of the terms and conditions of the Arrangement, approving the Arrangement, in a form acceptable to Far West and Capstone, each acting reasonably, as such order may be amended by the Court (with the consent of both Far West and Capstone, each acting reasonably) at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended (provided that any such amendment is acceptable to both Far West and Capstone, each acting reasonably) on appeal;

“Full Proration Alternative” has the meaning given to that term in the section of the Circular entitled “The Arrangement – Plan of Arrangement”; “GAAP” means Canadian generally accepted accounting principles;

“Governmental Entity” means: (a) any multinational, federal, provincial, territorial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau, agency or entity, domestic or foreign; (b) any stock exchange, including the TSX; (c) any subdivision, agent, commission, board or authority of any of the foregoing; or (d) any quasi-governmental or private body, including any tribunal, commission, regulatory agency or self-regulatory organization, exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing;

“In the Money Amount” means in respect of a stock option at any time, the amount, if any, by which the aggregate fair market value, at that time, of the securities subject to the option exceeds the aggregate exercise price under the option;

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“Interim Order” means the interim order of the Court obtained May 10, 2011 and made pursuant to Section 291 of the BCBCA, providing for, among other things, the calling and holding of the Far West Meeting, as the same may be amended by the Court (with the consent of Far West and Capstone, each acting reasonably);

“KORES” means Korea Resources Corporation, a corporation existing under the laws of the Republic of Korea;

“KORES Agreements” means, collectively: (i) the KORES ASPA, (ii) the KORES Subscription Agreement, and (iii) the AcquisitionCo Shareholders Agreement;

“KORES ASPA” means the Acquisition Support and Purchase Agreement between KORES and Capstone dated April 15, 2011;

“KORES Condition” means the execution and delivery of the KORES Agreements by all parties thereto, the satisfaction or waiver of all relevant closing conditions under the KORES Agreements and the taking of all actions required to be taken by the parties thereto on, concurrently with or prior to the Effective Time under the KORES Agreements by such parties;

“KORES Shares” means the Capstone Shares issuable to KORES Sub in connection with the KORES Subscription;

“KORES Sub” means Korea Chile Mining Corporation, a company incorporated in the Yukon Territory as a subsidiary of KORES;

“KORES Subscription” means the subscription by KORES Sub for Capstone Shares pursuant to the KORES Subscription Agreement at a price of Cdn.$4.3526 per Capstone Share;

“KORES Subscription Agreement” means the Subscription Agreement among KORES, KORES Sub and Capstone dated April 15, 2011;

“Meeting” means the special meeting of shareholders of the Company to be held at the Terminal City Club, 837 West Hastings Street, Vancouver British, on June 13, 2011 at 2:00 p.m. (Vancouver time), including any postponement or adjournment thereof;

“MLO” means Minera Lejano Oeste S.A., a corporation existing under the laws of Chile and a wholly-owned subsidiary of Far West;

“Named Proxyholders” means Darren M. Pylot and Richard R. Godfrey;

“NI 43-101” means National Instrument 43-101 - Standards of Disclosure for Mineral Projects;

“Notice of Meeting” means the Notice of Special Meeting of Shareholders accompanying this Circular;

“Option Shares” means the Capstone Shares issuable on exercise of Replacement Options;

“Outside Date” means August 31, 2011, or such later date as may be agreed to in writing by Capstone and Far West;

“Plan of Arrangement” means the plan of arrangement of Far West, substantially in the form of Schedule A to the Arrangement Agreement, and any amendments or variations thereto made in accordance with the Plan of Arrangement or upon the direction of the Court in the Final Order with the consent of Far West and Capstone, each acting reasonably;

“Proposed Agreement” means any agreement entered into by Far West as contemplated by Section 7.1(e) of the Arrangement Agreement;

“QuadraFNX” means QuadraFNX Mining Ltd.;

“Record Date” means May 11, 2011;

“Regulatory Approvals” means those sanctions, rulings, consents, orders, exemptions, permits and other approvals (including the waiver or lapse, without objection, of a prescribed time under a statute or regulation that states that a

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transaction may be implemented if a prescribed time lapses following the giving of notice without an objection being made) of Governmental Entities, required in connection with the consummation of the Arrangement or any of the transactions contemplated by the Arrangement Agreement;

“registered Shareholder” means a Shareholder of the Company in possession of a physical Capstone Share certificate as recorded with the Transfer Agent;

“Replacement Option” has the meaning given to that term in the section of the Circular entitled “The Arrangement – Plan of Arrangement”;

“Replacement Warrant” has the meaning given to that term in the section of the Circular entitled “The Arrangement – Plan of Arrangement”;

“Santo Domingo Project” means the iron-oxide copper-gold project in Region III, Chile, South America, located within the Candelaria Project Area which is owned by MLO, as more particularly described in the section of the Circular entitled “Information Concerning Far West – Santo Domingo Project”;

“Scotia” means Scotia Capital Inc., the financial advisor to Capstone in respect of the Arrangement;

“Scotia Fairness Opinion” means the written fairness opinion of Scotia dated April 15, 2011, delivered to the Board in connection with the Arrangement, the full text of which is set out as Schedule D to the Circular;

“SEC” means the United States Securities and Exchange Commission;

“Share Alternative” has the meaning given to that term in the section of the Circular entitled “The Arrangement – Plan of Arrangement”; “Share Issuance Resolution” means the ordinary resolution approving the issuance of the Consideration Shares, Option Shares, Warrant Shares and KORES Shares, as more particularly set forth as Schedule A to the Circular;

“Shareholder” means a holder of Capstone Shares;

“Superior Proposal” means an unsolicited bona fide Acquisition Proposal made by a third party to Far West in writing after the date of the Arrangement Agreement: (i) to purchase or otherwise acquire, directly or indirectly, by means of a merger, take-over bid, amalgamation, plan of arrangement, business combination, consolidation, recapitalization, liquidation, winding-up or similar transaction, all of the Far West Shares; (ii) that is reasonably capable of being completed without undue delay, taking into account all legal, financial, regulatory and other aspects of such Acquisition Proposal and the third party making such Acquisition Proposal; (iii) that is not subject to any financing condition and in respect of which any required financing to complete such Acquisition Proposal has been demonstrated to the satisfaction of the Far West Board, acting in good faith (after receipt of advice from its financial advisors and outside legal counsel), will be obtained; (iv) which is not subject to a due diligence and/or access condition; (v) that did not result from a breach of Section 7.1 of the Arrangement Agreement by Far West or its representatives; (vi) that is made available to all Far West Securityholders on the same terms and conditions; (vii) in respect of which the Far West Board determines in good faith (after receipt of advice from its outside legal counsel with respect to (x) below and financial advisors with respect to (y) below) that (x) failure to recommend such Acquisition Proposal to its shareholders would be inconsistent with its fiduciary duties and (y) such Acquisition Proposal would, taking into account all of the terms and conditions of such Acquisition Proposal, if consummated in accordance with its terms (but not assuming away any risk of non-completion), result in a transaction more favourable to its shareholders from a financial point of view than the Arrangement (including any adjustment to the terms and conditions of the Arrangement proposed by Capstone pursuant to Subsection 7.1(f) of the Arrangement Agreement);

“Tax Act” means the Income Tax Act (Canada) and the regulations made thereunder, as now in effect and as they may be promulgated or amended from time to time;

“Termination Fee” means an amount equal to Cdn.$20 million;

“Transfer Agent” means the transfer agent and registrar of the Company, Computershare Investor Services Inc.;

“TSX” means the Toronto Stock Exchange;

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“United States” means the United States of America, its territories and possessions, any State of the United States and the District of Columbia;

“U.S. Exchange Act” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder;

“U.S. Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder; and

“Warrant Shares” means the Capstone Shares issuable on exercise of the Replacement Warrants.

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SELECTED CAPSTONE UNAUDITED PRO FORMA FINANCIAL INFORMATION

The selected unaudited pro forma condensed consolidated financial information set forth below should be read in conjunction with Capstone’s unaudited pro forma condensed consolidated financial statements and the accompanying notes thereto attached as Schedule C to the Circular. The unaudited pro forma condensed consolidated balance sheet has been prepared from the audited consolidated balance sheet of Capstone as at December 31, 2010 and the audited consolidated balance sheet of Far West as at December 31, 2010 and gives pro forma effect to the successful completion of the Arrangement, the KORES Subscription and KORES’ acquisition of a 30% indirect interest in Far West as if the transactions occurred on December 31, 2010. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2010 has been prepared, from the audited statement of operations of Capstone for the year ended December 31, 2010 and the audited statement of operations of Far West for the year ended December 31, 2010 and gives pro forma effect to the successful completion of the Arrangement as if the transactions occurred on January 1, 2010.

The summary unaudited pro forma condensed consolidated financial information is not intended to be indicative of the results that would actually have occurred, or the results expected in future periods, had the events reflected herein occurred on the dates indicated. Actual amounts recorded upon consummation of the Arrangement will differ from the pro forma information presented below. No attempt has been made to calculate or estimate potential synergies between Capstone and Far West. The unaudited pro forma condensed consolidated financial statement information set forth below is extracted from and should be read in conjunction with the unaudited pro forma condensed consolidated financial statements of Capstone and the accompanying notes included in Schedule C to the Circular.

(in millions of U.S. dollars) Year Ended December

31, 2010

Statement of operations data:

Revenue ................................................................................................... 274.0

Operating earnings ................................................................................... 95.6

Net earnings ............................................................................................. 64.1 (in U.S. dollars)

Per Capstone Share data:

Basic earnings per share .......................................................................... 0.18 Diluted earnings per share ....................................................................... 0.17 (in millions of U.S. dollars) As at December 31, 2010

Balance sheet data:

Cash, restricted cash and short-term deposits .......................................... 496.8 Total assets .............................................................................................. 1,755.5

Total debt, including capital lease obligations ......................................... 22.1 Total liabilities ......................................................................................... 425.0

Non-controlling interest ........................................................................... 201.3

Shareholders’ equity ................................................................................ 1,129.5

GENERAL PROXY INFORMATION

Solicitation of Proxies

This Circular is furnished in connection with the solicitation of proxies by management of Capstone for use at the Meeting. The Meeting will be held on June 13, 2011 or any adjournment or postponement thereof at the time and place and for the purposes set forth in the accompanying Notice of Meeting. It is expected that solicitation of proxies will be primarily by mail but may also be in person or by telephone by the directors, officers and regular employees of the

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Company. The Company will also be using the services of Laurel Hill Advisory Group to solicit proxies. If you have questions, you may contact Laurel Hill Advisory Group by email at assistance@laurelhill.com or by telephone at 1-877-304-0211 (toll free within Canada or the U.S.) or 416-304-0211 (for collect calls outside Canada and the U.S.). The cost of solicitation will be borne by the Company.

To the Company’s knowledge, each of the directors and officers of the Company intends to vote their Capstone Shares in favour of the Share Issuance Resolution.

Appointment and Revocation of Proxies

The Named Proxyholders are officers and/or directors of Capstone. A Shareholder who wishes to appoint another person (who need not be a Shareholder) to represent the Shareholder at the Meeting may either insert the person’s name in the blank space provided in the form of proxy or complete another proper form of proxy.

The proxy must be in writing and signed by the Shareholder or by the Shareholder’s attorney, duly authorized in writing or, if the Shareholder is a body corporate or association, signed by any individual authorized by a resolution of the directors or governing body of the body corporate or association. A proxy will only be valid if it is duly completed, signed, dated and received at the office of the Transfer Agent, Computershare Investor Services Inc., Proxy Dept., 100 University Avenue, 11th Floor, Toronto, Ontario M5J 2Y1 (fax: (416) 263-9261), by 2:00 p.m. (Vancouver time) on June 9, 2011 or not less than 48 hours (excluding Saturdays, Sundays and holidays) before the commencement of any adjournment or postponement of the Meeting.

A Shareholder who has voted by proxy may revoke it any time prior to its use. To revoke a proxy, a registered Shareholder may deliver a written notice to the registered office of the Company at 9th Floor - 999 West Hastings Street, Vancouver, British Columbia V6C 2W2, Attention: Corporate Secretary, or at the offices of Computershare Investor Services Inc., 100 University Avenue, 11th Floor, Toronto, Ontario, M5J 2Y1 at any time up to 2:00 p.m. (Vancouver time) on the last business day before the Meeting or any adjournment or postponement of the Meeting. A proxy may also be revoked on the day of the Meeting or any adjournment or postponement of the Meeting by a registered Shareholder by delivering written notice to the chair of the Meeting. In addition, the proxy may be revoked by any other method permitted by applicable law. The written notice of revocation may be executed by the Shareholder or by an attorney who has the Shareholder’s written authorization. If the Shareholder is a corporation, the written notice must be executed by its duly authorized officer or attorney. Only registered Shareholders have the right to revoke a proxy. Beneficial Shareholders who wish to change their vote must arrange for their respective intermediaries to revoke the proxy on their behalf in accordance with any requirements of the intermediaries.

If you have questions, you may contact the proxy solicitation agent, Laurel Hill Advisory Group, by email at assistance@laurelhill.com or by telephone at 1-877-304-0211 (toll free within Canada or the U.S.) or 416-304-0211 (for collect calls outside Canada and the U.S.).

Voting of Proxies and Exercise of Discretion

The accompanying form of proxy confers discretionary authority on the persons named in it as proxies with respect to any amendments or variations to the matters identified in the Notice of Meeting or other matters that may properly come before the Meeting, or any adjournment or postponement thereof, and the named proxies in your properly executed proxy will vote on such matters in accordance with their judgment. At the date of this Circular, management of Capstone is not aware of any such amendments, variations or other matters which are to be presented for action at the Meeting.

IF A CHOICE IS NOT CLEARLY SPECIFIED IN THE PROXY, CAPSTONE SHARES WILL BE VOTED IN FAVOUR OF THE SHARE ISSUANCE RESOLUTION.

Notice to Non-Registered (Beneficial) Shareholders

The information set forth in this section is of significant importance to many Shareholders, as a substantial number of Shareholders do not hold Capstone Shares in their own name. Beneficial Shareholders should note that only proxies deposited by Shareholders whose names appear on the records of the Company as registered Shareholders can be recognized and acted upon at the Meeting or any adjournment or postponement thereof. If Capstone Shares are listed in an

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account statement provided to a Shareholder by a broker or other intermediary, then in almost all cases, those Capstone Shares will not be registered in the Shareholder’s name on the records of the Company.

Those Capstone Shares will more likely be registered under the name of the Shareholder’s intermediary or an agent of that intermediary. In Canada, the vast majority of those Capstone Shares are registered under the name of “CDS & Co.” (the registration name of CDS Clearing and Depository Services Inc., which acts as nominee for many Canadian brokerage firms). Shares held by intermediaries can only be voted (for or against resolutions) upon the instructions of the beneficial Shareholders. Without specific instructions, the intermediaries are prohibited from voting Capstone Shares for their clients. The Company does not know for whose benefit the Capstone Shares registered in the name of CDS & Co., or another intermediary, are held.

There are two kinds of beneficial owners: those who object to their name being made known to the issuers of securities which they own (called “OBOs” for Objecting Beneficial Owners) and those who do not object (called “NOBOs” for Non-Objecting Beneficial Owners). Issuers can request and obtain a list of their NOBOs from Broadridge via their transfer agents, pursuant to National Instrument 54-101 - Communication with Beneficial Owners of Securities of Reporting Issuers (“NI 54-101”) and issuers can use this NOBO list for distribution of proxy-related materials directly to NOBOs. The Company has decided to take advantage of those provisions of NI 54-101 that allow it to directly deliver proxy-related materials to its NOBOs. As a result, NOBOs can expect to receive a voting instruction from Computershare Investor Services Inc. These voting instruction forms are to be completed and returned to the Transfer Agent in the envelope provided or by any other voting methods described on the voting instruction form itself, which contains complete instructions regarding voting procedures. The Transfer Agent will tabulate the results of the voting instruction forms received from NOBOs and will provide appropriate instructions at the Meeting with respect to the shares represented by voting instruction forms they receive.

With respect to OBOs, applicable regulatory policy requires intermediaries to seek voting instructions from beneficial Shareholders in advance of Shareholder meetings. Every intermediary has its own mailing procedures and provides its own return instructions, which should be carefully followed by beneficial Shareholders in order to ensure that their Capstone Shares are voted at the Meeting or any adjournment or postponement thereof. Often, the form of proxy supplied to a beneficial Shareholder by its intermediary is identical to the form of proxy provided to registered Shareholders, however, its purpose is limited to instructing the registered Shareholder on how to vote on behalf of the beneficial Shareholder. Beneficial Shareholders who wish to appear in person and vote at the Meeting should be appointed as their representatives at the Meeting in accordance with the directions of their intermediary. The majority of intermediaries now delegate responsibility for obtaining instructions from clients to Broadridge. Broadridge typically mails a scanable voting instruction form in lieu of the form of proxy. Beneficial Shareholders are requested to complete and return the voting instruction form to Broadridge by mail or fax. Alternatively, beneficial Shareholders can call a toll-free telephone number to vote the Capstone Shares held by the beneficial Shareholder or access Broadridge’s dedicated voting website at www.proxyvote.com to deliver the beneficial Shareholder’s voting instructions. Broadridge tabulates the results of all instructions received and provides appropriate instructions respecting the voting of Capstone Shares to be represented at the Meeting or any adjournment or postponement thereof.

In either case, the purpose of these procedures is to permit non-registered Shareholders to direct the voting of the Capstone Shares they beneficially own. Should a non-registered Shareholder who receives one of the above forms wish to vote at the Meeting in person (or have another person attend and vote on behalf of the non-registered Shareholder), the non-registered Shareholder should strike out the persons named in the form of proxy and insert the non-registered Shareholder or such other person’s name in the blank space provided. In either case, non-registered Shareholders should carefully follow the instructions of their Intermediary, including those regarding when and where the proxy or voting instruction form is to be delivered.

VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES

The Company is authorized to issue an unlimited number of Capstone Shares, of which 203,992,540 Capstone Shares were issued and outstanding as at May 11, 2011. Shareholders are entitled to receive notice of and to attend and vote at all meetings of the Shareholders of the Company, and each Capstone Share confers the right to one vote in person or by proxy at all meetings of the Shareholders of the Company.

Shareholders at the close of business (Vancouver time) on the Record Date are entitled to vote or to have their Capstone Shares voted at the Meeting.

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To the knowledge of the directors and executive officers of the Company, other than as described below, as of the date of this Circular, there is no person or company that beneficially owns, directly or indirectly, or exercises control or direction over, voting securities of the Company carrying 10% or more of the voting rights attached to any class of voting securities of the Company:

Name Number of

Capstone Shares % of Outstanding Capstone Shares

Pala Investments Holdings Limited(1) 37,727,000 18.5%

(1): Based on the public filings made by Pala Investments Holdings Limited.

BUSINESS OF THE MEETING

As set out in the Notice of Meeting, at the Meeting, Shareholders of the Company will be asked to consider and vote on the Share Issuance Resolution.

Assuming that: (i) all of the Far West Shares outstanding as at April 15, 2011 are acquired upon completion of the Arrangement, (ii) all Far West Shareholders elect the Full Proration Alternative, (iii) all holders of Far West Options elect to receive Replacement Options rather than exercise their Far West Options in advance of the successful completion of the Arrangement, and (iv) all holders of Far West Warrants elect to receive Replacement Warrants rather than exercise their Far West Warrants in advance of the successful completion of the Arrangement, Capstone would issue an aggregate of approximately 158 million Capstone Shares in connection with the Arrangement and the KORES Subscription, which would result in there being up to a total of approximately 362 million Capstone Shares issued and outstanding (based on the number of Capstone Shares outstanding as at May 11, 2011) immediately following the completion of the Arrangement and the KORES Subscription, with Shareholders holding in the aggregate approximately 56% of the outstanding Capstone Shares, former Far West Shareholders holding approximately 33% of the outstanding Capstone Shares and KORES Sub holding approximately 11% of the outstanding Capstone Shares (each on a non-diluted basis). As a result of this issuance, the Shareholders’ ownership and voting interests in Capstone will be diluted, relative to their current proportional ownership and voting interest in Capstone.

Assuming that: (i) all of the Far West Shares outstanding (as at April 15, 2011) are acquired upon completion of the Arrangement, (ii) all Far West Shareholders elect the Share Alternative, (iii) all holders of Far West Options elect to duly exercise all such Far West Options for Far West Shares prior to the Effective Time and elect the Share Alternative, and (iv) all holders of Far West Warrants elect to duly exercise all such Far West Warrants for Far West Shares prior to the Effective Time and elect the Share Alternative, Capstone would issue an aggregate of approximately 203.6 million Capstone Shares in connection with the Arrangement and the KORES Subscription, which would result in there being up to a total of approximately 407.6 million Capstone Shares issued and outstanding (based on the number of Capstone Shares outstanding as at May 11, 2011) immediately following the completion of the Arrangement and the KORES Subscription, with Shareholders holding in the aggregate approximately 50% of the outstanding Capstone Shares, former Far West Shareholders holding approximately 39.6% of the outstanding Capstone Shares and KORES Sub holding approximately 10.4% of the outstanding Capstone Shares (each on a non-diluted basis).

Pursuant to the listing rules of the TSX, a listed company is generally required to obtain shareholder approval in connection with an acquisition transaction where the number of securities issued or issuable in payment of the purchase price for the acquisition (including any securities issued or issuable upon a concurrent private placement upon which the acquisition is contingent or otherwise linked) exceeds 25% of the number of securities of the listed issuer which are outstanding, on a non-diluted basis, prior to the date of closing of the transaction. As the Arrangement and the KORES Subscription will result in Capstone issuing in excess of 25% of the outstanding Capstone Shares (in the scenarios outlined above, up to approximately 77.5% or 99.8%, respectively), Shareholder approval is required. It is a condition of the acquisition of Far West that the Share Issuance Resolution be approved by a simple majority (50% plus one vote) of votes cast at the Meeting by Shareholders, present in person or by proxy.

Record Date

The Board has passed a resolution to fix the close of business (Vancouver time) on May 11, 2011 as the Record Date for the determination of the registered Shareholders that will be entitled to notice of the Meeting, and any adjournment or postponement of the Meeting, and that will be entitled to vote at the Meeting.

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Outstanding Shares

As at May 11, 2011, there were 203,992,540 Capstone Shares outstanding.

THE ARRANGEMENT

General

This section provides material information about the acquisition of Far West and other information regarding the Arrangement.

Both the Board and the Far West Board have approved the Arrangement Agreement. The Arrangement Agreement and the Plan of Arrangement provide that Capstone will acquire all of the issued and outstanding Far West Shares subject to, among other things:

• approval of the Share Issuance Resolution by Shareholders;

• approval of the Arrangement Resolution by Far West Securityholders;

• approval of the Arrangement by the Court;

• receipt of all Regulatory Approvals; and

• the KORES Condition being satisfied.

Pursuant to the Arrangement and following completion of the transactions contemplated between Capstone and KORES, Far West will become a subsidiary of Capstone, owned (indirectly) 70% by Capstone and 30% by KORES Sub. On consummation of the Arrangement, (i) Capstone will acquire each outstanding Far West Share in exchange for the Consideration, (ii) each outstanding Far West Option shall be exchanged for a Replacement Option, and (iii) each outstanding Far West Warrant shall be exchanged for a Replacement Warrant. Registered Far West Shareholders who validly exercise their Dissent Rights will be entitled to be paid the fair value of their Far West Shares by Capstone. Non-registered holders of Far West Shares and holders of Far West Options and Far West Warrants are not entitled to dissent rights. Dissent rights are not available to Capstone Shareholders in connection with the Arrangement. See the section of the Circular entitled “The Arrangement - Dissenting Shareholder Rights”.

If permitted by applicable laws, Capstone intends to delist the Far West Shares from the TSX as soon as practicable following the Effective Date and to apply for a decision for Far West to cease to be a reporting issuer under the securities laws of each province of Canada in which it is a reporting issuer.

When the Arrangement Becomes Effective

Under the BCBCA, the Court must approve the Plan of Arrangement. If, among other things, Capstone Shareholder Approval is obtained at the Capstone Meeting and Far West Securityholder Approval is obtained at the Far West Meeting, the Court will hold a hearing regarding the Final Order. The Court will consider, among other things, the fairness and reasonableness of the Arrangement. The Court may approve the Arrangement in any manner the Court may direct, subject to compliance with such terms and conditions, if any, as the Court deems fit.

Plan of Arrangement

Pursuant to the terms of the Plan of Arrangement, on the Effective Date, the following shall occur and shall be deemed to occur in the order and at the times set out below, without any further act or formality:

(a) Effective at the Effective Time, all Far West Shares to be issued to Far West Optionholders who have tendered Conditional Exercise Notices, together with the applicable exercise price, for any Far West Options that are vested prior to the Effective Time (including any unvested Far West Options whose vesting was accelerated pursuant to the Far West Option Plan), will be deemed to be issued to such Far West Optionholders, as fully paid and non-assessable common shares in the capital of Far West, such Far West

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Optionholders will be entered in the share register of Far West as the registered holder thereof and no share certificates in respect of such Far West Shares shall be issued;

(b) Immediately thereafter, each issued Far West Share outstanding immediately prior to the Effective Time held by a registered Far West Shareholder in respect of which Dissent Rights have been validly exercised shall be deemed to have been transferred without any further act or formality to Capstone, free and clear of any liens, claims and encumbrances, and: (i) such Far West Shareholder shall cease to be the registered holder of such Dissenting Shares and shall cease to have any rights as registered holders of such Far West Shares other than the right to be paid fair value for such Dissenting Shares pursuant to the Arrangement; (ii) such Far West Shareholder’s name shall be removed as the registered holder of such Dissenting Shares from the registers of Far West Shares maintained by or on behalf of Far West; and (iii) Capstone shall be deemed to be the transferee of such Dissenting Shares, free and clear of any liens, claims and encumbrances, and shall be entered in the registers of Far West Shares maintained by or on behalf of Far West;

(c) Immediately thereafter, each issued Far West Share (other than any Far West Share in respect of which the Far West Shareholder has validly exercised his, her or its Dissent Right) will be transferred to, and acquired by Capstone, without any act or formality on the part of the holder of such Far West Share or Capstone, free and clear of all liens, claims and encumbrances, in exchange for: (i) at the election of the holder of such Far West Share: (A) 1.825 Capstone Shares and Cdn.$1.00 in cash (the “Full Proration Alternative”); (B) 2.047 Capstone Shares and Cdn.$0.001 in cash (the “Share Alternative”); or (C) Cdn.$9.19 in cash, (the “Cash Alternative”), subject to proration (as described below), if applicable; or (ii) if no election has been made the holder of such Far West Share shall be deemed to have elected to receive the Full Proration Alternative per Far West Share;

(d) If the aggregate amount of cash consideration that would, but for the operation of this paragraph, be payable by Capstone to Far West Shareholders who elect or are deemed to receive the Full Proration Alternative or the Cash Alternative in respect of their Far West Shares, exceeds the Cash Maximum (as defined below), then the amount of cash per Far West Share to be paid to each Far West Shareholder that elects to receive the Cash Alternative shall be the greater of: (i) Cdn.$1.00; and (ii) such Far West Shareholder’s pro rata share of cash equal to the difference between (x) the Cash Maximum and (y) the aggregate of the Cdn.$1.00 per share of cash consideration to be paid in respect of Far West Shares to Far West Shareholders who elect or are deemed to elect to receive the Full Proration Alternative. “Cash Maximum” means Cdn.$1.00 multiplied by the number of Far West Shares issued and outstanding immediately preceding the steps contemplated in paragraph (c) above, excluding any Far West Shares deemed to be transferred to Capstone pursuant to the steps contemplated in paragraph (b) above;

(e) Immediately thereafter, all Far West Warrants shall be deemed to be exchanged for warrants (“Replacement Warrants”) to purchase Capstone Shares and each former Far West Warrantholder shall, in respect of each such Replacement Warrant, be entitled to receive upon the exercise thereof, in lieu of one Far West Share, 1.825 Capstone Shares, on the same terms and conditions as the original Far West Warrant, provided, however, that the exercise price of each Replacement Warrant shall be reduced by Cdn.$1.00 from the exercise price in the original Far West Warrant. No new certificates will be issued in respect of such Replacement Warrants, and each certificate which represented an outstanding Far West Warrant shall, as and from the Effective Time, be deemed to represent a Replacement Warrant; and

(f) Immediately thereafter: (i) all Far West Options shall be deemed to be exchanged for options (“Replacement Options”) to purchase Capstone Shares and each former Far West Optionholder shall, in respect of each such Capstone Option, be entitled to receive upon the exercise thereof, in lieu of one Far West Share, 2.047 Capstone Shares on the same terms and conditions as the original Far West Option, provided that the aforesaid exchange ratio shall be adjusted to the extent, if any, required to ensure that the In the Money Amount of the option to purchase Capstone Shares immediately after the exchange does not exceed the In the Money Amount of the original Far West Option immediately before the exchange. No new certificates will be issued in respect of such Replacement Options, and each certificate which represented an outstanding Far West Option shall, as and from the Effective Time, be deemed to represent a Replacement Option; and (ii) the expiry date on termination for all outstanding Far West Options held by Far West’s employees, officers, directors or consultants, respectively, who cease to be employees, officers, directors or consultants on or prior to the first anniversary of the Effective Date will be extended to the earlier of (A) 365 days from the

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Effective Date, and (B) the original expiry date (absent such termination) of any such Far West Option and otherwise will remain as the expiry date set by the original terms of such Far West Options.

Following the receipt of the Final Order and prior to the Effective Date, Capstone shall, deposit in escrow with the Depositary the Consideration Shares and sufficient cash to satisfy the Consideration issuable and/ or payable to Far West Shareholders pursuant to the Arrangement which Consideration Shares and cash shall be held by the Depositary as agent and nominee for such former Far West Shareholders for distribution to such former Far West Shareholders in accordance with the provisions of the Plan of Arrangement.

Fractional Shares

In no event shall any holder of Far West Shares be entitled to a fractional Capstone Share. Where the aggregate number of Capstone Shares to be issued to a Far West Shareholder as consideration under the Arrangement would result in a fraction of a Capstone Share being issuable, the number of Capstone Shares to be received by such Far West Shareholder shall be rounded down to the nearest whole Capstone Share and in lieu of a fractional Capstone Share, the Far West Shareholder will receive a cash payment in Canadian dollars determined on the basis of an amount equal to (i) the volume weighted average trading price on the TSX of the Capstone Shares for the five trading days ending three trading days prior to the Effective Date, multiplied by the (ii) fractional share amount.

Arrangement Consideration

Capstone has agreed to permit Far West Shareholder to elect to receive, in exchange for each Far West Share held (i) 1.825 Capstone Shares and Cdn.$1.00 in cash, (ii) 2.047 Capstone Shares and Cdn.$0.001 in cash, or (iii) Cdn.$9.19 in cash, subject to proration on the basis of an aggregate maximum cash amount of approximately Cdn.$79 million, and provided that no Far West shareholder that elects option (iii) above will receive less than Cdn.$1.00 in cash per Far West Share. Capstone intends to fund the aggregate cash amount to be paid to Far West Shareholders from cash on hand. The issuance of the Consideration Shares to Far West Shareholders requires Capstone Shareholder Approval.

Far West Shareholders will not be entitled to fractional Capstone Shares in connection with the Arrangement. Where the consideration owing to such a Far West Shareholder would otherwise result in a fractional Capstone Share being issued, the Far West Shareholder will receive a cash payment in lieu of the fractional share amount (based on the volume weighted average price on the TSX of a Capstone Share for the five trading days ending three trading days prior to the Effective Date).

TSX Listings

The Far West Shares are listed on the TSX, trading under the symbol “FWM”. Conditional approval of the TSX in respect of the Arrangement and related transactions has been obtained by Far West. If permitted by applicable laws, Capstone intends to delist the Far West Shares from the TSX as soon as practicable following the Effective Date.

The Capstone Shares are listed on the TSX under the symbol “CS”. The obligation of Capstone and Far West to complete the Arrangement is subject to, among other matters, the TSX approving the listing of the Consideration Shares.

Background to the Arrangement

On June 8, 2010, Far West publicly announced the engagement of BMO Capital Markets as financial advisor for purposes of advising Far West and the Far West Board on a broad range of financial and strategic matters.

In August, September and October 2010, Capstone and KORES held meetings to discuss the business of KORES, opportunities with Far West and a potential visit to the Santo Domingo Project. On October 26, 2010, Capstone and Far West had a meeting at the Far West offices to discuss if Far West was interested in executing a confidentiality agreement and allowing Capstone to visit the Santo Domingo Project. Participants in the meeting included the President and Chief Executive Officer of Capstone, the Vice President of Business Development of Capstone, the President and Chief Executive Officer of Far West, and the Chief Financial Officer of Far West.

On November 5, 2010, Far West executed confidentiality agreements with each of Capstone and KORES pursuant to which Far West agreed to disclose confidential information to Capstone and KORES, respectively. Far West subsequently granted Capstone and KORES, and their respective representatives, access to a data room and to the Santo

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Domingo Project. On November 5, 2010, Capstone undertook a site visit to the Santo Domingo Project. In attendance on the site visit were the Chief Operating Officer of Capstone, the Vice President of Exploration of Capstone, the Vice President of Business Development of Capstone and a metallurgical consultant from Capstone. Also in attendance were an engineer and a geologist from KORES. Over the course of the next several months, each of Capstone and KORES conducted technical, legal and financial due diligence on Far West. KORES conducted a site visit to the Minto mine on November 26, 2010. On November 27, 2010, Capstone and KORES entered into a non-binding letter agreement with respect to a proposed transaction, which included an exclusivity provision with respect to a transaction with Far West.

In December 2010, Capstone was granted access to Far West’s dataroom and in January 2011, Capstone held a meeting with KORES to discuss the timeline of the potential Far West transaction and to review each other’s cash flow models of Far West. In February 2011, Capstone drafted a KORES acquisition support agreement, and conducted meetings with KORES with regards to a technical review of the Santo Domingo Project, and for the purpose of finalizing the cash flow models. Capstone also undertook a technical review at Far West’s offices to discuss the most recent metallurgical test work results, and discussed the tax structure of a potential acquisition of Far West. An interim agreement between Capstone and KORES was executed on February 14, 2011 to extend exclusivity for 60 days, to April 15, 2011. Capstone completed an initial draft of a subscription agreement with KORES, and a first draft of a non-binding expression of interest in Far West. On February 24, 2011, Scotia gave a presentation to Capstone and KORES to discuss deal metrics. Capstone then completed an initial draft of an off-take term sheet with KORES with respect to 50% of the copper concentrate and 50% of the iron ore to be produced from the Santo Domingo Project for the life of the mine.

In March 2011, KORES undertook a site visit to the Cozamin mine. Subsequently, Capstone and KORES agreed that they would pursue a transaction that would result in KORES acquiring a 30% interest in Far West and becoming Capstone’s largest shareholder. Members of Capstone management provided a presentation to the Board regarding the recommendation to make an offer to Far West and the Board subsequently gave approval to issue a non-binding letter of intent to Far West. Capstone held a meeting with KORES to discuss the Board meeting and a timeline for issuing a letter of interest to Far West. On March 10, 2011, Capstone then met with Far West to explain the terms of the KORES arrangements and the terms of a potential transaction with Far West. Subsequent to this meeting on March 11, 2011, Capstone sent a non-binding letter of intent and term sheet to Far West, proposing, among other matters, to acquire all of the outstanding Far West Shares pursuant to a plan of arrangement at a 25% premium to the 30-day volume weighted average price of the Far West Shares as at March 11, 2011. On March 20, 2011, Far West delivered a revised version of the non-binding letter of intent and term sheet to Capstone, providing, among other things, for a 30% premium to the 30-day volume weighted average price of the Far West Shares as at March 18, 2011. Over the next four days, Capstone and Far West continued to negotiate the terms of a non-binding letter of intent and term sheet, and on March 24, 2011 Capstone and Far West executed the non-binding letter of intent and term sheet, providing, among other things, for a 29% premium to the 30-day volume weighted average market price of Far West Shares as of March 22, 2011. The executed letter of intent and non-binding term sheet provided for exclusivity until April 17, 2011. On March 28, 2011, Capstone entered into the Capstone Confidentiality Agreement with Far West to allow Far West to have access to confidential information about Capstone’s business. Capstone subsequently granted Far West and its representatives access to a data room and to Capstone’s mine sites and properties.

On April 1, 2011, Capstone formally engaged Scotia to act as financial advisor with respect to the transaction and to provide an opinion to the Board as to the fairness, from a financial point of view, of the transaction to Capstone. In the normal course of identifying business opportunities, members of Scotia had previously visited the Santo Domingo Project in June 2010.

During the period from March 24, 2011 until the evening of Friday, April 15, 2011, the management and legal/financial advisory teams of both parties continued with their due diligence investigations and negotiated the terms of a potential transaction between Capstone and Far West.

Colin Benner and Stephen Quin, directors of Capstone, recused themselves from the Board’s decision to recommend, that the Company’s shareholders vote in favour of the Share Issuance Resolution. Messrs. Benner and Quin did not participate in the meeting at which the Board resolved to recommend, that the Company’s shareholders vote in favour of the Share Issuance Resolution. Mr. Benner is Executive Chairman and a director of Creston Moly Corp. (“Creston”) and Mr. Quin is a director of Mercator Minerals Ltd. (“Mercator”), which companies are subject to a proposed business combination. The Board and management of the Company were of the view that the Company and Mercator are potential competitors for the same corporate opportunities and, as such, this presented a potential conflict of interest for Messrs. Benner and Quin. Bruce McLeod resigned from the Capstone Board on April 13, 2011 due to the same potential conflict of interest as he is the President, Chief Executive Officer and a director of Creston.

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On April, 13, 2011, the CEOs of Capstone and Far West met with the Executive Vice President of Corporate Development, of QuadraFNX, a significant shareholder of Far West. At this meeting the proposed transaction was raised for the first time with QuadraFNX and a Far West Voting Support Agreement was sought from QuadraFNX.

On April 15, 2011 the President and CEO of Capstone had a discussion with the President and CEO of Far West and met with the Chair of the special committee of the Far West Board, and had telephone calls with the CEO of QuadraFNX, to finalize the terms of the proposed transaction and the proposed Far West Voting Support Agreement between Capstone and QuadraFNX. Following these discussions, the parties agreed to a set of proposed terms which included an increase in the consideration offered by Capstone for each Far West Share. Thereafter, Capstone conducted a board meeting to discuss the signing of the Arrangement Agreement, the KORES ASPA and the KORES Subscription Agreement. After careful consideration, including an oral opinion delivered by Scotia, the Board unanimously resolved to approve the transaction and to recommend that Capstone shareholders vote in favour of the Arrangement. A signing ceremony between Capstone, Far West and KORES took place later that day during which the Arrangement Agreement, the KORES ASPA and the KORES Subscription Agreement were executed. On April 17, 2011, Capstone and Far West issued a joint news release announcing the Arrangement and the KORES transactions.

Recommendation of the Board

AFTER CAREFUL CONSIDERATION OF THE ARRANGEMENT AND THE TRANSACTIONS CONTEMPLATED WITH KORES, THE BOARD HAS RECOMMENDED THAT SHAREHOLDERS VOTE IN FAVOUR OF THE SHARE ISSUANCE RESOLUTION.

Reasons for the Arrangement

In reaching its conclusion to approve the Arrangement Agreement, and recommend that Shareholders vote in favour of the Share Issuance Resolution, the Board considered, among other things, the following factors:

• Highly compelling transaction delivering fully-funded growth from Santo Domingo. Capstone believes that the Santo Domingo Project has the potential to be a significant copper and iron producer over a long mine life. The completion of the KORES Agreements will provide Capstone with a strong pro forma balance sheet which, in addition to Capstone’s existing cash flow generation, is anticipated to be more than sufficient to meet Capstone’s portion of the Santo Domingo Project’s future capital requirements.

• Santo Domingo is favourably located with access to nearby infrastructure and ongoing studies continue to demonstrate the potential for significant copper and iron production. The Santo Domingo Project is located in an established mining district, with access to nearby infrastructure (highway, rail, power, port, smelter, airport, etc.) and at low elevation. A preliminary economic assessment dated April 30, 2008 on the Santo Domingo Project outlined the potential for estimated annual production of 145 million pounds of copper concentrate and 3-4 million tonnes of iron concentrate, with production achievable in 2015, assuming that a positive feasibility study is received and the construction targets it sets out can be achieved. Ongoing test work continues to indicate the potential for increased throughput and a pre-feasibility study is currently underway with anticipated completion in Q3 2011.

• Consistent with Capstone’s strategy of building a mid-tier copper producer focused in the Americas with a portfolio of high quality operating mines and a strong pipeline of copper production growth in mining friendly jurisdictions. Upon completion of the Arrangement, Capstone will become an Americas-based mid-tier copper producer with a fully-funded growth pipeline.

• Over 200% growth in anticipated copper production from 2011 to 2016 and over 125% increase in measured and indicated copper contained in mineral resources. Assuming that anticipated production from the Santo Domingo Project is supported by a positive feasibility study and the construction targets it sets out are achieved, and assuming further that Capstone’s Kutcho project commences production on the currently anticipated timeline, with the addition of the Santo Domingo Project to its existing properties, Capstone may have the potential to produce approximately 300 million pounds of copper annually by 2016.

• Further asset diversification in a preferred mining geography. Capstone will have properties in Canada, Mexico, Chile and Australia. As a result, Capstone will benefit from attractive operational and geopolitical diversification.

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• Robust cash flow generation in a company with a strong pro-forma balance sheet and a strategic relationship with KORES to fund a leading copper production growth profile. Capstone believes that, upon completion of the Arrangement and the KORES transactions, it will have the financial strength to fund the development of the Santo Domingo Project and Capstone’s existing development and expansion projects. Capstone has a proven history of cash flow generation. KORES is a financially strong partner and has agreed to enter into a life-of-mine off-take agreement for 50% of the copper concentrate and iron ore (at the then prevailing market terms) over the life of the possible Santo Domingo mine. Based on the unaudited pro forma financial statements of Capstone as at December 31, 2010 included in this Circular, Capstone would have a pro forma working capital balance of $468 million.

• No future share dilution to fund Santo Domingo as Capstone expects to fund its portion of Santo Domingo capital requirements through expected cash on hand as reflected in its pro forma consolidated balance sheet and ongoing cash flow from operations. After taking into account the KORES transactions, Capstone would have unaudited pro forma cash, restricted cash and short-term deposits of $470.9 million as at December 31, 2010. This amount, in addition to anticipated cash flow generation from Capstone’s existing operating mines, is expected to be more than sufficient to meet Capstone’s portion of the Santo Domingo Project’s future capital requirements.

• Enhanced capital markets profile through increased market capitalization, which should further improve trading liquidity for shareholders of Capstone. After taking into effect the Arrangement and the KORES Subscription, Capstone will have a market capitalization of approximately $1.4 billion (based on the current market price for Capstone Shares and representing an increase of greater than 75% from the current market capitalization). Capstone believes that this increased market capitalization will provide greater trading liquidity, research coverage, increased index weighting and generally enhanced institutional investor interest.

• Fairness Opinion. In connection with the Arrangement, the Board received a written opinion from Scotia to the effect that, as of April 15, 2011 and based upon and subject to the various assumptions, explanations, qualifications and limitations set forth in their opinion, the Arrangement was fair, from a financial point of view, to Capstone. The full text of the opinion can be found at Schedules D to this Circular. See the section of the Circular entitled “The Arrangement - Fairness Opinion”.

• Capstone Shareholder Approval. The Share Issuance Resolution must be approved by a majority of the votes cast in respect thereof by Capstone Shareholders present in person or represented by proxy at the Meeting, giving Shareholders an opportunity to consider and approve the proposed transactions.

A number of these anticipated benefits and factors are based on various assumptions and are subject to various risks. See the section of the Circular entitled “Statements Regarding Forward-Looking Information” and the section of the Circular entitled, “Risk Factors”.

The Board also considered potential adverse factors associated with the transaction, including, among other things:

• As a result of the issuance of the Capstone Shares pursuant to the Arrangement and the KORES Subscription, Shareholders will experience a significant degree of dilution in their ownership of Capstone.

• The issuance of a significant number of Capstone Shares pursuant to the Arrangement could adversely impact the market price of Capstone Shares.

• Capstone may not realize the benefits currently anticipated due to challenges associated with integrating the properties, operations and personnel of Far West.

• Risks associated with feasibility, permitting, financing and other development activities related to the Santo Domingo Project;

• Capstone may not meet future key cost estimates, or the upside potential at the Santo Domingo Project that Capstone believes exists may not materialize.

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• The completion of the Arrangement is subject to several conditions that must be satisfied or waived, including, in particular, Capstone Shareholder Approval and Far West Securityholder Approval, satisfaction of the KORES Condition and satisfaction of regulatory conditions (including Court and TSX approvals).

• The Arrangement Agreement may be terminated by Capstone or Far West in certain circumstances, in which case a termination fee may be payable by Capstone and the market price for Capstone Shares may be adversely affected.

Fairness Opinion

Scotia Fairness Opinion

Capstone entered into an engagement letter with Scotia pursuant to which, among other things, Scotia agreed to provide Capstone with an opinion as to the fairness of the Arrangement, from a financial point of view, to Capstone. At a meeting held on April 13, 2011, Scotia provided the Board with an oral opinion, subsequently confirmed in writing to the Board, to the effect that, based upon and subject to the various assumptions, limitations and qualifications contained therein, the Arrangement was fair, from a financial point of view, to Capstone.

The full text of the Scotia Fairness Opinion, which sets forth, among other things, the assumptions made, information reviewed and matters considered, and limitations and qualifications on the review undertaken in connection with the opinion, is attached to this Circular as Schedule D hereto. The Scotia Fairness Opinion is not intended to be and does not constitute a recommendation to any Shareholder as to how to vote or act at the Meeting. The Scotia Fairness Opinion was one of a number of factors taken into consideration by the Board in considering the Arrangement. This summary of the Scotia Fairness Opinion is qualified in its entirety by reference to the full text of the Scotia Fairness Opinion and Shareholders are urged to read the Scotia Fairness Opinion in its entirety.

The Scotia Fairness Opinion was rendered on the basis of securities markets, economic and general business and financial conditions prevailing as at the date of the Scotia Fairness Opinion and the conditions, prospects, financial and otherwise, of Capstone and Far West, as applicable, as they are reflected in the information and documents reviewed by Scotia and as they were presented to Scotia. Subsequent developments may affect the Scotia Fairness Opinion. Scotia has disclaimed any undertaking or obligation to advise any person of any change in any fact or matter affecting the Scotia Fairness Opinion which may come or be brought to the attention of Scotia after the date of the Scotia Fairness Opinion.

Scotia has acted as financial advisor to Capstone in connection with the Arrangement and will receive a fee for its services, including a fee for the delivery of the Scotia Fairness Opinion, a fee in connection with the announcement of the Arrangement and fees that are contingent upon the completion of the Arrangement or another change of control involving Capstone.

Voting Support Agreements

Far West Voting Support Agreements

Each of the directors, executive officers and certain shareholders of Far West has entered into a Far West Voting Support Agreement with Capstone. Each Far West Voting Support Agreement sets forth, among other things, the terms and conditions upon which each Far West Locked-up Shareholder has agreed, among other things, to vote in favour of the Arrangement Resolution, all of the Far West Securities currently owned or controlled by such Far West Locked-up Shareholder. The following is a summary of the principal terms of the Far West Voting Support Agreements.

Under the Far West Voting Support Agreements, each of the Far West Locked-up Shareholders has agreed, among other things, to vote, or cause to be voted in favour of the Arrangement Resolution, all of the Far West Securities currently owned or controlled by such Far West Locked-up Shareholder, being an aggregate of 17,831,435 Far West Shares, 4,068,000 Far West Options and 7,922,821 Far West Warrants, representing approximately 38% of the fully-diluted outstanding Far West Shares as at May 11, 2011.

Except as otherwise noted below, each Far West Locked-up Shareholder has covenanted and agreed that it will:

• not (A) sell, transfer, gift, assign, convey, pledge, hypothecate, encumber, option, grant a security interest in or otherwise dispose of any right or interest in (including by way of deposit or tender under any take-over

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bid) any of the Far West Shares, Far West Options, or Far West Warrants owned or controlled by such Far West Locked-up Shareholder (the “Far West Subject Securities”), other than the exercise of Far West Options or Far West Warrants in accordance with their terms for Far West Shares that will become subject to the Far West Voting Support Agreement as if they were Far West Subject Securities owned by the Far West Locked-up Securityholder on the date of the Far West Voting Support Agreement, or enter into any agreement, arrangement or understanding in connection therewith (whether by actual disposition or effective economic disposition due to cash settlement or otherwise), other than pursuant to the Arrangement Agreement, without having first obtained the prior written consent of Capstone, or (B) other than as set forth in the Far West Voting Support Agreements, grant any proxies or powers of attorney, deposit any Far West Subject Securities into a voting trust, in any way transfer any of the voting rights associated with any of the Far West Subject Securities, or enter into a voting agreement, understanding or arrangement with respect to the right to vote, call meetings of Far West Shareholders or give consents or approval of any kind with respect to any Far West Subject Securities;

• vote (or cause to be voted) all the Far West Subject Securities at any meeting of Far West Shareholders, including without limitation the Far West Meeting, and in any action by written consent of the Far West Shareholders:

• in favour of the approval, consent, ratification and adoption of the Arrangement Resolution and the transactions contemplated by the Arrangement Agreement (and any actions required in furtherance thereof); and

• against any (A) merger, reorganization, consolidation, amalgamation, arrangement, business combination, or share exchange, liquidation, dissolution, recapitalization, or similar transaction involving Far West; (B) sale, lease or transfer of any significant part of the assets of Far West; (C) Acquisition Proposal; (D) material change in the capitalization of Far West or the corporate structure or constating documents of Far West (other than the transactions contemplated in the Arrangement Agreement, and any other agreement or transactions involving Capstone or its Affiliates); (E) action that would reasonably be expected to impede, delay, interfere with, or discourage the transactions contemplated by the Arrangement Agreement; and (F) any action that would result in a Far West Material Adverse Effect (other than the transactions contemplated by the Arrangement Agreement);

• not, without the prior written consent of Capstone, requisition or join in the requisition of any meeting of Far West Shareholders for the purpose of considering any resolution;

• not, directly or indirectly: (A) solicit, initiate, encourage or otherwise facilitate (including by way of entering into any agreement, arrangement or understanding) inquiries, proposals or offers from, or provide information to, any other person, entity or group (other than Capstone) relating to any Acquisition Proposal, (B) participate in any discussions or negotiations regarding any Acquisition Proposal, or (C) accept or enter into, or publicly propose to accept or enter into, any letter of intent, agreement, arrangement or undertaking related to any Acquisition Proposal. Nothing hereunder shall prevent any shareholder, director or officer of the Far West Locked-up Shareholder who is a director or officer of Far West from doing any act or thing that such director or officer is properly obligated to do in such capacity, provided that such act or thing is permitted by and is done in compliance with the terms of the Arrangement Agreement;

• immediately cease and cause to be terminated any and all existing discussions and negotiations, if any, with any person or group or any agent or representative of such person or group before the date of the Far West Voting Support Agreement with respect to any Acquisition Proposal or potential Acquisition Proposal;

• promptly (and in any event within 24 hours following receipt) notify Capstone of any Acquisition Proposal or inquiry that could lead to an Acquisition Proposal of which the Far West Locked-up Shareholder or, to the knowledge of the Far West Locked-up Shareholder, any of the shareholders, directors or officers of the Far West Locked-up Shareholder becomes aware. Such notification shall be made first orally and then in writing and shall include the identity of the person making such Acquisition Proposal or inquiry, a description of the material terms thereof, together with a copy of all documentation relating to such Acquisition Proposal or inquiry; provided however that such notification shall not be required if Far West has already notified Capstone;

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• promptly notify Capstone of any acquisitions by the Far West Locked-up Shareholder or any of its respective affiliates of any securities of Far West, if any, after the date of the Far West Voting Support Agreements, which, for greater certainty, shall include any Far West Options and Far West Warrants and any Far West Shares issuable upon the exercise or conversion of any Far West Options or Far West Warrants owned or controlled by the Far West Locked-up Shareholder which may be exercised, converted into or exchanged for Far West Shares. Any such securities shall be subject to the terms of the Far West Voting Support Agreements as though they were Far West Subject Securities owned by the Far West Locked-up Shareholder on the date of the Far West Voting Support Agreements;

• not (i) exercise any securityholder rights or remedies available at common law or pursuant to applicable securities legislation; or (ii) take any other action of any kind, in each case which might reasonably be regarded as likely to reduce the success of, or delay or interfere with the completion of, the transactions contemplated by the Arrangement Agreement; and

• not make any public announcement or statement with respect to the transactions contemplated by the Far West Voting Support Agreements or pursuant to the Arrangement Agreement without the prior written approval of Capstone.

Each Far West Voting Support Agreement shall be terminated and be of no further force or effect upon the earliest of:

• the written agreement of Capstone and the Far West Locked-up Shareholder;

• the termination of the Arrangement Agreement in accordance with its terms;

• written notice by the Far West Locked-up Shareholder if: (a) Capstone has not complied in all material respects with its covenants to consummate the transactions contemplated by the Arrangement Agreement and to use its reasonable commercial efforts to assist Far West in effecting the Arrangement and to successfully complete the Arrangement in the manner contemplated by the Far West Voting Support Agreement and the Arrangement Agreement; (b) Capstone, without the prior written consent of the Far West Locked-up Shareholder, decreases the amount of the Consideration; or (c) Capstone, without the prior written consent of the Far West Locked-up Shareholder, otherwise varies the terms of the Arrangement Agreement in a manner that is materially adverse to the Far West Locked-up Shareholder;

• the Effective Time; or

• the Outside Date.

In addition to the covenants set out above, QuadraFNX has covenanted and agreed that it will not, until the Effective Time, without the prior written consent of Capstone exercise in any manner, any of the technical committee rights and pre-emptive rights to purchase securities granted to QuadraFNX pursuant to the subscription agreement dated October 30, 2009 between QuadraFNX and Far West, and that at the Effective Time, all such rights shall transfer in their entirety to Capstone, without any further act, formality or obligation of Capstone to QuadraFNX.

The Far West Voting Support Agreement between Capstone and QuadraFNX shall terminate as set out above, except that it shall also terminate upon the announcement of any superior proposal, which shall mean any unsolicited, bona fide written Acquisition Proposal, other than the Arrangement, that (i) in the opinion of QuadraFNX, after consultation with its financial advisors and acting reasonably, is financially superior to the Arrangement; (ii) is reasonably capable of being completed without undue delay, taking into account all legal, financial, regulatory and other aspects of such proposal and the person making such proposal, (iii) is not subject to a due diligence condition, (iv) is made to all Far West shareholders in compliance with applicable securities laws, and (v) is not conditional on obtaining financing.

In addition, Pacific Road Resources has covenanted and agreed that at the Effective Time, the board nomination rights and pre-emptive rights to purchase securities granted to Pacific Road Resources pursuant to the subscription agreements dated July 28, 2008 and September 21, 2010 between Pacific Road Resources and Far West shall terminate and be of no further force or effect, without any further obligation of Capstone to Pacific Road Resources. Pacific Road Resources has agreed that it will not accept or enter into, or publicly propose to accept or enter into, any letter of intent,

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agreement, arrangement or undertaking related to any Acquisition Proposal provided however, that Pacific Road Resources may conduct discussions and negotiations with any person making an Acquisition Proposal with whom the Far West Board is engaged in discussions in compliance with the Arrangement Agreement.

Notwithstanding the above, Pacific Road Resources has not covenanted and agreed to:

• promptly (and in any event within 24 hours following receipt) notify Capstone of any Acquisition Proposal or inquiry that could lead to an Acquisition Proposal of which Pacific Road Resources or, to the knowledge of Pacific Road Resources, any of the shareholders, directors or officers of Pacific Road Resources becomes aware; or

• promptly notify Capstone of any acquisitions by Pacific Road Resources or any of its respective affiliates of any securities of Far West, if any, after the date of the Far West Voting Support Agreements, which, for greater certainty, shall include any Far West Options and Far West Warrants and any Far West Shares issuable upon the exercise or conversion of any Far West Options or Far West Warrants owned or controlled by the Pacific Road Resources which may be exercised, converted into or exchanged for Far West Shares. Any such securities shall be subject to the terms of the Far West Voting Support Agreements as though they were Far West Subject Securities owned by Pacific Road Resources on the date of the Far West Voting Support Agreements.

The Far West Voting Support Agreements between Capstone and Pacific Road Resources shall terminate as set out above, except that they shall also terminate upon: (i) the announcement of any superior proposal, which shall mean any bona fide Acquisition Proposal that offers consideration per Far West Share that is, in Pacific Road Resource’s view acting reasonably, more favourable to Pacific Road Resources from a financial point of view, than the consideration payable pursuant to the Arrangement Agreement; (ii) written notice by Pacific Road Resources if Capstone is in breach of any representation or warranty in any material respect or has not complied in all material respects with the covenants under the Far West Voting Support Agreements between Capstone and Pacific Road Resources; (iii) written notice by Pacific Road Resources if Capstone varies the terms or conditions of the Arrangement Agreement in any manner that is adverse to Pacific Road Resources (any amendment that (A) alters the overall ratio of consideration as between shares and cash, (B) reduces the amount of cash that can be elected by Pacific Road Resources on a per Far West Share basis, or (C) that amends the termination rights of Far West, shall be deemed to be adverse to Pacific Road Resources); and (iv) August 31, 2011 (in lieu of the Outside Date).

Capstone Voting Support Agreements

Each of the directors and executive officers of Capstone has entered into a Capstone Voting Support Agreement with Far West. Each Capstone Voting Support Agreement sets forth, among other things, the terms and conditions upon which each Capstone Locked-Up Shareholder has agreed, among other things, to vote in favour of the Share Issuance Resolution, all of the Capstone Shares currently owned or controlled by such Capstone Locked-Up Shareholder. The following is a summary of the principal terms of the Capstone Voting Support Agreements.

Under the Capstone Voting Support Agreements, each of the Capstone Locked-Up Shareholders has agreed, among other things, to vote, or cause to be voted in favour of the Share Issuance Resolution, all of the Capstone Shares currently owned or controlled by such Capstone Locked-Up Shareholder, being an aggregate of 1,046,530 Capstone Shares (representing approximately 0.5% of the outstanding Capstone Shares as at May 11, 2011), and all Capstone Shares issued upon the exercise or conversion of any Capstone Options owned or controlled by such Capstone Locked-Up Shareholder.

Except as otherwise noted below, each Capstone Locked-Up Shareholder has covenanted and agreed that it will:

• not (A) sell, transfer, gift, assign, convey, pledge, hypothecate, encumber, option, grant a security interest in or otherwise dispose of any right or interest in (including by way of deposit or tender under any take-over bid) any of the Capstone Shares (the “Capstone Subject Shares”) or Capstone Options owned or controlled by such Capstone Locked-Up Shareholder (the “Capstone Subject Securities”), other than the exercise of Capstone Options in accordance with their terms for Capstone Shares that will become subject to the Capstone Voting Support Agreement as if they were Capstone Subject Shares owned by the Capstone Locked-Up Shareholder on the date of the Capstone Voting Support Agreement, or enter into any agreement, arrangement or understanding in connection therewith (whether by actual disposition or effective economic disposition due to cash settlement or otherwise), other than pursuant to the Arrangement Agreement, without

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having first obtained the prior written consent of Far West, or (B) other than as set forth in the Capstone Voting Support Agreements, grant any proxies or powers of attorney, deposit any Capstone Subject Shares into a voting trust, in any way transfer any of the voting rights associated with any of the Capstone Subject Shares, or enter into a voting agreement, understanding or arrangement with respect to the right to vote, call meetings of Capstone Shareholders or give consents or approval of any kind with respect to any Capstone Subject Shares;

• vote (or cause to be voted) all the Capstone Subject Shares at any meeting Capstone Shareholders, including without limitation the Capstone Meeting, and in any action by written consent of the Capstone Shareholders:

• in favour of the approval, consent, ratification and adoption of the resolution of Capstone approving the Arrangement, and the transactions contemplated by the Arrangement Agreement (and any actions required in furtherance thereof); and

• against any (A) material change in the capitalization of Capstone or the corporate structure or constating documents of Capstone (other than the transactions contemplated in the Arrangement Agreement, and any other agreement or transactions involving Capstone or its Affiliates); (B) action that would reasonably be expected to impede, delay, interfere with, or discourage the transactions contemplated by the Arrangement Agreement; and (C) any action that would result in a Capstone Material Adverse Effect (other than the transactions contemplated by the Arrangement Agreement);

• not, without the prior written consent of Far West, requisition or join in the requisition of any meeting of Capstone Shareholders for the purpose of considering any resolution;

• promptly notify Far West of any acquisitions by the Capstone Locked-Up Shareholder or any of its respective affiliates of any securities of Capstone, if any, after the date of the Capstone Voting Support Agreements, which, for greater certainty, shall include any Capstone Options and any Capstone Shares issuable upon the exercise or conversion of any Capstone Options owned or controlled by the Capstone Locked-Up Shareholder which may be exercised, converted into or exchanged for Capstone Shares. Any such securities shall be subject to the terms of the Capstone Voting Support Agreements as though they were Capstone Subject Securities owned by the Capstone Locked-Up Shareholder on the date of the Capstone Voting Support Agreements;

• not (i) exercise any securityholder rights or remedies available at common law or pursuant to applicable securities legislation; or (ii) take any other action of any kind, in each case which might reasonably be regarded as likely to reduce the success of, or delay or interfere with the completion of, the transactions contemplated by the Arrangement Agreement; and

• not make any public announcement or statement with respect to the transactions contemplated by the Capstone Voting Support Agreements or pursuant to the Arrangement Agreement without the prior written approval of Capstone.

Each Capstone Voting Support Agreement shall be terminated and be of no further force or effect upon the earliest of:

• the written agreement of Far West and the Capstone Locked-Up Shareholder;

• the termination of the Arrangement Agreement in accordance with its terms;

• written notice by the Capstone Locked-Up Shareholder if: (a) Far West has not complied in all material respects with its covenants to consummate the transactions contemplated by the Arrangement Agreement and to use its reasonable commercial efforts to assist Capstone in effecting the Arrangement and to successfully complete the Arrangement in the manner contemplated by the Capstone Voting Support Agreement and the Arrangement Agreement; or (b) Far West, without the prior written consent of the Capstone Locked-Up Shareholder, otherwise varies the terms of the Arrangement Agreement in a manner that is materially adverse to the Capstone Locked-Up Shareholder;

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• the Effective Time; or

• the Outside Date.

Approvals

Far West Securityholder Approval

Subject to the Interim Order, the Arrangement Resolution must be approved by at least two-thirds of the votes cast by Far West Securityholders, voting as a single class present in person or represented by proxy, at the Far West Meeting. In addition, the TSX requires approval of the Arrangement Resolution by a majority of the Far West Shareholders present in person or represented by proxy at the Far West Meeting.

Capstone Shareholder Approval

Assuming that: (i) all of the Far West Shares outstanding as at April 15, 2011 are acquired upon completion of the Arrangement, (ii) all Far West Shareholders elect the Full Proration Alternative, (iii) all holders of Far West Options elect to receive Replacement Options rather than exercise their Far West Options in advance of the successful completion of the Arrangement, and (iv) all holders of Far West Warrants elect to receive Replacement Warrants rather than exercise their Far West Warrants in advance of the successful completion of the Arrangement, Capstone would issue an aggregate of approximately 158 million Capstone Shares in connection with the Arrangement and the KORES Subscription, which would result in there being up to a total of approximately 362 million Capstone Shares issued and outstanding (based on the number of Capstone Shares outstanding as at May 11, 2011) immediately following the completion of the Arrangement and the KORES Subscription, with Shareholders holding in the aggregate approximately 56% of the outstanding Capstone Shares, former Far West Shareholders holding approximately 33% of the outstanding Capstone Shares and KORES Sub holding approximately 11% of the outstanding Capstone Shares (each on a non-diluted basis). As a result of this issuance, the Shareholders’ ownership and voting interests in Capstone will be diluted, relative to their current proportional ownership and voting interest in Capstone.

Assuming that: (i) all of the Far West Shares outstanding (as at April 15, 2011) are acquired upon completion of the Arrangement, (ii) all Far West Shareholders elect the Share Alternative, (iii) all holders of Far West Options elect to duly exercise all such Far West Options for Far West Shares prior to the Effective Time and elect the Share Alternative, and (iv) all holders of Far West Warrants elect to duly exercise all such Far West Warrants for Far West Shares prior to the Effective Time and elect the Share Alternative, Capstone would issue an aggregate of approximately 203.6 million Capstone Shares in connection with the Arrangement and the KORES Subscription, which would result in there being up to a total of approximately 407.6 million Capstone Shares issued and outstanding (based on the number of Capstone Shares outstanding as at May 11, 2011) immediately following the completion of the Arrangement and the KORES Subscription, with Shareholders holding in the aggregate approximately 50% of the outstanding Capstone Shares, former Far West Shareholders holding approximately 39.6% of the outstanding Capstone Shares and KORES Sub holding approximately 10.4% of the outstanding Capstone Shares (each on a non-diluted basis).

Pursuant to the listing rules of the TSX, a listed company is generally required to obtain shareholder approval in connection with an acquisition transaction where the number of securities issued or issuable in payment of the purchase price for the acquisition (including any securities issued or issuable upon a concurrent private placement upon which the acquisition is contingent or otherwise linked) exceeds 25% of the number of securities of the listed issuer which are outstanding, on a non-diluted basis, prior to the date of closing of the transaction. As the Arrangement and the KORES Subscription will result in Capstone issuing in excess of 25% of the outstanding Capstone Shares (in the scenarios outlined above, up to approximately 77.5% or 99.8%, respectively), Shareholder approval is required. It is a condition of the acquisition of Far West that the Share Issuance Resolution be approved by a simple majority (50% plus one vote) of votes cast at the Meeting by Shareholders, present in person or by proxy.

Court Approval

The BCBCA requires that Far West obtain the approval of the Court in respect of the Arrangement.

On May 10, 2011, Far West obtained the Interim Order which provides for the calling and holding of the Far West Meeting and other procedural matters, and filed a Notice of Hearing of Petition for the Final Order to approve the

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Arrangement. Copies of the Interim Order and the Notice of Hearing of Petition are attached as Appendices D and E, respectively, to the Far West Circular.

The Court hearing in respect of the Final Order is expected to take place at 9:45 a.m. (Vancouver time) on June 14, 2011, or as soon thereafter as counsel for Far West may be heard, subject to the approval of the Arrangement Resolution at the Far West Meeting. At the hearing, the Court will consider, among other things, the fairness of the terms and conditions of the Arrangement and the rights and interests of every person affected. The Court may approve the Arrangement in any manner the Court may direct, subject to compliance with such terms and conditions, if any, as the Court deems fit. Prior to the hearing on the Final Order, the Court will be informed that the Final Order will also constitute the basis for an exemption from registration under the U.S. Securities Act for the Capstone Securities to be issued in the Arrangement to holders of the Far West Securities, as applicable, pursuant to Section 3(a)(10) of the U.S. Securities Act. Under the terms of the Interim Order, each Far West Securityholder, as well as creditors of Far West, will have the right to appear and make submissions at the application for the Final Order. There can be no assurance that the Court will approve the Arrangement.

Dissenting Shareholder Rights

Under applicable Canadian law, Capstone Shareholders are not entitled to dissent rights with respect to the Share Issuance Resolution. Any registered Far West Shareholder who validly dissents from the Arrangement Resolution in accordance with the BCBCA will be entitled, in the event the transaction becomes effective, to be paid by Capstone in accordance with the terms of the Plan of Arrangement, the fair value of the Far West Shares held by the dissenting shareholder. It is a condition to the obligation of Capstone to complete the Arrangement that no more than 5% of the Far West Shares shall have exercised Dissent Rights.

Issuance of Capstone Securities

The Capstone Securities to be issued pursuant to the Arrangement have not been, and will not be registered under the U.S. Securities Act or the securities laws of any other jurisdiction. The Capstone Securities to be issued in the Arrangement will be issued pursuant to an exemption from the prospectus requirements of Canadian securities law and pursuant to the exemption from the registration requirements of the U.S. Securities Act provided by Section 3(a)(10) of the U.S. Securities Act, based on the approval of the Plan of Arrangement by the Court.

THE ARRANGEMENT AGREEMENT

General

At the Effective Time of the Arrangement, upon the terms and subject to the conditions of the Arrangement Agreement and in accordance with the Arrangement, among other things, Capstone will acquire all of the Far West Shares and Far West will become a subsidiary of Capstone. The Arrangement Agreement and Plan of Arrangement provide that Capstone will acquire each outstanding Far West Share (other than those held by Far West Shareholders who validly exercise their Dissent Rights) in exchange for the Consideration. Upon completion of the Arrangement, the parties will complete the KORES Subscription and KORES Sub will acquire a 30% interest in the Santo Domingo Project.

The Arrangement, which is deemed part of the Arrangement Agreement, provides that at the Effective Time, a series of events shall occur without any further act or formality thereby giving effect to the transactions contemplated by the Arrangement.

Conditions

Mutual Conditions Precedent

The obligations of Capstone and Far West to complete the Arrangement are subject to the fulfillment of each of the following conditions precedent on or before the Effective Time, each of which may only be waived with the mutual consent of Capstone and Far West:

• the Arrangement Resolution shall have been approved and adopted by the Far West Securityholders at the Far West Meeting in accordance with the Interim Order;

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• the Court shall have determined that the terms and conditions of the Arrangement are procedurally and substantively fair to the Far West Securityholders and the Interim Order and the Final Order shall each have been obtained on terms consistent with the Arrangement Agreement, and shall not have been set aside or modified in a manner unacceptable to either Far West or Capstone, acting reasonably, on appeal or otherwise;

• Capstone Shareholder Approval shall have been obtained;

• no Governmental Entity shall have enacted, issued, promulgated, enforced or entered any law which is then in effect and has the effect of making the Arrangement illegal or otherwise preventing or prohibiting consummation of the Arrangement;

• the Capstone Shares to be issued in the United States pursuant to the Arrangement shall be exempt from the registration requirements of the U.S. Securities Act pursuant to s.3(a)(10) of the U.S. Securities Act; provided, however, that Far West shall not be entitled to rely on the provisions of the Arrangement Agreement in failing to complete the transactions contemplated by the Arrangement Agreement if Far West fails to advise the Court prior to the hearing in respect of the Final Order, as required by the terms of the foregoing exemptions, that Capstone will rely on the foregoing exemptions based on the Court’s approval of the Arrangement;

• all Regulatory Approvals shall have been obtained on terms and conditions satisfactory to each of Capstone and Far West, acting reasonably;

• there shall not be pending or threatened in writing any suit, action or proceeding by any Governmental Entity or any other person that would reasonably be expected to: (i) prohibit or restrict the acquisition by Capstone of any Far West Shares, the payment of consideration by Capstone to Far West Shareholders, or the consummation of the Arrangement or give rise to any material damages to Far West or Capstone directly or indirectly in connection with the Arrangement; (ii) prohibit or materially limit the ownership by Capstone of Far West or any material portion of its business; or (iii) impose limitations on the ability of: (A) Capstone to acquire or hold, or exercise full rights of ownership of, any Far West Shares, including the right to vote the Far West Shares to be acquired by it on all matters properly presented to the Far West Shareholders; or (B) Far West Shareholders to acquire or hold, or exercise full rights of ownership of, any Capstone Shares, including the right to vote the Capstone Shares to be acquired by it on all matters properly presented to Capstone Shareholders; and

• the KORES Condition shall have been satisfied.

Additional Conditions Precedent to the Obligations of Capstone

The obligation of Capstone to complete the Arrangement is subject to the fulfillment of each of the following conditions precedent on or before the Effective Time (each of which is for the exclusive benefit of Capstone and may be waived by Capstone):

• all covenants of Far West under the Arrangement Agreement to be performed on or before the Effective Time which have not been waived by Capstone shall have been duly performed by Far West in all material respects and Capstone shall have received a certificate of Far West addressed to Capstone and dated the Effective Date, signed on behalf of Far West by two senior executive officers of Far West (on Far West’s behalf and without personal liability), confirming the same as at the Effective Time;

• the representations and warranties of Far West set forth in the Arrangement Agreement shall be true and correct in all respects, without regard to any materiality or Far West Material Adverse Effect qualifications contained in them as of the Effective Time, as though made on and as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date), and the representations and warranties (other than those aforementioned) made by Far West that are not qualified by a reference to a Far West Material Adverse Effect or materiality shall be true and correct in all material respects, in each case as of the Effective Time as if made at and as of such time (except for representations and warranties made as of a specified date, the accuracy of which shall be

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determined as of that specified date), and Capstone shall have received a certificate of Far West addressed to Capstone and dated the Effective Date, signed on behalf of Far West by two senior executive officers of Far West (on Far West’s behalf and without personal liability), confirming the same as at the Effective Time;

• there shall not have occurred a Far West Material Adverse Effect that has not been publicly disclosed by Far West prior to the date of the Arrangement Agreement, and since the date of the Arrangement Agreement, there shall not have occurred a Far West Material Adverse Effect, and Capstone shall have received a certificate signed on behalf of Far West by the chief executive officer and the chief financial officer of Far West to such effect;

• arrangements satisfactory to Capstone, acting reasonably, shall have been made to release Far West from all obligations of Far West and rights of QuadraFNX arising pursuant to certain provisions of the QuadraFNX Subscription Agreement;

• holders of no more than 5% of the Far West Shares shall have exercised Dissent Rights;

• the Board of Far West shall have passed a resolution pursuant to the Far West Shareholder Rights Plan waiving the application of the Far West Shareholder Rights Plan to the Arrangement; and

• Far West shall have delivered to Capstone opinions in customary form regarding title to the Santo Domingo Project.

Additional Conditions Precedent to the Obligations of Far West

The obligation of Far West to complete the Arrangement is subject to the fulfillment of each of the following conditions precedent on or before the Effective Time (each of which is for the exclusive benefit of Far West and may be waived by Far West):

• all covenants of Capstone under the Arrangement Agreement to be performed on or before the Effective Time which have not been waived by Far West shall have been duly performed by Capstone in all material respects and Far West shall have received a certificate of Capstone, addressed to Far West and dated the Effective Date, signed on behalf of Capstone by two of its senior executive officers (on Capstone’s behalf and without personal liability), confirming the same as of the Effective Date;

• the representations and warranties of Capstone set forth in the Arrangement Agreement shall be true and correct in all respects, without regard to any materiality or Capstone Material Adverse Effect qualifications contained in them as of the Effective Time, as though made on and as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date), and the representations and warranties (other than those aforementioned) made by Capstone that are not qualified by a reference to a Capstone Material Adverse Effect or materiality shall be true and correct in all material respects, in each case as of the Effective Time as if made at and as of such time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of that specified date), and Far West shall have received a certificate signed on behalf of Capstone by two senior executive officers of Capstone (on Capstone’s behalf and without personal liability) to this effect;

• Capstone shall have complied with its obligations in respect of the payment of the Consideration and the Depositary shall have confirmed receipt of the Consideration and funds contemplated thereby;

• there shall not have occurred a Capstone Material Adverse Effect that has not been publicly disclosed by Capstone prior to the date of the Arrangement Agreement, and since the date of the Arrangement Agreement, there shall not have occurred a Capstone Material Adverse Effect, and Far West shall have received a certificate signed on behalf of Capstone by the chief executive officer and the chief financial officer of Capstone to such effect;

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• Capstone shall have received the necessary consents under the Credit Agreement dated as of January 16, 2009 between Capstone and The Bank of Nova Scotia (as of May 11, 2011, the lenders have confirmed their consents are forthcoming);

• Capstone shall have delivered evidence satisfactory to Far West, acting reasonably, of the approval of the listing and posting for trading on the TSX of the Consideration Shares, subject only to the satisfaction of the customary listing conditions of the TSX; and

• Capstone shall have delivered to Far West opinions in customary form regarding title to (i) the Cozamin Polymetalic Mine, Mexico, (ii) the Minto Copper-Gold Mine, Yukon, and (iii) the Kutcho Copper-Zinc-Gold-Silver Project, Northwestern British Columbia.

Representations and Warranties

The Arrangement Agreement contains a number of customary representations and warranties of Capstone and Far West relating to, among other things, corporate status; capitalization; and the corporate authorization and enforceability of, and board approval of, the Arrangement Agreement and the Arrangement. The representations and warranties also address various matters relating to the business, operations and properties of each of the parties and their respective subsidiaries, including, accuracy of financial statements; absence of undisclosed liabilities; absence of any Far West Material Adverse Effect or Capstone Material Adverse Effect and certain other changes or events since December 31, 2010; absence of any undisclosed litigation or other actions which if determined adversely would reasonably be expected to have a Far West Material Adverse Effect or Capstone Material Adverse Effect; employment matters; pension matters; tax matters; compliance with laws; insurance; environmental matters; mineral resources; interest in mineral rights; restrictions on business activities; stock exchange compliance; no expropriation; no conflict; reporting issuer status; brokers; operational matters; non-arm’s length transactions; books and records; and reports.

Covenants

Conduct of the Business of Far West

Far West covenants and agrees that, during the period from the date of the Arrangement Agreement until the earlier of the Effective Time except: (i) as required by applicable Law or by any Governmental Entity having jurisdiction; (ii) with respect to matters qualified by the Far West Disclosure Letter; (iii) as Capstone shall otherwise consent to in writing; or (iv) as otherwise expressly contemplated or permitted by the Arrangement Agreement, Far West shall, and shall cause each of its subsidiaries to, conduct its and their respective businesses only in, not take any action except in, and maintain their respective facilities, in the ordinary course of business consistent with past practice and to use commercially reasonable efforts to preserve intact its and their present business organization and goodwill, to preserve intact Far West and the Santo Domingo Project, to keep available the services of its officers, consultants and employees as a group and to maintain satisfactory relationships with suppliers, distributors, employees and others having business relationships with them.

Far West shall provide Capstone with prompt written notice of: (A) any Far West Material Adverse Effect; (B) the occurrence, or failure to occur, of any event or state of facts which occurrence or failure would or would be likely to (x) cause any of the representations of Far West contained in the Arrangement Agreement to be untrue or inaccurate (without giving effect to, applying or taking into consideration any materiality or Far West Material Adverse Effect qualification already contained within such representation or warranty) in any material respect; or (y) result in the failure in any material respect of Far West to comply with or satisfy any covenant, condition or agreement (without giving effect to, applying or taking into consideration qualification already contained in such covenant, condition or agreement) to be complied with or satisfied prior to the Effective Time.

Other Covenants

Each of Capstone and Far West has also agreed in the Arrangement Agreement to co-operate and use their commercially reasonable efforts to take, or cause to be taken, all reasonable actions, including the preparation of any applications for appropriate Regulatory Approvals and other orders, registrations, consents, filings and approvals and the preparation of any required documents, in each case as reasonably necessary to discharge their respective obligations under the Arrangement Agreement and the Arrangement, and to complete any of the transactions contemplated by the Arrangement Agreement, including their obligations under applicable securities laws.

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Far West Covenants Regarding Non-Solicitation

The Arrangement Agreement contains certain “non-solicitation” provisions pursuant to which Far West has agreed that it will not, directly or indirectly, through any officer, director, employee, advisor, representative agent or otherwise:

• make, solicit, assist, initiate, encourage or otherwise facilitate any inquiries, proposals or offers relating to any Acquisition Proposal involving Far West, participate in any discussions or negotiations regarding, or furnish to any person any information with respect to, or otherwise co-operate in any way with, or assist or participate in, facilitate or encourage any effort or attempt by any person to do or seek to do any of the foregoing;

• engage in any discussions or negotiations regarding, or provide any information with respect to, or otherwise co-operate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by any other person to make or complete any Acquisition Proposal, provided that, for greater certainty, Far West may advise any person making an unsolicited Acquisition Proposal that such Acquisition Proposal does not constitute a Superior Proposal when the Far West Board has so determined;

• withdraw, modify or qualify, or propose publicly to withdraw, modify or qualify, in any manner adverse to Capstone, the approval or recommendation of the Far West Board or any committee thereof of the Arrangement Agreement or the Arrangement;

• approve, recommend or remain neutral with respect to, or propose publicly to approve, accept, endorse, recommend or remain neutral with respect to, any Acquisition Proposal for Far West (it being understood that publicly taking no position or a neutral position with respect to an Acquisition Proposal until 15 calendar days following the public announcement of such Acquisition Proposal shall not be considered a violation of this provision); or

• accept or enter into, or publicly propose to accept or enter into, any letter of intent, agreement in principle, agreement, arrangement or undertaking related to any Acquisition Proposal.

The Arrangement Agreement provides that, notwithstanding the foregoing restrictions, nothing shall prevent the Far West Board from considering, and the Far West Board shall be permitted to engage in discussions or negotiations with, or respond to enquiries from any person that has made a bona fide unsolicited written Acquisition Proposal that the Far West Board has determined constitutes, or could reasonably be expected to result in, a Superior Proposal, or provide information pursuant to the Arrangement Agreement to, any person in response to an Acquisition Proposal made by any such person, provided that the requirements of the Arrangement Agreement are met.

Far West shall immediately cease and cause to be terminated any existing discussions or negotiations with any person (other than Capstone) with respect to any potential Acquisition Proposal and, in connection therewith, Far West will discontinue access to any of its confidential information (and not establish or allow access to any of its confidential information, or any data room, virtual or otherwise) and shall as soon as possible request the return or destruction of all confidential information provided in connection therewith. Far West agrees not to release any third party from any confidentiality, non-solicitation or standstill agreement to which such third party is a party, or terminate, modify, amend or waive the terms thereof and Far West undertakes to enforce, or cause its subsidiaries to enforce, all standstill, non-disclosure, non-disturbance, non-solicitation and similar covenants that it or any of its subsidiaries have entered into prior to the date of the Arrangement Agreement, provided, however, that the foregoing shall not prevent the Far West Board from considering an Acquisition Proposal (that was not solicited after the date of the Arrangement Agreement in contravention of the Arrangement Agreement and provided that Far West is in compliance with the Arrangement Agreement) that the Far West Board has determined constitutes, or could reasonably be expected to result in, a Superior Proposal;

From and after the date of the Arrangement Agreement, Far West shall promptly provide notice to Capstone of any unsolicited bona fide Acquisition Proposal or any proposal, inquiry or offer that could lead to an Acquisition Proposal or any amendments to the foregoing or any request for non-public information relating to Far West or any of its subsidiaries or for access to the properties, books or records of Far West or any subsidiary by any person that informs Far West, any member of the Far West Board or such subsidiary that it is considering making, or has made, an Acquisition Proposal. Such notice to Capstone shall be made, from time to time, first orally and then (in any event within 24 hours) in writing and shall indicate the identity of the person making such proposal, inquiry or contact, all material terms thereof and such other details

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of the proposal, inquiry or contact known to Far West as Capstone may reasonably request, and shall include copies of any such proposal, inquiry, offer or request or any amendment to any of the foregoing. Far West shall keep Capstone promptly and fully informed of the status, including any change to the material terms, of any such proposal, inquiry or request and will respond promptly to all reasonable inquiries by Capstone with respect thereto.

If the Far West Board receives a request for material non-public information from a person who proposes to Far West an unsolicited bona fide written Acquisition Proposal and the Far West Board determines that such Acquisition Proposal constitutes, or could reasonably be expected to result in, a Superior Proposal; and in the opinion of the Far West Board, acting in good faith and on advice from their outside legal advisors, the failure to provide such party with access to information regarding Far West and its subsidiaries would be inconsistent with the fiduciary duties of the Far West Board, then, and only in such case, Far West may provide such person with access to information regarding Far West and its subsidiaries, subject to the execution of a confidentiality and standstill agreement which is customary in such situations and which, in any event and taken as a whole, is no less favourable to Far West than the Far West Confidentiality Agreement; provided that Far West sends a copy of any such confidentiality and standstill agreement to Capstone promptly upon its execution and Capstone is provided with a list of, and, at the request of Capstone, copies of, the information provided to such person and immediately provided with access to similar information to which such person was provided.

Far West agrees that it will not accept, approve or enter into any Proposed Agreement, other than a confidentiality and standstill agreement as contemplated in the preceding paragraph, with any person providing for or to facilitate an Acquisition Proposal, unless:

• the Far West Board determines that the Acquisition Proposal constitutes a Superior Proposal;

• the Far West Meeting has not occurred;

• Far West has complied with the non-solicitation provisions in the Arrangement Agreement;

• Far West has provided Capstone with a notice in writing that there is a Superior Proposal together with all documentation related to and detailing the Superior Proposal, including a copy of any Proposed Agreement relating to such Superior Proposal, and a written notice from the Far West Board regarding the value in financial terms that the Far West Board has in consultation with its financial advisors determined should be ascribed to any non-cash consideration offered under the Superior Proposal, such documents to be so provided to Capstone not less than five business days prior to the proposed acceptance, approval, recommendation or execution of any such Proposed Agreement by Far West;

• five business days shall have elapsed from the date Capstone received the notice and documentation referred to in the immediately preceding paragraph from Far West and, if Capstone has proposed to amend the terms of the Arrangement in accordance with the Arrangement Agreement, the Far West Board shall have determined in good faith after consultation with its financial advisors and outside legal counsel that the Acquisition Proposal is a Superior Proposal compared to the proposed amendment to the terms of the Arrangement by Capstone;

• Far West concurrently terminates the Arrangement Agreement; and

• Far West has previously, or concurrently will have, paid, or caused to be paid, to Capstone the Termination Fee.

Capstone Opportunity to Match

Pursuant to the Arrangement Agreement, Far West has acknowledged and agreed that, during the five business day period referred to above, Capstone shall have the right, but not the obligation, to offer to amend the terms of the Arrangement Agreement and the Plan of Arrangement in order to provide for terms at least equivalent to those provided for in the Superior Proposal. If Capstone does so, then the Far West Board shall review any such proposal by Capstone to determine (acting in good faith and in accordance with its fiduciary duties) whether the Acquisition Proposal to which Capstone is responding would continue to be a Superior Proposal when assessed against the amended Agreement and Plan of Arrangement as proposed by Capstone. If the Far West Board determines that the Acquisition Proposal would thereby cease to be a Superior Proposal, it will cause Far West to enter into an amendment to the Arrangement Agreement and the

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Plan of Arrangement reflecting the offer by Capstone to amend the terms of the Arrangement Agreement and Plan of Arrangement and will further agree not to enter into the applicable Proposed Agreement and not to withdraw, modify or change any recommendation regarding the Arrangement save and except to reaffirm its recommendation of the amended Plan of Arrangement.

The Far West Board shall promptly reaffirm its recommendation of the Arrangement by press release after: (a) any Acquisition Proposal which the Far West Board determines not to be a Superior Proposal is publicly announced or made; or (b) the Far West Board determines that a proposed amendment to the terms of the Arrangement would result in the Acquisition Proposal which has been publicly announced or made not being a Superior Proposal, and Capstone has so amended the terms of the Arrangement. Capstone and its counsel shall be given a reasonable opportunity to review and comment on the form and content of any such press release, recognizing that whether or not such comments are appropriate will be determined by Far West, acting reasonably.

Nothing in the Arrangement Agreement shall prevent the Far West Board from responding through a directors’ circular or otherwise as required by applicable securities laws to an Acquisition Proposal that it determines is not a Superior Proposal, or from withdrawing, modifying or changing its recommendation as a result of Capstone having suffered a Capstone Material Adverse Effect. Further, nothing in the Arrangement Agreement shall prevent the Far West Board from making any disclosure to the securityholders of Far West if the Far West Board, acting in good faith and upon the advice of its legal advisors, shall have first determined that the failure to make such disclosure would be inconsistent with the fiduciary duties of the Far West Board. Capstone and its counsel shall be given a reasonable opportunity to review and comment on the form and content of any such disclosure, recognizing that whether or not such comments are appropriate will be determined by Far West, acting reasonably.

Termination

The Arrangement Agreement may be terminated at any time prior to the Effective Time (notwithstanding Capstone Shareholder Approval or any approval of the Arrangement Agreement or the Arrangement Resolution by the Far West Securityholders, the Capstone Shareholders and/or by the Court, as applicable):

• by mutual written agreement of Far West and Capstone;

• by either Far West or Capstone, if:

• the Effective Time shall not have occurred on or before the Outside Date, except that the right to terminate the Arrangement Agreement under this provision shall not be available to any party whose failure to fulfill any of its obligations or whose breach of any of its representations and warranties under the Arrangement Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur by such Outside Date;

• after the date of the Arrangement Agreement, there shall be enacted or made any law that makes consummation of the Arrangement illegal or otherwise prohibited or enjoins Far West or Capstone from consummating the Arrangement and such law or enjoinment shall have become final and non-appealable;

• Far West Securityholder Approval shall not have been obtained at the Far West Meeting in accordance with the Interim Order;

• Capstone Shareholder Approval shall not have been obtained at the Meeting; or

• the Effective Time shall not have occurred on or before the Outside Date due to the KORES Condition not being satisfied except that the right to terminate the Arrangement Agreement under this provision shall not be available to any party whose failure to fulfill any of its obligations or whose breach of any of its representations and warranties under the Arrangement Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur by such Outside Date;

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• by Capstone, if:

• prior to the Effective Time: (a) the Far West Board fails to recommend or withdraws, amends, modifies or qualifies, in a manner adverse to Capstone or fails to publicly reaffirm its recommendation of the Arrangement within five business days (and in any case prior to the Far West Meeting) after having been requested in writing by Capstone to do so, in a manner adverse to Capstone (it being understood that the taking of a neutral position or no position with respect to an Acquisition Proposal beyond a period of 15 calendar days shall be considered an adverse modification), (a “Far West Change in Recommendation”); (b) the Far West Board or a committee thereof shall have approved, accepted, endorsed or recommended any Acquisition Proposal; or (c) Far West shall have breached the non-solicitation provisions of the Arrangement Agreement in any material respect;

• a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Far West set forth in the Arrangement Agreement shall have occurred that would cause certain conditions which are for the benefit of Capstone not to be satisfied, and such conditions are incapable of being satisfied by the Outside Date, as reasonably determined by Capstone and provided that Capstone is not then in breach of the Arrangement Agreement so as to cause any such conditions not to be satisfied; or

• Capstone has been notified in writing by Far West of a Proposed Agreement in accordance with the terms of the Arrangement Agreement, and either: (a) Capstone does not deliver an amended Arrangement proposal within five business days of delivery of the Proposed Agreement to Capstone; or (b) Capstone delivers an amended Arrangement proposal in accordance with the terms of the Arrangement Agreement but the Far West Board determines, acting in good faith and in the proper discharge of its fiduciary duties, that the Acquisition Proposal provided in the Proposed Agreement continues to be a Superior Proposal in comparison to the amended Arrangement of Capstone;

• by Far West, if:

• a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Capstone set forth in the Arrangement Agreement shall have occurred that would cause certain conditions which are for the benefit of Far West not to be satisfied, and such conditions are incapable of being satisfied by the Outside Date as reasonably determined by Far West and provided that Far West is not then in breach of the Arrangement Agreement so as to cause any such conditions not to be satisfied; or

• it wishes to enter into a binding written agreement with respect to a Superior Proposal (other than a non-disclosure and standstill agreement permitted by the Arrangement Agreement), subject to compliance with the terms of the Arrangement Agreement in all material respects and provided that no termination under this provision shall be effective unless and until Far West shall have paid to Capstone the amount required to be paid as described below under “Termination Fees”.

Termination Fees

The Arrangement Agreement provides that Far West will pay the Termination Fee to Capstone if a Far West Termination Fee Event occurs. “Far West Termination Fee Event” means the termination of the Arrangement Agreement:

• by Capstone (a) if there is a Far West Change in Recommendation (but not including a termination by Capstone in circumstances where the Far West Change in Recommendation resulted from the occurrence of a Capstone Material Adverse Effect); (b) the Far West Board or a committee thereof shall have approved, accepted, endorsed or recommended any Acquisition Proposal; (c) Far West shall have breached the non-solicitation provisions of the Arrangement Agreement in any material respect; or (d) Capstone has been notified in writing by Far West of a Proposed Agreement in accordance with the terms of the Arrangement Agreement, and either: (i) Capstone does not deliver an amended Arrangement proposal within five business

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days of delivery of the Proposed Agreement to Capstone; or (ii) Capstone delivers an amended Arrangement proposal in accordance with the terms of the Arrangement Agreement but the Far West Board determines, acting in good faith and in the proper discharge of its fiduciary duties, that the Acquisition Proposal provided in the Proposed Agreement continues to be a Superior Proposal in comparison to the amended Arrangement terms offered by Capstone;

• by Far West if Far West wishes to enter into a binding written agreement with respect to a Superior Proposal; or

• by either party if (a) Far West Securityholder Approval shall not have been obtained at the Far West Meeting in accordance with the Interim Order, or (b) the Effective Time shall not have occurred on or before the Outside Date, but only if, in these termination events, (i) prior to such termination, a bona fide Acquisition Proposal for Far West shall have been made or publicly announced by any person other than Capstone and (ii) within twelve months following the date of such termination, Far West or one or more of its subsidiaries (A) enters into a definitive agreement in respect of one or more Acquisition Proposals or (B) there shall have been consummated one or more Acquisition Proposals for Far West.

If a Far West Termination Fee Event occurs, Far West shall pay the Termination Fee to Capstone by wire transfer of immediately available funds, as follows:

• if the Termination Fee is payable pursuant to subsection 8.3(c)(i) of the Arrangement Agreement, the Termination Fee shall be payable within 7 business days following such termination;

• if the Termination Fee is payable pursuant to subsection 8.3(c)(ii) of the Arrangement Agreement, the Termination Fee shall be payable prior to or simultaneously with such termination; or

• if the Termination Fee is payable pursuant to subsection 8.3(c)(iii) of the Arrangement Agreement, the Termination Fee shall be payable concurrently upon the earlier of the entering into of the applicable agreement referred to therein or upon the consummation of the Acquisition Proposal referred to therein.

For the purposes of the Arrangement Agreement, “Capstone Termination Fee Event” means the termination of the Arrangement Agreement:

• by either party if the KORES Condition shall not have occurred on or before the Outside Date;

• by either party if (a) Capstone Shareholder Approval shall not have been obtained at the Meeting, or (b) the Effective Time shall not have occurred on or before the Outside Date, but only if, in these termination events, (i) prior to such termination, a bona fide Acquisition Proposal for Capstone shall have been made or publicly announced by any person other than Far West and (ii) within twelve months following the date of such termination, Capstone or one or more of its subsidiaries (A) enters into a definitive agreement in respect of one or more Acquisition Proposals or (B) there shall have been consummated one or more Acquisition Proposals involving Capstone; or

• by Far West pursuant to a breach of a representation or warranty or failure to perform any covenant or agreement on the part of Capstone would cause the conditions precedent in the Arrangement Agreement not to be satisfied, but only in the event of a breach of the covenants by Capstone with respect to the Capstone Circular contained in subsection 5.7(c) of the Arrangement Agreement (but not including a termination by Far West pursuant to the foregoing in circumstances where such breach resulted from the occurrence of a Far West Material Adverse Effect).

If a Capstone Termination Fee Event occurs, Capstone shall pay the Termination Fee to Far West by wire transfer of immediately available funds, as follows:

• if the Termination Fee is payable pursuant to subsection 8.3(d)(i) of the Arrangement Agreement, the Termination Fee shall be payable within 7 business days following such termination; or

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• if the Termination Fee is payable pursuant to subsection 8.3(d)(ii) of the Arrangement Agreement, the Termination Fee shall be payable concurrently upon the earlier of the entering into of the applicable agreement referred to therein or upon the consummation of the Acquisition Proposal referred to therein.

Capstone and KORES have agreed in the KORES ASPA that in the event that Capstone is required to pay the Termination Fee as a result of the KORES Condition not being satisfied due to:

a) a breach by KORES of its covenants in the KORES ASPA or the KORES Subscription Agreement; or

b) a breach of a representation or warranty made by KORES in the KORES Subscription Agreement,

either of which has the result that the completion by KORES of its acquisition of shares of AcquisitionCo as contemplated in the KORES ASPA, the KORES Subscription or the execution of the AcquisitionCo Shareholders Agreement by the parties thereto would be materially less advantageous to Capstone, then KORES shall pay to Capstone by wire transfer of immediately available funds Cdn.$20,000,000 by no later than seven calendar days following the termination of the Arrangement Agreement.

Directors’ and Officers’ Insurance

Prior to the Effective Date, Far West shall purchase customary “Extended Reporting Period” policies of directors’ and officers’ liability insurance providing protection no less favourable in the aggregate to the protection provided by the policies maintained by Far West and its subsidiaries which are in effect immediately prior to the Effective Date and providing protection in respect of claims arising from facts or events which occurred on or prior to the Effective Date and Capstone will, or will cause Far West and its subsidiaries to, maintain such policies in effect without any reduction in limits, scope or coverage for six years from the Effective Date; provided, that Capstone shall not be required to pay any amounts in respect of such coverage prior to the Effective Time and provided, further that the cost of such policy shall not exceed 300% of Far West’s current annual aggregate premium for policies currently maintained by Far West or its subsidiaries. If a policy is not available at a cost less than or equal to 300% of Far West’s current annual aggregate premium for policies currently maintained by Far West or its subsidiaries, then Capstone agrees that for the period of six years following the Effective Date, Capstone shall cause Far West or any successor to Far West or any of its subsidiaries (including any successor resulting from any winding-up or liquidation or dissolution of any of them) to maintain Far West’s and its subsidiaries’ current directors’ and officers’ insurance policies or substantially equivalent policies subject in either case to terms and conditions no less advantageous to the directors and officers of Far West and its subsidiaries than those contained in the policies in effect on the date of the Arrangement Agreement, for all present and former directors and officers of Far West and its subsidiaries, covering claims made prior to or within such six year period.

Capstone agrees that it shall directly honour all rights to indemnification or exculpation now existing in favour of present and former officers and directors of Far West and its subsidiaries to the extent that they are disclosed in the Far West Disclosure Letter, and acknowledges that such rights, to the extent that they are disclosed in the Far West Disclosure Letter, shall survive the completion of the Arrangement and shall continue in full force and effect for a period of not less than six years from the Effective Date.

The Arrangement Agreement is attached as Schedule B to the Circular and is also available for viewing under Capstone’s profile on www.sedar.com.

KORES TRANSACTIONS

General

Capstone has entered into agreements with KORES to form a long-term strategic relationship for the development of the Santo Domingo Project, subject to completion of the Arrangement. The transactions contemplated under the KORES ASPA and the KORES Subscription Agreement shall occur concurrent with the completion of the Arrangement. The completion of the Arrangement is a condition precedent to the completion of the transactions contemplated under the KORES ASPA and the KORES Subscription Agreement.

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About KORES

KORES is the national mineral resources company of the Republic of Korea (often referred to as South Korea), and is wholly owned by the Government of South Korea. KORES was incorporated in 1967 and engages in mineral resources development, mineral information service, and mineral research activities in South Korea. KORES focuses on supplying energy and industrial mineral resources, which include bituminous coal, uranium, iron, copper, zinc, and nickel. Its services include investment circumstance surveying, prospecting, cosmetic charge validity surveying, and domestic mineral resources development, which includes exploration, safety, financial, and technology support services.

KORES provides technical research services in the areas of mineral separation and new material development processes, as well as conducts research associated with national policy making when requested by the government or public institutes. In addition, it is involved in collecting, analyzing, and providing domestic and overseas mineral resources information; and mineral resource geographic information systems. KORES is based in Seoul, South Korea, with branch offices in South Korea; Pretoria, South Africa; Almaty, Kazakhastan; Lima, Peru; Mongolia; Indonesia; the Democratic Republic of Congo; Chile; Toronto, Canada; Sydney, Australia; and Beijing, China.

Santo Domingo Project

Upon completion of the Arrangement, KORES will acquire a 30% interest in Santo Domingo (indirectly by acquiring a 30% interest in AcquisitionCo) for cash consideration of approximately Cdn.$210 million (subject to adjustment based on the net cash balance of Far West) to be paid to Capstone. Capstone incorporated AcquisitionCo as a wholly-owned subsidiary of Capstone on April 13, 2011 for the purposes of completing the post-Arrangement reorganization of Far West.

KORES ASPA

Pursuant to the KORES ASPA, provided the Arrangement is completed, at the Effective Time:

a) Capstone shall subscribe for such number of common shares of AcquisitionCo such that it will own 70% of AcquisitionCo following completion of all the transactions contemplated in the KORES ASPA, in consideration for the transfer of all of the issued and outstanding Far West Shares on a tax deferred basis under section 85 of the Tax Act; and

b) then, KORES Sub shall subscribe for, in two tranches, such number of common shares of AcquisitionCo such that it will own 30% of AcquisitionCo following completion of all of the transactions contemplated in the KORES ASPA, in consideration for an aggregate amount equal to 30% of the Acquisition Consideration (as defined below).

“Acquisition Consideration”, at any time, means:

(i) the aggregate amount to be paid by Capstone (or an affiliate of Capstone) for all of the issued and outstanding Far West Shares pursuant to the Arrangement (for purposes of this definition, any Capstone Shares offered pursuant to the Acquisition shall be valued at the thirty-day volume weighted average closing price of the Capstone Shares on the TSX ending on the trading day prior to April 17, 2011, the date of announcement of the Arrangement and transactions with KORES);

(ii) less the result of subtracting the amount of any unpaid current liabilities of Far West from the aggregate balance of cash and cash equivalents held by Far West in each case, immediately after the Effective Time, as set forth in the certified statement to be delivered by Far West as of the date on which the Effective Time occurs pursuant to Section 5.1(j)(ii) of the Arrangement Agreement (for greater certainty, if the result of such calculation is a negative number, the Acquisition Consideration shall not be increased);

(iii) plus the aggregate amount (if any) paid by Capstone for all issued and outstanding Far West Shares acquired by Capstone (or any of its affiliates) other than pursuant to the Arrangement (for purposes of this definition, any Capstone Shares paid as part consideration for Far West Shares other than pursuant to the Acquisition shall be valued at the thirty-day volume

41

weighted average closing price of the Capstone Shares on the TSX ending on the trading day prior to the date of on which the Capstone’s offer to acquire such Far West Shares was accepted by the seller).

The transactions contemplated under the KORES ASPA are subject to a number of conditions, including:

a) the Effective Time shall occur concurrently;

b) the KORES Subscription shall occur concurrently; and

c) the AcquisitionCo Shareholders Agreement shall be executed concurrently.

Pursuant to the KORES ASPA, KORES and Capstone covenant and agree that each will take such steps as necessary to cause MLO to, enter into an off-take agreement as soon as reasonably practicable pursuant to which MLO will agree to sell and KORES will agree to buy 50% of the copper concentrate and 50% of the iron concentrate to be produced from the Santo Domingo Project for the life of the mine. The purchase by KORES of copper concentrate and iron ore produced at the Santo Domingo Project will be at the prevailing market terms for 50% of the copper concentrate and iron ore produced at the Santo Domingo Project and will be subject to prevailing market terms for pricing adjustments or potential deductions for possible quality issues.

AcquisitionCo Shareholders Agreement

Provided the Arrangement is completed, at the Effective Time, KORES, KORES Sub, Capstone and AcquisitionCo will enter into the AcquisitionCo Shareholders Agreement, providing for the governance and funding of AcquisitionCo after KORES acquires its 30% interest. The current draft of the AcquisitionCo Shareholders Agreement contemplates the following significant provisions:

• The board of directors AcquisitionCo will initially consist of seven members, five appointed by Capstone and two appointed by KORES. The proportion of the board that is composed of nominees of each of Capstone and KORES shall thereafter reflect, to the extent possible, the proportion of the equity of AcquisitionCo held, directly or indirectly, by such party.

• KORES will use its commercially reasonable best efforts to arrange for a debt financier to offer to provide debt financing for AcquisitionCo for 65% of the financing required to fund capital costs for the purposes of advancing the Santo Domingo Project to commencement of commercial production (the “KORES Production Financing Offer”). Such financing is to be on terms (“Market Terms”) that are within the range of then prevailing market terms in respect of a non-recourse bank-provided project financing for a project having similar financial characteristics and risk profile as the Santo Domingo Project. If Capstone believes that the KORES Production Financing Offer is not on Market Terms it may request a review by a mutually accepted independent financial institution and, if it does so, Capstone must seek alternative offers (“Alternate Offers”) for debt financing and cause AcquisitionCo to accept the best Alternate Offer. If the independent review process determines that the KORES Production Financing Offer was not on Market Terms and within a specified period AcquistionCo has accepted an Alternate Offer this is on more favourable financial terms, then KORES’ interest in AcquisitionCo will be diluted down according to the difference between the total life-time cost to AcquisitionCo of the KORES Production Financing Offer and the total life-time cost to AcquisitionCo of the relevant Alternate Offer. If, however, Capstone requests a review of the KORES Production Financing Offer and the total life-time cost to AcquisitionCo of the best Alternate Offer that Capstone is able to procure exceeds the total life-time cost to AcquisitionCo of the KORES Production Financing Offer, then Capstone's interest in AcquisitionCo will be diluted down according to such difference.

• AcquisitionCo will prepare an operating plan each year. To the extent cash flows from operations are insufficient to fund the operating plan, AcquisitionCo will make quarterly cash calls from the shareholders. If a shareholder fails to fund its portion of a cash call, its interest in AcquisitionCo will be diluted through the issuance of additional common shares in AcquisitionCo to the other shareholder.

• Extraordinary shareholder approval (75%) is required for certain fundamental changes to AcquisitionCo, including the following: its dissolution; corporate reorganization; creating or incurring debt, other than as discussed above; the issuance of additional shares (other than in respect of the dilution in respect of cash

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calls); a listing of AcquisitionCo’s securities on a stock exchange; the sale of all or substantially all of its assets; commencing commercial production at the Santo Domingo Project if the internal rate of return for the life of the Santo Domingo Project is below a specified threshold, and the cessation of commercial production at the Santo Domingo Project.

KORES Subscription

Pursuant to the KORES Subscription Agreement, on the Effective Date, KORES Sub (or an affiliate thereof) will acquire such number of Capstone Shares as is equal to 39 million plus 0.1236 times the number of Capstone Shares issued under the Arrangement in respect of Far West Shares issued by Far West (including in connection with the due exercise of Far West Options and/or Far West Warrants) after April 15, 2011 and on or before the Effective Time. This is currently estimated to represent approximately 11% of the issued and outstanding Capstone Shares upon completion of the Arrangement and the KORES Subscription. The KORES Shares will be subscribed for at a price of Cdn.$4.3526 per share (which is based on a 1% discount to the five day volume weighted average price of the Capstone Shares on the TSX measured over the five trading days ending on the trading day prior to April 17, 2011, the date of announcement of the Arrangement and transactions with KORES).

Closing of the KORES Subscription is conditional upon, amongst other things:

• receipt of TSX conditional approval of the listing of the KORES Shares;

• Capstone concurrently acquiring all of the issued and outstanding Far West Shares and transferring them to AcquisitionCo; and

• the AcquisitionCo Shareholders Agreement shall be executed concurrently.

The KORES ASPA and KORES Subscription Agreement are available for viewing under Capstone’s profile on www.sedar.com.

RISK FACTORS

Shareholders should carefully consider the following risk factors related to the Arrangement. In addition to the risks set out in the documents incorporated by reference in the Circular, the proposed combination of Capstone with Far West upon the successful completion of the Arrangement is subject to certain risks, including the following:

The Arrangement is subject to satisfaction or waiver of several conditions.

The Arrangement is conditional upon, among other things, Far West Securityholder Approval, Capstone Shareholder Approval, the KORES Condition being satisfied and Capstone and/or Far West having obtained all government or Regulatory Approvals required by law, policy or practice (including those of the Court and the TSX). There can be no certainty, nor can Capstone provide any assurance, that these conditions will be satisfied or, if satisfied, when they will be satisfied. A substantial delay in obtaining satisfactory approvals or the imposition of unfavourable terms or conditions in any government or regulatory approvals could have an adverse effect on the business or financial condition of Capstone. In addition, if for any reason the conditions to the Arrangement are not satisfied or waived and the Arrangement is not completed, the market price of Capstone Shares may be adversely affected.

The issuance of a significant number of Capstone Shares and a resulting “market overhang” could adversely affect the market price of Capstone Shares after completion of the Arrangement.

On completion of the Arrangement and the KORES Subscription, a significant number of additional Capstone Shares will be available for trading in the public market. The increase in the number of Capstone Shares may lead to sales of such shares or the perception that such sales may occur, either of which may adversely affect the market for, and the market price of, Capstone Shares. The potential that such a Shareholder may sell its Capstone Shares in the public market (commonly referred to as “market overhang”), as well as any actual sales of such Capstone Shares in the public market, could adversely affect the market price of the Capstone Shares.

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The integration of Capstone and Far West may not occur as planned.

The Arrangement Agreement has been entered into with the expectation that its successful completion will result in increased copper and other metal production, increased earnings and enhanced growth opportunities. These anticipated benefits will depend in part on whether Capstone and Far West’s operations can be integrated in an efficient and effective manner. Most operational and strategic decisions and certain staffing decisions have not yet been made. These decisions and the integration of the two companies will present challenges to management, including the integration of systems and personnel of the two companies, and special risks, including possible unanticipated liabilities and unanticipated costs. As a result of these factors, it is possible that the cost reductions and synergies expected from the acquisition of Far West will not be realized. In addition, such synergies assume certain realized long-term metals and consumable commodities prices and foreign exchange rates. If actual prices were below such assumed prices, the realization of potential synergies could be adversely effected.

Mineral resource figures pertaining to the Santo Domingo Project are only estimates and are subject to revision based on developing information.

Information pertaining to the Santo Domingo Project’s mineral resources presented in this Circular or incorporated by reference herein are estimates and no assurances can be given as to their accuracy. Such estimates are, in large part, based on interpretations of geological data obtained from drill holes and other sampling techniques. Actual mineralization or formations may be different from those predicted. Mineral resource estimates are materially dependent on the prevailing price of minerals, including copper, iron and gold, and the cost of recovering and processing minerals. Market fluctuations in the price of minerals, including copper, iron and gold, or increases in recovery costs, as well as various short-term operating factors, may cause a mining operation to be unprofitable in any particular accounting period.

Capstone may not realize the benefits of the growth projects.

As part of its strategy, Capstone will continue its efforts to develop new mineral projects and will have an expanded portfolio of such projects as a result of the acquisition of Far West (including the Santo Domingo Project and Capstone’s Kutcho copper-zinc-gold-silver deposit in British Columbia). A number of risks and uncertainties are associated with the development of these types of projects, including political, regulatory, design, construction, labour, operating, technical and technological risks, uncertainties relating to capital and other costs and financing risks.

The level of production and capital and operating cost estimates relating to the expanded portfolio of growth projects, which are used in establishing ore/mineral reserve estimates for determining and obtaining financing and other purposes, are based on certain assumptions and are inherently subject to significant uncertainties. It is very likely that actual results for Capstone’s projects will differ from its current estimates and assumptions, and these differences may be material. In addition, experience from actual mining or processing operations may identify new or unexpected conditions which could reduce production below, and/or increase capital and/or operating costs above, Capstone’s current estimates. If actual results are less favourable than Capstone currently estimates, the combined company’s business, results of operations, financial condition and liquidity could be adversely impacted.

Capstone may be subject to significant capital requirements and operating risks associated with its expanded operations and its expanded portfolio of growth projects.

Capstone must generate sufficient internal cash flows and/or be able to utilize available financing sources to finance its growth and sustain capital requirements. If Capstone does not realize satisfactory prices for the copper or other metals that Capstone produces, it could be required to raise significant additional capital through the capital markets and/or incur significant borrowings to meet its capital requirements. These financing requirements could adversely affect Capstone’s credit ratings and its ability to access the capital markets in the future to meet any external financing requirements Capstone might have. If there are significant delays in when these projects are completed and are producing on a commercial and consistent scale, and/or their capital costs were to be significantly higher than estimated, these events could have a significant adverse effect on Capstone’s results of operation, cash flow from operations and financial condition.

In addition, Capstone’s mining operations and processing and related infrastructure facilities are subject to risks normally encountered in the mining and metals industry. Such risks include, without limitation, environmental hazards, industrial accidents, labour disputes, changes in laws, technical difficulties or failures, late delivery of supplies or equipment, unusual or unexpected geological formations or pressures, cave-ins, pit-wall failures, rock falls, unanticipated

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ground, grade or water conditions, flooding, periodic or extended interruptions due to the unavailability of materials and force majeure events. Such risks could result in damage to, or destruction of, mineral properties or producing facilities, personal injury, environmental damage, delays in mining or processing, losses and possible legal liability. Any prolonged downtime or shutdowns at Capstone’s mining or processing operations could materially adversely affect Capstone’s business, results of operations, financial condition and liquidity.

Far West’s operations are in jurisdictions new to Capstone.

Operations, development and exploration activities carried out by Far West are or may be affected to varying degrees by taxes and government regulations relating to such matters as environmental protection, land use, water use, health, safety, labour, restrictions on production, price controls, currency remittance, maintenance of mineral rights, mineral tenure, and expropriation of property. Far West’s principal asset is held outside of North America in Chile. Although the government of Chile is currently generally stable and generally friendly to foreign investment, including offering incentives to attract international investment, there are still political risks. The risks include, but are not limited to, extreme fluctuations in currency exchange rates, high rates of inflation, labour unrest, terrorism, hostage taking, and expropriation. Changes in mining or investment policies or shifts in political attitudes may also adversely affect Capstone’s business. Operations may be affected in varying degrees by government regulations with respect to, but not limited to, restrictions on production, price controls, export controls, currency remittance, income taxes, maintenance of claims, environmental legislation, expropriation of property, land use, land claims of local people, water use and safety. Any changes in the laws relating to mining in the jurisdictions in which Far West carries on business could materially affect the rights and title to the interests held there by the Company. No assurance can be given that applicable governments will not revoke or significantly alter the conditions of the applicable exploration and mining authorizations nor that such exploration and mining authorizations will not be challenged or impugned by third parties. The effect of any of these factors cannot be accurately predicted.

CAPSTONE UPON COMPLETION OF THE ARRANGEMENT

Overview

On completion of the Arrangement, Capstone will continue to be a corporation existing under the BCBCA and the former Far West Shareholders will be shareholders of Capstone. After the Effective Date, and upon completion of the transactions contemplated by the KORES ASPA, Far West will become a subsidiary of Capstone, owned (indirectly) 70% by Capstone and 30% by KORES Sub.

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Organization Chart

The following chart shows the corporate relationship between Capstone and Far West following the completion of the Arrangement and the transactions contemplated by the KORES ASPA:

Directors and Officers

Following the Effective Date, it is expected that the Board will be comprised of eight directors. Bruce McLeod resigned from the Board on April 13, 2011 and it is expected that Colin Benner and Stephen Quin will also resign from the Board following the Effective Date. Upon completion of the Arrangement, Capstone expects that the Board will comprise the following current members of the Board: Darren Pylot, Larry Bell, George Brack, Chantal Gosselin and Dale Peniuk, and that Richard Zimmer, Chief Executive Officer, President and a director of Far West, Hak-Kyun Shin, Director General, Business Development – Foreign Investment of KORES, and Jan Castro, Chief Executive Officer of Pala Investments Holdings Limited, will be appointed to fill the vacancies on the Board. The Board also expects to reconstitute its committees on or after the Effective Date.

Following the Effective Date, it is expected that the officers of Capstone will be unchanged. The officers are expected to remain: Darren Pylot, President & Chief Executive Officer; Gregg Bush, Senior Vice President & Chief Operating Officer; Richard Godfrey, Senior Vice President & Chief Financial Officer; Brad Mercer, Vice President, Exploration; Peter Hemstead, Vice President, Marketing & Treasurer; John Sagman, Vice President, Technical Services; Jason Howe, Vice President, Business Development; Cindy Burnett, Vice President, Investor Relations; and John Kim, Corporate Secretary.

Description of Share Capital

The share capital of Capstone will remain unchanged as a result of the completion of the Arrangement, other than for the issuance of the Consideration Shares, and issuance of any Option Shares and Warrant Shares, contemplated in the Arrangement and the issuance of the KORES Shares in connection with the KORES Subscription.

Capstone is authorized to issue an unlimited number of Capstone Shares, without par value. As at May 11, 2011, there were 203,992,540 Capstone Shares issued and outstanding. There are no limitations contained in the constating documents of Capstone on the ability of a person who is not a Canadian resident to hold Capstone Shares or exercise the voting rights associated with Capstone Shares. A summary of the rights of the Capstone Shares is set forth below.

Assuming that: (i) all of the Far West Shares outstanding as at April 15, 2011 are acquired upon completion of the Arrangement, (ii) all Far West Shareholders elect the Full Proration Alternative, (iii) all holders of Far West Options elect to receive Replacement Options rather than exercise their Far West Options in advance of the successful completion of the

(70%)

Capstone

AcquisitionCo Capstone Existing Subsidiaries

Far West

Far West Existing Subsidiaries

(100%)

KORES Sub

(30%)

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Arrangement, and (iv) all holders of Far West Warrants elect to receive Replacement Warrants rather than exercise their Far West Warrants in advance of the successful completion of the Arrangement, Capstone would issue an aggregate of approximately 158 million Capstone Shares in connection with the Arrangement and the KORES Subscription, which would result in there being up to a total of approximately 362 million Capstone Shares issued and outstanding (based on the number of Capstone Shares outstanding as at May 11, 2011) immediately following the completion of the Arrangement and the KORES Subscription, with Shareholders holding in the aggregate approximately 56% of the outstanding Capstone Shares, former Far West Shareholders holding approximately 33% of the outstanding Capstone Shares and KORES Sub holding approximately 11% of the outstanding Capstone Shares (each on a non-diluted basis). As a result of this issuance, the Shareholders’ ownership and voting interests in Capstone will be diluted, relative to their current proportional ownership and voting interest in Capstone.

Dividends

The holders of Capstone Shares, subject to the prior rights, if any, of the holders of any other class of shares of the Company, are entitled to receive such dividends in any financial year as the Board may determine. The BCBCA provides that a corporation may not declare or pay a dividend if there are reasonable grounds for believing that the corporation is or would, after the payment of the dividend, be unable to pay its debts as they become due in the ordinary course of its business.

Liquidation

In the event of liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of Capstone Shares are entitled to receive, subject to the prior rights, if any, of the holders of any other class of shares of the Company, the remaining property and assets of the Company.

Voting

Holders of Capstone Shares are entitled to one vote for each Capstone Share held on all matters voted on by shareholders, including the election of directors.

Capstone Debentures

In connection with the business combination between the Company and Sherwood Cooper Corporation completed in November 2008, Capstone acquired Sherwood’s Cdn.$43.6 million in 5% convertible unsubordinated debentures due March 31, 2012, issued pursuant to a short form prospectus offering. On December 22, 2008, the Company informed all of the debentureholders that the Company was offering to repurchase their outstanding debentures for Cdn.$1,025.62 for each Cdn.$1,000 principal amount of such debentures, being equal to the aggregate of (i) 101% of the principal amount of the debentures and (ii) all accrued and unpaid interest thereon up to but excluding the payment date. On January 22, 2009, the Company repurchased Cdn.$38,871,000 in outstanding Debentures. On December 29, 2010, Cdn.$100,000 of the outstanding debentures were converted into 24,857 Capstone Shares. As at May 11, 2011, there are Cdn.$4,629,000 in debentures outstanding. The Capstone Debentures are listed for trading on the TSX under the trading symbol “CS.DB”.

Selected Capstone Unaudited Pro Forma Financial Information

The selected unaudited pro forma condensed consolidated financial information set forth below should be read in conjunction with Capstone’s unaudited pro forma condensed consolidated financial statements and the accompanying notes thereto attached as Schedule C to the Circular. The unaudited pro forma condensed consolidated balance sheet has been prepared from the audited consolidated balance sheet of Capstone as at December 31, 2010 and the audited consolidated balance sheet of Far West as at December 31, 2010 and gives pro forma effect to the successful completion of the Arrangement, the KORES Subscription and KORES’ acquisition of a 30% indirect interest in Far West as if the transactions occurred on December 31, 2010. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2010 has been prepared, from the audited statement of operations of Capstone for the year ended December 31, 2010 and the audited statement of operations of Far West for the year ended December 31, 2010 and gives pro forma effect to the successful completion of the Arrangement as if the transactions occurred on January 1, 2010.

The summary unaudited pro forma condensed consolidated financial information is not intended to be indicative of the results that would actually have occurred, or the results expected in future periods, had the events reflected herein occurred on the dates indicated. Actual amounts recorded upon consummation of the Arrangement will differ from the pro

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forma information presented below. No attempt has been made to calculate or estimate potential synergies between Capstone and Far West. The unaudited pro forma condensed consolidated financial statement information set forth below is extracted from and should be read in conjunction with the unaudited pro forma condensed consolidated financial statements of Capstone and the accompanying notes included in Schedule C to the Circular.

(in millions of U.S. dollars) Year Ended December

31, 2010

Statement of operations data:

Revenue ................................................................................................... 274.0

Operating earnings ................................................................................... 95.6

Net earnings ............................................................................................. 64.1 (in U.S. dollars)

Per Capstone Share data:

Basic earnings per share .......................................................................... 0.18 Diluted earnings per share ....................................................................... 0.17 (in millions of U.S. dollars) As at December 31, 2010

Balance sheet data:

Cash, restricted cash and short-term deposits .......................................... 496.8 Total assets .............................................................................................. 1,755.5

Total debt, including capital lease obligations ......................................... 22.1 Total liabilities ......................................................................................... 425.0

Non-controlling interest ........................................................................... 201.3

Shareholders’ equity ................................................................................ 1,129.5

Post-Arrangement Shareholdings and Principal Shareholders

Assuming that: (i) all of the Far West Shares outstanding as at April 15, 2011 are acquired upon completion of the Arrangement, (ii) all Far West Shareholders elect the Full Proration Alternative, (iii) all holders of Far West Options elect to receive Replacement Options rather than exercise their Far West Options in advance of the successful completion of the Arrangement, and (iv) all holders of Far West Warrants elect to receive Replacement Warrants rather than exercise their Far West Warrants in advance of the successful completion of the Arrangement, Capstone would issue an aggregate of approximately 158 million Capstone Shares in connection with the Arrangement and the KORES Subscription, which would result in there being up to a total of approximately 362 million Capstone Shares issued and outstanding (based on the number of Capstone Shares outstanding as at May 11, 2011) immediately following the completion of the Arrangement and the KORES Subscription, with Shareholders holding in the aggregate approximately 56% of the outstanding Capstone Shares, former Far West Shareholders holding approximately 33% of the outstanding Capstone Shares and KORES Sub holding approximately 11% of the outstanding Capstone Shares (each on a non-diluted basis). As a result of this issuance, the Shareholders’ ownership and voting interests in Capstone will be diluted, relative to their current proportional ownership and voting interest in Capstone.

Immediately following the completion of the Arrangement, and subject to the assumptions above, to the knowledge of the directors and executive officers of the Company (based solely upon a review of public filings made) and assuming that its current holdings in Capstone remain unchanged (and it does not exercise any Dissent Rights with respect to any Far West Shares it may hold), Pala Investments Holdings Limited will hold 37,727,000 Capstone Shares, representing approximately 10% of the issued and outstanding Capstone Shares. In addition, KORES Sub will acquire 39 million Capstone Shares pursuant to the KORES Subscription, representing approximately 11% of the issued and outstanding Capstone Shares immediately following the completion of the Arrangement and the KORES Subscription.

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To the knowledge of the directors and executive officers of the Company, other than as set forth above, following completion of the Arrangement, there will be no person or company that beneficially owns, directly or indirectly, or exercises control or direction over, voting securities of the Company carrying 10% or more of the voting rights attached to any class of voting securities of the Company.

INFORMATION CONCERNING CAPSTONE

Overview

Capstone is principally engaged in the production of copper from its two producing copper mines: the 100% owned Cozamin copper-silver-zinc-lead mine located in Zacatecas State, Mexico and the 100% owned Minto copper-gold-silver mine in the Yukon, Canada.

Using its operations as a springboard, Capstone aims to grow both organically and through mergers and acquisitions: organic growth through continued mineral resource and reserve expansions at its operating mines and through the development of its 100% owned high grade Kutcho copper-zinc-gold-silver deposit in British Columbia, while mergers and acquisitions provide opportunities to accelerate that growth profile by combining with other current producers or acquiring operating mines or development projects.

The Company’s material mineral properties consist of: (i) the Cozamin Mine located in the Morelos Municipality of the Zacatecas Mining District near the south-eastern boundary of the Sierra Madre Occidental Physiographic Province in north-central Mexico; (ii) the Minto Mine located in the Whitehorse Mining District, Yukon Territory; and (iii) the Kutcho copper-gold project located in the Liard Mining Division of Northern British Columbia.

The Company was incorporated pursuant to the Company Act (British Columbia) on July 17, 1987 under the name 330338 B.C. Ltd. The Company changed its name to Fire Star Resources Ltd. on April 21, 1989, and to International Bancorp Ltd. on August 17, 1989, and to IBL Equities Ltd. on March 5, 1991. On January 2, 1996, the Company changed its name to Serena Resources Ltd. and consolidated its share capital on a 5:1 basis. On May 17, 2001, the Company changed its name to Consolidated Serena Resources Ltd. and consolidated its share capital on a 5:1 basis. On March 6, 2003, the Company changed its name to Capstone Gold Corp. On February 8, 2006, the Company changed its name to Capstone Mining Corp. Capstone is governed by the BCBCA and its registered and principal offices are located at 9th Floor - 999 West Hastings Street, Vancouver, British Columbia V6C 2W2.

Capstone is a reporting issuer or the equivalent in all provinces of Canada and files its continuous disclosure documents with the relevant Canadian securities regulatory authorities. Such documents are available at www.sedar.com.

Share Capital of Capstone

For a description of Capstone’s share capital, see the Section of the Circular entitled, “Capstone Upon Completion of the Arrangement - Description of Share Capital”.

Price Range and Trading Volumes of Capstone Shares

The Capstone Shares are listed for trading on the TSX under the trading symbol “CS”. The following table sets forth, for the periods indicated, the reported high, low and closing trading prices and the aggregate volume of trading of the Capstone Shares on the TSX:

High (Cdn.$)

Low (Cdn.$)

Close (Cdn.$)

Volume (#)

May 2010 2.93 2.11 2.32 28,843,500 June 2010 2.56 2.05 2.16 23,822,800 July 2010 2.56 2.10 2.50 12,777,600 August 2010 2.60 2.26 2.56 10,030,200 September 2010 3.60 2.56 3.38 16,696,100 October 2010 3.94 3.19 3.58 22,763,700 November 2010 4.64 3.59 4.34 25,890,000 December 2010 4.83 4.24 4.49 31,222,800

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January 2011 4.84 4.10 4.64 23,142,800 February 2011 4.98 4.19 4.35 24,661,300 March 2011 4.99 3.84 4.41 35,35,1442 April 2011 4.91 3.57 3.78 28,640,599 May 2011 (1 to 11) 3.87 3.53 3.56 10,434,016

As of April 17, 2011, the date the entering into of the Arrangement Agreement was announced, the implied value of the Arrangement was Cdn.$9.19 per Far West Share, representing a premium of approximately 30%, based on the preceding 30-day volume-weighted average price of the Far West Shares traded on the TSX and the April 15, 2011 closing price of the Capstone Shares traded on the TSX.

Price Range and Trading Volumes of Capstone Debentures

The Capstone Debentures are listed for trading on the TSX under the trading symbol “CS.DB”. The following table sets forth, for the periods indicated, the reported high, low and closing trading prices and the aggregate volume of trading of the Capstone Debentures on the TSX:

High (Cdn.$)

Low (Cdn.$)

Close (Cdn.$)

Volume (#)

September 2010 101 100.25 100.25 3,850 December 2010 119 116 117.5 980 February 2011 118 118 118 410

Prior Sales

The information set out below is in respect of the issuances by Capstone of Capstone Shares, warrants, options to purchase Capstone Shares and Capstone restricted share units for the twelve month period before the date of the Circular. No warrants have been issued during the twelve month period before the date of the Circular.

For the 12-month period prior to the date of the Circular, other than as set forth above, Capstone has issued the Capstone Shares listed in the table set forth below:

Date

Security

Price per Security (Cdn.$)

Number of Securities

May 2010 Capstone Shares(1) $1.30 65,000 May 2010 Capstone Shares(1) $1.88 50,000 May 2010 Capstone Shares(2) $2.13 61,390 June 2010 Capstone Shares(1) $0.79183 17,617 June 2010 Capstone Shares(1) $1.70 5,000 July, 2010 Capstone Shares(1) $0.63857 215,325 July, 2010 Capstone Shares(1) $0.64767 250,900 July, 2010 Capstone Shares(1) $0.78 12,500 July, 2010 Capstone Shares(1) $1.30 8,000 July, 2010 Capstone Shares(1) $1.57 45,000 August 2010 Capstone Shares(1) $1.30 8,000 September 2010 Capstone Shares(1) $0.78 29,500 September 2010 Capstone Shares(1) $1.30 82,500 September 2010 Capstone Shares(1) $1.88 30,000 September 2010 Capstone Shares(1) $2.26 6,666 September 2010 Capstone Shares(1) $2.29 10,000 September 2010 Capstone Shares(1) $2.43934 20,000 September 2010 Capstone Shares(1) $2.45 10,000 September 2010 Capstone Shares(1) $2.99 24,999 October 2010 Capstone Shares(1) $1.27714 31,580 October 2010 Capstone Shares(1) $1.30 317,000

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Date

Security

Price per Security (Cdn.$)

Number of Securities

October 2010 Capstone Shares(1) $1.32 10,800 October 2010 Capstone Shares(1) $1.57 55,000 October 2010 Capstone Shares(1) $1.88 10,000 October 2010 Capstone Shares(1) $1.95 117,450 October 2010 Capstone Shares(1) $2.29 13,500 October 2010 Capstone Shares(1) $2.43934 3,500 October 2010 Capstone Shares(1) $2.67 10,000 October 2010 Capstone Shares(1) $2.96 17,333 October 2010 Capstone Shares(1) $2.99 31,666 October 2010 Capstone Shares(1) $3.16 10,000 October 2010 Capstone Shares(1) $3.19285 39,150 November 2010 Capstone Shares(3) $3.15 100,000 November 2010 Capstone Shares(1) $1.27714 39,150 November 2010 Capstone Shares(1) $1.30 60,000 November 2010 Capstone Shares(1) $1.596 39,150 November 2010 Capstone Shares(1) $2.26 5,000 November 2010 Capstone Shares(1) $2.33078 100,486 November 2010 Capstone Shares(1) $2.99 116,331 November 2010 Capstone Shares(1) $3.16 70,000 November 2010 Capstone Shares(1) $3.19285 65,660 November 2010 Capstone Shares(1) $3.22478 39,150 November 2010 Capstone Shares(1) $3.35888 70,000 November 2010 Capstone Shares(1) $3.39719 78,300 November 2010 Capstone Shares(1) $3.5696 9,150 December 2010 Capstone Shares(1) $1.30 52,667 December 2010 Capstone Shares(1) $1.49 50,000 December 2010 Capstone Shares(1) $2.31 8,333 December 2010 Capstone Shares(1) $2.43934 9,140 December 2010 Capstone Shares(1) $2.99 21,666 December 2010 Capstone Shares(1) $3.16 75,000 December 2010 Capstone Shares(1) $3.19285 281,880 December 2010 Capstone Shares(4) $0.89 24,857 January 2011 Capstone Shares(1) $1.27714 39,150 January 2011 Capstone Shares(1) $1.30 84,750 January 2011 Capstone Shares(1) $1.57 380,000 January 2011 Capstone Shares(1) $1.88 30,000 January 2011 Capstone Shares(1) $2.33078 298,725 January 2011 Capstone Shares(1) $2.43934 10,000 January 2011 Capstone Shares(1) $2.47765 12,528 January 2011 Capstone Shares(1) $2.98212 20,000 January 2011 Capstone Shares(1) $2.67 4,700 January 2011 Capstone Shares(1) $2.99 101,661 January 2011 Capstone Shares(1) $3.16 90,000 January 2011 Capstone Shares(1) $3.27 6,000 January 2011 Capstone Shares(1) $3.35888 32,000 January 2011 Capstone Shares(1) $3.39719 65,772 January 2011 Capstone Shares(1) $3.5696 187,920 February 2011 Capstone Shares(1) $1.27714 156,600 February 2011 Capstone Shares(1) $1.30 212,500 February 2011 Capstone Shares(1) $1.57 150,000 February 2011 Capstone Shares(1) $1.88 35,000 February 2011 Capstone Shares(1) $1.94764 109,620 February 2011 Capstone Shares(1) $2.26 5,000 February 2011 Capstone Shares(1) $2.33078 173,110 February 2011 Capstone Shares(1) $2.43934 10,000 February 2011 Capstone Shares(1) $2.67 5,300

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Date

Security

Price per Security (Cdn.$)

Number of Securities

February 2011 Capstone Shares(1) $2.99 39,998 February 2011 Capstone Shares(1) $3.16 28,667 February 2011 Capstone Shares(1) $3.19 12,500 February 2011 Capstone Shares(1) $3.35888 93,750 February 2011 Capstone Shares(1) $3.5696 30,000 March 2011 Capstone Shares(1) $1.30 38,000 March 2011 Capstone Shares(1) $2.33078 21,320 March 2011 Capstone Shares(1) $3.16 4,000 April 2011 Capstone Shares(1) $3.16 2,500 May 2011 Capstone Shares(1) $2.99 16,667 May 2011 Capstone Shares(1) $1.30 30,000

Notes: (1) Issued upon exercise of previously issued stock options of Capstone. (2) Issued pursuant to the employment agreement between Capstone and Gregg Bush. (3) Issued pursuant to the Cooperation Agreement between Capstone and the Selkirk First Nation with respect to the

Minto project. (4) Issued upon conversion of Cdn.$100,000 of the outstanding Capstone Debentures.

For the 12-month period prior to the date of the Circular, Capstone has issued the options to purchase Capstone Shares listed in the table set forth below:

Date

Security

Exercise Price per Security (Cdn.$)

Number of

Securities

May 20, 2010 Options 2.13 300,000 June 3, 2010 Options 2.31 25,000 June 7, 2010 Options 2.26 50,000 July 2, 2010 Options 2.25 30,000 July 26, 2010 Options 2.34 100,000 September 7, 2010 Options 2.67 50,000 October 29, 2010 Options 3.67 50.000 December 15, 2010 Options 4.59 50,000 January 5, 2011 Options 4.48 3,770,000 January 31, 2011 Options 4.55 25,000 March 1, 2011 Options 4.34 150,000 April 11, 2011 Options 3.88 105,000

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Consolidated Capitalization

The following table sets forth Capstone’s consolidated capitalization as at December 31, 2010, the date of Capstone’s most recent annual audited consolidated financial statements, adjusted to give effect to the Circular. The table should be read in conjunction with the annual audited consolidated financial statements of Capstone as at and for the year ended December 31, 2010 including the notes thereto, and management’s discussion and analysis thereof and the other financial information contained in or incorporated by reference in this Circular.

As at December 31, 2010

As at December 31, 2010 After

Giving Effect to the Arrangement and the

KORES Subscription

Capstone Share Capital $205.5 million $902.0 million (2) Capstone Shares (unlimited authorized)(1) 201,454,802 359,398,951(2) Cash, Cash Equivalents and Short-Term Deposits $192.4 million $496.8 million Total Debt (including Capital Lease Obligations) $22.1 million $22.1 million

Notes: (1): Excluding 11,429,733 Capstone Shares issuable pursuant to outstanding options and 1,175,495 Capstone Shares issuable upon conversion of the Capstone Debentures. (2): Assumes that: (i) all Far West Shareholders elect the Full Proration Alternative; (ii) no Far West Options are exercised prior to the completion of the Arrangement; and (iii) no Far West Warrants are exercised prior to the completion of the Arrangement.

Capstone Documents Incorporated by Reference and Further Information

The following documents of Capstone are specifically incorporated by reference into, and form an integral part of, this Circular:

• annual information form dated March 31, 2011 for the year ended December 31, 2010;

• annual audited consolidated financial statements for the year ended December 31, 2010, including consolidated balance sheets as at December 31, 2010 and 2009 and the consolidated statements of earnings (loss), comprehensive earnings, cash flows and shareholders’ equity for each of the years in the two-year period then ended and related notes, together with the auditor’s report thereon, contained therein;

• management’s discussion and analysis for the annual audited consolidated financial statements for the year ended December 31, 2010;

• management information circular dated February 9, 2011 in connection with the annual and special meeting of shareholders held on March 16, 2011;

• material change report dated April 18, 2011 announcing the entering into of the Arrangement Agreement, the KORES ASPA and the KORES Subscription Agreement;

• material change report dated April 14, 2011 announcing the resignation of D. Bruce McLeod from the Board;

• material change report dated March 14, 2011 announcing Capstone’s financial results for the year ended December 31, 2010;

• material change report dated March 14, 2011 announcing the results of a Prefeasibility Study for the Phase V expansion of Capstone’s Minto copper-gold mine in the Yukon;

• material change report dated February 24, 2011 announcing the results of the Prefeasibility Study completed by JDS Energy & Mining Inc. on Capstone’s Kutcho Project located in north-western BC; and

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• material change report dated January 26, 2011 announcing the operating results for the three and twelve months ended December 31, 2010 from Capstone’s two operations, the Cozamin and Minto mines.

All documents of the type referred to above (excluding confidential material change reports) and any business acquisition reports subsequently filed by Capstone with any securities commission or similar regulatory authority in Canada on or after the date of this Circular and prior to the completion of the Arrangement in accordance with the terms of the Arrangement Agreement and the Plan of Arrangement shall be deemed to be incorporated by reference into this Circular.

Any statement contained herein or in any document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purposes of this Circular to the extent that a statement contained herein, or in any subsequently filed document which also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. The modifying statement or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document which it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute part of this Circular.

Information has been incorporated by reference in this Circular from documents filed with the securities regulatory authority in each of the provinces of Canada. Copies of the documents incorporated by reference in the Circular regarding Capstone may be obtained may be obtained by accessing SEDAR at www.sedar.com or on request without charge from the Corporate Secretary, Capstone Mining Corp., 9th Floor - 999 West Hastings Street, Vancouver, British Columbia V6C 2W2; telephone: 604-637-8155; email: jkim@capstonemining.com.

Information contained in or otherwise accessed through Capstone’s website, www.capstone.com, or any other website does not form part of this Circular.

INFORMATION CONCERNING FAR WEST

The information concerning Far West contained in this Circular, including information incorporated herein by reference, has been taken from or based upon publicly available documents and records on file with Canadian securities regulatory authorities and other public sources. Although Capstone does not have any knowledge that would indicate that any statements contained herein relating to Far West taken from or based upon such documents and records are inaccurate or incomplete, neither Capstone nor any of its officers or directors assumes any responsibility for the accuracy or completeness of the information relating to Far West taken from or based upon such documents and records, or for any failure by Far West to disclose events which may have occurred or may affect the significance or accuracy of any such information but which are unknown to Capstone.

Overview

Far West is a mineral exploration company governed by the BCBCA and is primarily engaged in the evaluation, acquisition, and exploration of mineral properties in Chile and Australia. Far West’s main project is the wholly-owned Santo Domingo copper-iron-gold deposit in Chile. The registered office of Far West is located at Suite 2800 - 666 Burrard St., Vancouver, British Columbia, V6C 2Z7 and the principal office is located at Suite 420 - 1090 West Georgia Street, Vancouver, British Columbia, V6E 3V7.

Far West is a reporting issuer in each of British Columbia, Alberta and Ontario and files its continuous disclosure documents with the relevant securities regulatory authorities in such provinces. Such documents are available at www.sedar.com.

Santo Domingo Project

The Santo Domingo Project is Far West’s only material project. The following summaries regarding the Santo Domingo Project are taken from the Scott Wilson Roscoe Postle Associates (“Scott Wilson RPA”) Technical Report on the Santo Domingo Property, Region III, Atacama Province, Chile dated August 26, 2010 (the “Scott Wilson RPA 2010 Technical Report”), which report is incorporated by reference in Far West’s annual information form dated March 31,

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2011 for the year ended December 31, 2010 which is incorporated by reference herein and is available for review on SEDAR at www.sedar.com. At the time of preparation of the Scott Wilson RPA 2010 Technical Report, David Rennie, P.Eng. was a “qualified person” as defined by NI 43-101 and was independent of Far West within the meaning of NI 43-101.

The summaries included herein are based on assumptions, qualifications and procedures which are set out in the Scott Wilson RPA 2010 Technical Report. For a complete description of the assumptions, qualifications and procedures associated with the following summaries, readers should refer to the full text of the Scott Wilson RPA 2010 Technical Report.

Executive Summary

Scott Wilson RPA was retained by Far West to prepare an independent Technical Report on the Santo Domingo Property of the Candelaria Project, near Diego de Almagro, Region III, Chile. The purpose of this report is to update the estimate of Mineral Resources in the Santo Domingo Sur (“SDS”), Iris, and Iris Norte deposits. This Technical Report conforms to NI 43-101. Scott Wilson RPA has visited the property several times, most recently on June 14–16, 2010.

Far West, through its wholly owned Chilean subsidiary, Minera Lejano Oeste S.A. (“MLO”), is engaged in the exploration and advancement of the Candelaria Project in Regions II and III, Chile. In 2002, BHP Billiton (“BHP”) flew segments of the Chilean Iron Belt with its proprietary FALCONTM airborne geophysical system and defined many zones of high gravity and/or magnetic susceptibility thought to be associated with iron-oxide-copper-gold (“IOCG”) deposits. Through an exploration agreement, Far West accepted responsibility to explore this belt in return for an interest in the BHP-held concessions within the zone. Far West, through MLO, now owns 100% of the concessions subject to a 2% net smelter return (“NSR”) royalty retained by BHP. Far West has outlined four deposits within the property: Santo Domingo Sur, Iris, Iris Norte, and Estrellita.

Scott Wilson RPA prepared an initial Mineral Resource estimate for the SDS deposit in June 2006. An initial resource estimate for the Iris and Estrellita deposits, as well as an update for SDS, was prepared by Scott Wilson RPA in October 2007. An update of the Mineral Resource estimates for SDS, Iris, and Iris Norte was carried out by Scott Wilson RPA in June 2009.

Conclusions

Scott Wilson RPA has updated the Mineral Resource estimates for the SDS, Iris, and Iris Norte deposits. The cut-off date for the assay data is May 15, 2010, and the estimate is considered to be current to that date.

Scott Wilson RPA draws the following conclusions:

• The drilling is being conducted in a manner consistent with common industry practice.

• The sampling has been carried out in an appropriate manner for the deposit geometry and type, and is representative and unbiased. The site security and sample-handling protocols are reasonably secure.

• Assaying has been performed at a commercial accredited laboratory using conventional protocols, common to the industry.

• Far West employs an independent assay Quality Assurance/Quality Control (“QA/QC”) program that is properly configured, rigorously maintained, and properly monitored.

• Magnetic Susceptibility (“MS”) measurements are being conducted in a reasonable and consistent fashion, and with an acceptable level of QA/QC. Calibration testing of the instrument indicates that there is some drift developing for certain grade ranges, and that the instrument may be due for servicing.

• The database is properly configured and maintained with an adequate level of error checking and validation. Scott Wilson RPA has conducted several validation exercises on the database and has not found any significant errors. In Scott Wilson RPA’s opinion, the database is acceptable for use in estimation of mineral resources.

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• Metallurgical test work conducted to date has shown that the copper, gold, and iron at the Candelaria Project is amenable to recovery using conventional processes (i.e., flotation and magnetic separation).

• Bulk density tests are being carried out in an appropriate fashion, and in adequate numbers. A few sections of core were observed to be relatively porous and these may not yield accurate bulk density measurements.

• Far West has developed a formula for conversion of MS measurements into an estimate of Mass Recovery (MR). The formula is based on Davis Tube and Satmagan test work and comparison with MS measurements. In Scott Wilson RPA’s opinion, the conversion formula is based on an adequate volume of test work and is probably conservative.

• The CuEq cut-off grade of 0.25% CuEq is probably conservative.

• A preliminary pit optimization captured almost all of the present mineral resources and confirmed that open pit mining is an appropriate method to consider for this deposit.

• There is evidence for an oxidized zone within the deposit that extends from surface down to a depth of roughly 80 m. Approximately 7% of the Mineral Resources are encompassed within the interpreted oxide layer. The interpretation of the oxide zone is very preliminary, however, and requires additional work.

• Economic assessment work conducted to date indicates that an open pit mine with flotation and Low Intensity Magnetic Separation (“LIMS”) process plant is potentially economic and that a Pre-Feasibility Study is warranted. The work should also include additional drilling, both for infill and upgrading of existing mineral resources, as well as for condemnation under proposed infrastructure sites.

Recommendations

Scott Wilson RPA makes the following recommendations:

At present, there are no Measured Mineral Resources, and there are no geostatistical parameters for deriving criteria for definition of Measured Resources. Most of the reason for this is that at the present drill spacing, the variography for short ranges within about 100 m is very poorly defined. Closer-spaced drilling should be carried out in order to provide a basis for defining the criteria for definition of Measured Mineral Resources. Scott Wilson RPA notes that infill drilling is included in Far West’s budget for the next phase of work.

The instrument for measuring MS has recently begun to show some significant variability and drift for some grade ranges. This suggests that there may be some inconsistency in the MS readings, upon which the Magnetic Recovery (“RM”) estimates are based. The reasons for this variability/drift should be resolved and the instrument should be adjusted or replaced if necessary.

At the time of writing, a Pre-Feasibility Study was underway on the project. Far West intends to complete this study by the end of the third quarter 2011 (as indicated in the news release of Far West dated April 16, 2011) and subsequently to continue with development work. A budget and scope of work has been prepared by Far West and is shown in the table below Scott Wilson RPA agrees that this work is warranted and recommends that it be completed.

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Proposed Program and Budget

Purpose Cost ($) Drilling: Infill 10,800,000 Condemnation 600,000 Geotechnical 1,050,000 Assaying 900,000 Metallurgical test work Crushing and grinding 2,000,000 Cu and Fe recovery 2,500,000 Environmental 1,000,000 Engineering 6,000,000 Total 24,850,000

Technical Summary

Property Description and Location

The Candelaria Project area encompasses a number of non-contiguous concessions within a roughly north-south belt approximately 300 km long by up to 40 km wide. It extends from near the town of Taltal in the north to 75 km south of the city of Copiapó in the south, in Regions II and III of Northern Chile. The approximate geographical limits of this project area are: 324000E–410000E, 6900000N–7200000N (datum: PSAD ’56, Zone 19S). The centre of the Santo Domingo area is at approximately 398000E and 7074000N (datum: PSAD ’56, Zone 19S), in Region III of Northern Chile.

Land Tenure

The initial Candelaria Project land package assembled by BHP in 2002 consisted of 3,434.5 km2 of exploration concessions. In 2002 and 2003, Far West and BHP entered into Project Area Agreements that allowed Far West to earn an interest in the concessions within the project area. Effective August 5, 2003, Far West assigned interests in the Project Area Agreements to its wholly owned Chilean subsidiary, MLO. On May 4, 2005, BHP terminated any interest in the concessions within the project area and commenced transfer of title of all these concessions to MLO in exchange for a retained 2% NSR royalty. As of the date of this report, all concessions in the Candelaria Project area are 100% owned by MLO.

All of the registered exploration concessions have been upgraded to exploitation status mining leases. Sixty-five of the exploitation concessions in progress were surveyed during 2010 and are waiting for technical approval by the government. Far West controls 100% of 82 exploitation concessions (“constituidas”) in the Santo Domingo area, consisting of 15 established concessions totalling 1,780 ha including the exploitation concessions acquired through option (Estrellita 1/10, Iris I 1/200, Iris II 1/160, Iris 1/55, Estefánia, Manto Ruso 1/8, Pichanga 1/100, and Santo 1/20) and 67 exploitation concessions (17,978 ha) in progress. In all, the 82 exploitation concessions cover a total area of 19,578 ha.

The entire concession package in the Santo Domingo area can be maintained over the next year for a cost of approximately Ch$73,235,000, or approximately $138,180, up to the end of March 2011 (which amount has been paid). None of the concessions includes surface rights.

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No permits are required for the proposed work, but a notice of intent to perform ongoing exploration work has been filed with the National Geological and Mining Service (“Servicio Nacional de Geología y Minería”, SERNAGEOMIN) in Copiapó.

Accessibility, Climate, Local Resources, Infrastructure and Physiography

Access to the Candelaria Project area is via the paved Pan-American Highway (“Ruta 5”) and a network of generally well maintained gravel roads. The Santo Domingo Property, which is the subject of this report, is roughly five hours’ travel time by road south of Antofagasta, and two hours by road north of Copiapó.

The Santo Domingo Property is located in the arid Atacama Desert. Weather is generally clear and warm in all seasons and poses no limitations on field activities.

Several cities or towns are near the Santo Domingo Property that are able to provide labour, accommodations, food, fuel, rail transportation, and a deep-sea port. The most important logistical centre in the region is Copiapó, approximately two hours’ drive to the south of the Santo Domingo Property. It has a population of approximately 150,000 people, an airport with scheduled daily flights to Santiago and Antofagasta, and abundant businesses offering services to mining and exploration companies. The region has an infrastructure (power, water, transportation, manpower, etc.) well established to service the mining community. There is no infrastructure at the Santo Domingo Property other than gravel roads for access to the property and drill sites.

Vegetation is very sparse. In the valley bottoms, plant life consists of small widely spaced bushes a few tens of centimetres in height. Hillsides and peaks are generally devoid of any vegetation.

History

Mining for copper, gold, and iron has been ongoing in this area since early in the 19th century. Small mines in the region supplied copper ore to smelters in both Chañaral and Pan de Azucar. Independent copper mines have been in operation on what is now the Manto Verde deposit (located 25 km southwest of the Santo Domingo Property) since the late 1800s, but significant production in this area started in 1906. Between 1906 and 1935, a reported total of 400,000 t grading in excess of 3% Cu was mined from the Manto Verde fault zone.

Previous ownership of concessions in the Santo Domingo Property is not known. Many small inactive mines and a myriad of pits occur throughout the property area. The mines typically exploited copper mineralization hosted in narrow (one metre to five metres) steeply dipping veins and, in some cases, mantos adjacent to these veins. The largest mines are located along approximately 700 m of the Santo Domingo structure. These mines include the active La Estrella, La Estrellita, El Iris, and others. A second area of minor production is a small open pit with peripheral underground workings on the Caprichosa concession in Target Area 4a2 consisting of copper oxidebearing specularite manto. Surface workings at the majority of the mines in the Santo Domingo Property are generally less than a few tens of metres in length and the extent of underground development is unknown. Mining activities at Manto Verde date back to the late 1800s and it is probable that workings in the Santo Domingo Property have a similar age.

No historic resource estimates or production records for workings in the Santo Domingo property have been located.

Geology

The dominant geological feature of the Chilean Iron Belt (“CIB”) is the north-south Atacama fault zone, a complex sinistral strike-slip and dip-slip fault system that is sub-parallel to the coast of northern Chile for over 1,200 km and is thought to control mineralization of many CIB iron deposits. The CIB is a roughly 630 km by 40 km area that extends from La Serena to Taltal and contains the Santo Domingo Property. Many of the abundant iron ± copper deposits hosted within the CIB have been mined extensively.

Initial movement along the Atacama fault zone was strike-slip, causing ductile deformation and the formation of mylonite. Subsequent extensional tectonism allowed dip-slip fault movement and brittle deformation. Intrusions were emplaced during both ductile (strike-slip) and brittle (dip-slip) deformation regimes. Volcanic- or intrusivehosted breccia zones that formed during these ductile-brittle transitions were the sites for the formation of many metasomatic iron oxide and IOCG deposits.

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Deposits within the CIB have two general end members: a magnetite-apatite-actinolite mineral assemblage, similar to the Kiruna deposit in Sweden, and a copper-rich type, similar to the Olympic Dam deposit in Australia. The iron rich end members of the IOCG mineral occurrences in the CIB are typically hosted in brecciated volcanic materials or brecciated intrusions thought to be genetically related to the formation of the deposits. Iron rich end members include the Los Colorados mine south of Copiapó. Copper-bearing end members of this deposit class within the CIB include La Candelaria and Manto Verde.

The Santo Domingo Property lies on the east side of the Atacama fault complex, which, in this area, consists of numerous clusters of generally north-south structural breaks in a belt approximately 30 km wide. It appears that the 10 km wide westernmost cluster, which hosts the Manto Verde copper deposit, is the main part of the fault system. To the east, a second cluster of north-south faults host the Santa Teresita, 3M, and many other small shearhosted IOCG deposits.

The base of the stratigraphic sequence in the Santo Domingo Property is presumed to be Punta del Cobre Formation sedimentary rocks. These rocks grade upwards into an interdigitated contemporaneous sequence of limestone and marine sediments of the Chañarcillo Group and andesitic flows and volcaniclastic rocks of the Bandurrias Group. The upper Punta del Cobre Formation near its contact with the overlying Bandurrias–Chañarcillo Group sequences is the stratigraphic host location of the Candelaria deposit approximately 120 km to the south. The Santo Domingo Property area is divided into a number of structural blocks with different lithological characteristics suggesting that the blocks are part of different stratigraphic levels.

The SDS deposit is hosted in andesitic tuffaceous rocks at the southern end of the property. This package consists of thick semi-massive to massive iron oxide mantos that have replaced the tuffaceous rocks. The mantos consist of both hematite and magnetite and various amounts of chalcopyrite and pyrite. The mantos sequences are underlain by a sequence of andesitic flows and andesite breccias that are mineralized by nearly vertical stringers of chalcopyrite and pyrite. The stratigraphic sequence of andesitic flows and tuffs dips gently (at an angle of approximately 15°) towards the north-northwest under gravel cover.

The Iris deposit is covered by a sequence of Quaternary gravel. Geological interpretation from drilling suggests that the Iris deposit consists of iron oxide mantos hosted by andesitic tuffs and andesitic breccias. The elongated shape of the deposit and textures observed indicate that the Iris deposit has formed in a north-northwest striking fault zone that is bounded by a west-dipping fault that can be traced along most of the deposit’s western side. The eastern side of the deposit is bordered by a steeply dipping fault that divides andesitic tuffs on the western side from calcareous sedimentary rocks and limestone to the east that seem to have been less susceptible to replacement by iron oxides than the andesitic tuffs.

The Iris Norte deposit, which lies in the northern part of the Santo Domingo Property, is entirely covered by a thick sequence of younger gravel. The area is characterized by andesitic flows and andesite porphyries with thick sequences of limestone that overlie the volcanic package and form the highest ridges. Mineralization at Iris Norte is very similar to the Iris deposit except hosted by andesitic flows rather than tuffs. The Iris Norte deposit is also elongated in shape and seems to have formed in a structural zone. The deposit displays a northeasterly strike which is a rotation of approximately 55° clockwise versus the strike of the Iris deposit. The Iris Norte deposit has been intruded by significant amounts of diorite dykes and sills that separate the deposit into two lenses.

The package of andesitic porphyries and flows in the vicinity of the Estrellita deposit has a thickness of up to 200 m and is underlain by a sequence of volcaniclastics with minor intercalations and interbeds of andesite porphyry, limestone, and altered tuff. Mineralization at Estrellita is hosted by andesitic porphyries, typically just above an andesite breccia. The mineralization consists of mineralized structures, both flat lying and steeply dipping, as well as iron oxide mantos that seem to have formed where major structures of both types intersect. The mineralization probably occurs at a higher stratigraphic level than SDS, Iris, and Iris Norte, which are hosted in tuff sequences below the level of mineralization at Estrellita. The tuff sequences below Estrellita are intercalated with volcanic sediments and limestone. The structural break between the southern and northern blocks at Santo Domingo is under cover and has not been explored by drillholes.

High-angle block faulting played an important role in localizing manto- and fault-related iron oxide-copper mineralization in the Santo Domingo area. These faults have uplifted the central part of the SDS area, bringing the manto succession close to surface. To the east and south, it is possible that this prospective horizon is present at depth, beneath a cover of limestone.

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Mineralization

Copper-bearing IOCG-type mineralization is widespread in the Santo Domingo area. Specular hematite and copper oxides (including chrysocolla, brochantite, and malachite) are the typical near-surface mineral assemblages. Copper oxides typically persist to 70 m to 90 m below surface, with chalcopyrite being the dominant copper mineral at greater depths. Modes of occurrence are:

Stratiform replacement mantos and breccias within tuffaceous sediments (e.g., SDS deposit);

Structurally controlled mineralization along the east-west Santo Domingo fault zone (e.g., Estrellita deposit);

Small, closely spaced (100 m to 200 m) northwest-trending and moderately to steeply northeast dipping veins, which range in width from a few centimetres to several metres;

Minor copper oxide minerals disseminated in amygdules in volcanic flows and encountered as small chalcocite nodules in limestone.

Exploration

Exploration work in the Santo Domingo area was conducted from July 2003 to May 2010. It consisted of:

• 50 km2 of geological mapping at 1:25,000

• 50 surface rock samples for analysis for Au and a 27-element Inductively Coupled Plasma (“ICP”) suite

• 47 sieved (106 micron) drainage sediment samples for analyses as above

• 17.6 km of Induced Polarization (IP) survey

• A total of 106,886 m of drilling in 398 holes, including 90,611 m of reverse circulation (“RC”) drilling in 348 holes and 16,275 m diamond (core) drilling in 50 holes and Analysis for gold and 27-element ICP on two-metre intervals for RC and one-metre intervals for core

Drilling

Drilling has been conducted in the Santo Domingo area since May 2004. Far West has completed 348 RC drillholes in the target area for a total of 90,611 m and 50 diamond drillholes for a total of 16,275 m. As of May 31, 2010, drilling in the Santo Domingo area totalled 106,886 m in 398 holes. The drilling statistics are summarized in the following table.

Drilling Statistics

Area No. of Holes Type m Santo Domingo Sur 103 RC 31,810 Santo Domingo Sur 26 DD 10,697 Estrellita 143 RC 30,528 Estrellita 13 DD 2,366 Iris/Iris Norte 102 RC 28,273 Iris/Iris Norte 11 DD 3,212 Totals 398 106,886

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Most of the RC drilling was conducted by a truck-mounted Schramm Rotadrill, using a 5.5 in. (13.97 cm) carbide button bit. The diamond drilling was conducted by various types of equipment. HQ core (63.5 mm diameter) was typically drilled to a depth of approximately 300 m, below which NQ core (47.6 mm diameter) was drilled.

Most holes are vertical as mineralization at SDS and Estrellita is horizontal or gently dipping. Inclined holes, particularly diamond holes, were drilled in order to establish the limits of mineralization at the edges of the deposits as well as to establish the structural framework at Estrellita, Iris, and Iris Norte.

Sampling Method and Approach

Reverse circulation drill cuttings were blown collected every two metres from top to bottom of each hole, regardless of lithology changes. Material from each interval was split three times and a 2 kg to 3 kg portion of this final split was bagged and ticketed with a unique assay number, ready to be sent to the laboratory for analyses. A second sample of 3 kg to 4 kg was collected and can be used for confirmation assays, petrographic work, etc.

In the case of diamond drilling, the core was photographed and a geotechnical log completed. Cut core samples with a length of 15 cm or 20 cm were also collected and stored in preparation for subsequent tri-axial and point load tests. The core was then geologically logged for lithology, mineralogy, etc., using the same codes employed for logging of the RC cuttings. Structural information was also noted during core logging.

Sample lengths were not less than 0.5 m, nor did they exceed two metres. Sampled intervals were cut in half along the drill axis using a diamond saw. Half of the sample was returned to the core box and stored at the core facility. The other half was bagged and shipped (via ALS Chemex truck) to the ALS Chemex laboratory at La Serena, Chile, for analyses.

Sample Preparation, Analyses and Security

Samples were collected at the drill in the case of RC and, for the diamond drillholes, at the Far West logging facility in Diego de Almagro. The logging facility is fenced, locked when not occupied, and is secure. Samples are handled only by Far West employees or designates.

Samples were shipped to ALS Chemex in La Serena, Chile, a commercial ISO 9001-certified laboratory, where they were prepared for analyses using ALS Chemex’s Prep-31 process. All samples were analyzed for 27 elements using ICP. Samples were initially analyzed using ALS Chemex procedure ME-ICP61, which is ICP following four-acid total digestion (HF-HNO3 – HClO4 acid digestion, HCl leach) and more recently by ME-ICP81. The ME-ICP61 protocol has been recognized as understating the Fe content, particularly for high grades. As a result, Far West recently implemented the ALS Chemex ME-ICP81 protocol. Copper values over 10,000 ppm were assayed using ALS Chemex method Cu-AA62, which involved total digestion and an Atomic Absorption Spectroscopy (“AAS”) finish. Gold content was determined using method Au-AA24 (30 g sample, fire assay with an AAS finish). These analytical procedures conform to industry standards.

MS measurements are made on site by Far West personnel using a handheld Fugro GMS-2 instrument. A total of 10,834 MS determinations have been made to date. Of these, 2,093 were conducted on pulps owing to the lack of remaining reject material. Measurements taken on pulps routinely yield lower readings than those taken on rejects. Far West conducted a comparison of 788 samples and concluded that there was a distinct and measureable bias between pulp and reject determinations.

Assay Quality Control/Quality Assurance

An independent QA/QC program was implemented by Far West to monitor the analytical results. Three types of quality control sample inserts were utilized during the drilling programs:

• Standards

• Blanks

• Duplicates

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The QA/QC protocols have remained largely consistent throughout all of the programs conducted by Far West. Minor changes have been implemented to accommodate issues and recommendations from past programs, and to include the MS measurements, which is a relatively recent addition to the assay procedures.

Scott Wilson RPA reviewed the results of the QA/QC program for the 2006, 2007, and 2009 Technical Reports, and did not find any concerns that would preclude the use of the assay data in resource estimation.

Certified Reference Materials (CRM), or standards, are inserted every 25th sample, constituting 4% of the total number of samples submitted. The standards results were compiled on a spreadsheet and plotted to assess precision and accuracy. Scott Wilson RPA reviewed the plots prepared by Far West personnel. There were isolated instances of assays that were outside of the control limits, but no evidence of significant concerns or systematic errors in the assaying. Scott Wilson RPA notes that the standards results are being compiled in a timely fashion, using appropriate evaluation techniques that are commonly used in the industry.

Checks were routinely carried out on standard reference material to confirm that the MS instrument was reporting consistently. It has been noted that for some of the reference samples, there are significant variations over time. In Scott Wilson RPA’s opinion, Far West’s approach to calibration of the MS instrument is reasonably rigorous and indicates that the MS data is valid. However, in Scott Wilson RPA’s opinion, the most recent calibration measurements suggest that a conservative bias may be developing, particularly for the higher ranges.

Blanks, consisting of common Portland Cement, are inserted every 50th sample and analyzed for copper as well as for gold if the copper is greater than 0.1% Cu. More recently, analyses for iron have been included. For the most part, the blank results are within a reasonable tolerance, although some of the copper results suggest that either there is some contamination or the blank material contains a high background concentration of copper.

Duplicates are taken every 25th sample. Core duplicates consist of quarter-core splits. Prior to December 2005, RC duplicates were collected from the cuttings remaining after the primary sample had been taken. This protocol has since been modified such that the duplicate now comprises a split off of the primary sample.

From 2004 to 2007 duplicates were analyzed for copper and gold. The mean grades of the duplicates were observed to average lower than the originals. Subsequent analyses conducted by Scott Wilson RPA indicated also that there were no apparent biases.

Scott Wilson RPA conducted analyses on the duplicate data from 2008 to 2009 for copper and gold and found a bias in the gold results. Reruns of the duplicate analyses did not show the same bias.

In 2010, duplicates were plotted on scatter diagrams configured to show each duplicate pair relative to an error limit. Scott Wilson RPA reviewed the hyperbolic precision diagrams prepared by Far West and notes that for all duplicate data sets, the error rate was well within the 10% limit. In Scott Wilson RPA’s opinion, the duplicate QA/QC data are being compiled and evaluated in a timely and reasonable manner, consistent with industry best-practice.

Far West has twinned several holes over the course of the exploration work conducted on the project. Most of these twins were drilled in the 2010 campaign in order to acquire MS data in areas for which sample material was no longer available for testing. Since most of the early holes were RC, this provided an opportunity to compare RC results with diamond coring. Scott Wilson RPA matched intervals of four-metre composites and plotted the grades for Au, Cu, and Fe to compare the results. In Scott Wilson RPA’s opinion, for most of the pairs, the assay results compared reasonably well and have provided a reasonably consistent verification of the earlier drill results particularly considering the differences in assay protocols and possible survey errors.

Data Verification

Data provided to Scott Wilson RPA were based on exports from the MS Access database.

In 2006, Scott Wilson RPA independently verified a portion of the database by randomly selecting a hole on each drill section and comparing the copper, gold, and silver values in the provided data with the assay certificates from the laboratory and Far West’s master database. In total, assay results for the mineralized portions of six of the 34 holes that intersected the mineralized portion of the manto were verified.

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In 2007, MS Excel spreadsheets from the laboratory were consolidated into a database for comparison with the assays provided by Far West. The ICP data from the laboratory contained within 86 individual spreadsheets were combined into a table comprising 5,161 assay records. This table was then compared to the assay table in the GEMS database received from Far West. Of these, 4,677 records could be matched via the sample ID. There were no errors or discrepancies found in either the Cu or Au entries.

In 2009, Scott Wilson RPA compared Cu, Au, and Fe values in the database provided with individual certificates for 11 of the 52 holes drilled subsequent to the 2007 Mineral Resource estimate.

For this report, Scott Wilson RPA compared the certificates to the database entries for Au, Cu, and Fe for 5,271 samples. No errors, inconsistencies, or discrepancies were noted.

Metallurgical Processing and Metallurgical Testing

Locked cycle test work on a composite sample of SDS and Iris drill core close in grade to that reported for the 2007 resource estimate indicates that a copper concentrate can be produced that will range from 27% Cu at 89% recovery to 30% Cu at 87% recovery. Gold recovery reporting to the copper concentrate is in the order of 70%. In April 2010, Far West reported the results of a lock cycle test in sea water that produced a concentrate of 32.6% Cu at 88.5% recovery from a composite of 0.57% Cu. The gold recovery into the concentrate was 68%.

Utilizing LIMS on bulk sulphide flotation tailings from the composite sample, iron concentrates suitable for pelletizing and downstream iron making by blast furnace were produced at an overall mass recovery into the iron concentrate of 16% of throughput.

In Scott Wilson RPA’s opinion, metallurgical work on Cu, Au, and Fe is sufficiently advanced to apply cut-off grade calculations and conduct scoping-level economic assessments on the deposit. No downgrading of resources from Indicated to Inferred is considered necessary to include Fe in the resource statement.

Mineral Resource and Mineral Reserve Estimates

The Mineral Resource estimates for the SDS and Iris Zones have been updated by Scott Wilson RPA. The estimates include data from recent measurements of magnetic susceptibility, as well as 35 additional drill holes completed since the last estimate, which was carried out by Scott Wilson RPA in 2009. In addition to the 35 holes, five other holes were used in the geological interpretation, but not the grade interpolation, as the assay results had not been received. The cut-off for the assay data was May 15, 2010, and the estimate is considered to be current to that date.

Indicated and Inferred Mineral Resources – May 15, 2010

Zone Mt %CuEq %Cu g/t Au %Fe Indicated

SDS (1-4) 275 0.64 0.41 0.056 27.8 Iris (5-6) 111 0.50 0.23 0.033 26.3

Iris Norte (7-8) 99.5 0.47 0.16 0.019 26.4 Indicated (SDS/Iris) 486 0.57 0.32 0.043 27.2

Estrellita 31.7 n/a 0.53 0.050 n/a Total Indicated 517 0.33 0.044

Inferred

SDS (1-4) 30.5 0.46 0.26 0.037 23.7 Iris (5-6) 5.52 0.47 0.19 0.026 26.0

Iris Norte (7-8) 25.3 0.47 0.10 0.011 27.9 Inferred (SDS/Iris) 61.3 0.46 0.19 0.025 25.7

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Estrellita 2.7 n/a 0.48 0.050 n/a Total Inferred 64.0 0.20 0.026

Notes: (1) CIM definitions were followed for Mineral Resources. (2) Mineral Resources for SDS/Iris are estimated at a cut-off grade of 0.25% CuEq. The cut-off for Estrellita was 0.3% Cu. (3) CuEq grades are calculated using average long-term prices of $2.25/lb Cu, $950/oz Au and $0.74/dmtu Fe ($50/dmt conc. @ 67.5% Fe). (4) Cu Equivalence calculations are as stated in the text of this document. (5) Metallurgical recovery factors were applied as described in this document.

The Estrellita Zone, which was estimated in 2007, was not included in this update as there has been no change to the database for this deposit.

The estimate was carried out using a block model constrained by three dimensional (“3D”) wireframe envelopes. The wireframes were constructed primarily from lithological boundaries. The principal rock types used for these models were the manto-hosting volcanic and sedimentary units which were clipped against fault boundaries and wireframe models of post-mineral dykes or sills. Eight domains were created within the deposit and three of these (Zones 1, 2, and 3) were further subdivided into magnetite-rich and magnetite-poor variants. Much of the geology interpretation had been done by both Far West and Scott Wilson RPA for the 2009 estimate. For this more recent estimate, the wireframe modelling consisted of updating the earlier work with the new drill results. Scott Wilson RPA notes that only minor modifications to the interpretations were required.

Grades for Cu, Au, total Fe, and MS were estimated into the blocks using Ordinary Kriging. Estimates of recoverable Fe (“Fe_rec”) and bulk density were carried out from the estimated Fe and MS grades using linear regression relationships. Copper equivalent (“CuEq”) grades were calculated from the estimated Cu, Au and Fe_rec, using recoveries estimated from recent metallurgical testing. The Mineral Resources were reported at a cut-off of 0.25% CuEq, which is consistent with the 2009 estimate.

There are no mineral reserves for the project.

Other Relevant Data and Information

Identifying sources of process water within close proximity may be more challenging. Several small aquifers and potential sources of process water have been identified in the area, however, a number of mines must pipe their process water significant distances. Manto Verde, some 25 km to the southwest, sources its process water from the Copiapó Valley, more than 100 km away. Test work has shown that copper processing in sea water is a viable option that eliminates the problem of limited water in the area but will require pumping sea water to the site over a distance of approximately 70 km.

A preliminary assessment, or scoping study, was completed by AMEC International (Chile) S.A. (“AMEC”) in April 2008. The study focused on mineral resources contained in the SDS and Iris deposits based on the estimates completed by Scott Wilson RPA in October 2007. Estrellita was not included in the evaluation. The study was based on conventional open-pit mining followed by flotation of copper concentrates and various means to recover iron.

AMEC considered two metallurgical options:

1. Recovery of copper by flotation, followed by treatment of the copper flotation rougher tailings by LIMS to recover magnetite (magnetite option).

2. The magnetite option followed by treatment of the tailings from the LIMS circuit by flotation to recover hematite and other oxides (hematite option).

AMEC developed cash flow models at a range of Cu and Fe prices. Financial results for the magnetite and hematite options are summarized in the tables below for after-tax net present values (NPV) using an 8% discount rate. It should be noted that Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. The preliminary assessment completed by AMEC is preliminary in nature. It includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that the preliminary assessment will be carried out.

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NVP@8% Discount Rate, Magnetite Option

Fe $/dmt Concentrate (65.5% Fe)

Prices 40 50 60 70

1.50 -174 -133 -92 -55

1.80 8 50 93 135

Cu $/lb 2.10 188 229 270 311

2.40 376 417 458 499

2.70 552 592 632 672

3.00 734 774 814 854

NVP@8% Discount Rate, Hematite Option

Fe $/dmt Concentrate (65.5% Fe)

Prices 40 50 60 70

1.50 -33 158 338 531

1.80 174 353 546 738

Cu $/lb 2.10 368 560 739 927

2.40 575 753 941 1,129

2.70 766 954 1,142 1,330

3.00 968 1,156 1,344 1,532

Far West has chosen to pursue the magnetite option and continued with test work aimed at confirming the iron recoverability and reinstating the Mineral Resource classification. This work included:

• Reanalysis of pulps to improve the iron assays.

• Davis Tube and Satmagan determinations, and comparison with MS measurements.

• Collection of MS readings from existing assay reject material in order to more accurately estimate recoverable iron.

• Additional drilling for infill in the proposed pit area and to provide iron assays and MS readings where required within the deposit boundary.

• Continued metallurgical testing to investigate using salt water in the process plant.

• Crushing and grinding test work.

Share Capital of Far West

Far West is authorized to issue an unlimited number of Far West Shares and preferred shares. As at May 11, 2011, 65,429,876 Far West Shares were issued and outstanding and no preferred shares were issued and outstanding. The Far West Shares have attached to them the rights, privileges, restrictions and conditions as follows:

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a) except for meetings at which only holders of another specified class or series of shares of Far West are entitled to vote separately as a class or series, each holder of a Far West Share is entitled to receive notice of, to attend and to vote at all meetings of the shareholders of Far West;

b) subject to the rights of the holders of the preferred shares, the holders of the Far West Shares are entitled to receive dividends, if, as and when declared by the directors of Far West; and

c) subject to the rights, privileges, restrictions and conditions attached to any other class of shares of Far West, the holders of the Far West Shares are entitled to share equally in the remaining property of Far West upon liquidation, dissolution or winding up of Far West.

The preferred shares have attached to them, the rights, privileges, restrictions and conditions as follows:

a) the preferred shares may from time to time be issued in one or more series and, subject to the following provisions, and subject to altering the notice of articles, if required, and the directors may fix from time to time and before issue of a series of preferred shares, the number of shares which are to comprise that series and the designation, rights, privileges, restrictions and conditions to be attached to that series of preferred shares including, without limiting the generality of the foregoing, the rate or amount of dividends, the redemption, purchase and/or conversion prices and terms and conditions of redemption, purchase and/or conversion, and any sinking fund or other provisions;

b) The preferred shares of each series shall, with respect to the payment of dividends and the distribution of assets or return of capital in the event of liquidation, dissolution or winding-up of Far West, whether voluntary or involuntary, or any other return of capital or distribution of the assets of Far West among its shareholders for the purpose of winding-up its affairs, rank on a parity with the preferred shares of every other series and be entitled to preference over the Far West Shares and over any other shares of Far West ranking junior to the preferred shares. The preferred shares of any series may also be given other preferences, not inconsistent with these articles, over the Far West Shares and any other shares of Far West ranking junior to the preferred shares of a series as may be fixed in accordance with paragraph (a) above;

c) If any cumulative dividends or amounts payable on the return of capital in respect of a series of preferred shares are not paid in full, all series of preferred shares shall participate rateably in respect of accumulated dividends and return of capital; and

d) Unless the directors otherwise determine when designating a series of preferred shares, the holder of each share of a series of preferred shares shall not, as such, be entitled to receive notice of or vote at any meeting of shareholders, except as otherwise specifically provided in the BCBCA.

Price Range and Trading Volume of Far West Shares

The Far West Shares are listed for trading on the TSX under the symbol “FWM”. The following table sets forth, for the periods indicated, the reported high, low and closing trading prices and the aggregate volume of trading of the Far West Shares on the TSX.

High (Cdn.$)

Low (Cdn.$)

Close (Cdn.$)

Volume (#)

May 2010 5.26 4.47 5.15 357,403 June 2010 5.30 4.27 4.40 359,207 July 2010 5.10 4.16 4.50 298,912 August 2010 4.81 4.40 4.50 195,439 September 2010 5.95 4.49 5.67 895,502 October 2010 5.98 5.25 5.50 648,006 November 2010 5.75 4.85 5.04 446,586 December 2010 5.64 5.00 5.62 549,733 January 2011 7.05 5.35 6.51 1,416,752 February 2011 7.45 6.55 7.19 682,464

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March 2011 7.77 5.86 7.46 933,942 April 2011 8.41 7.19 7.86 5,220,677 May 2011 (1 to 11) 7.90 7.40 7.52 1,512,336

As of April 17, 2011, the date the entering into of the Arrangement Agreement was announced, the implied value of the Arrangement was Cdn.$9.19 per Far West Share, representing a premium of approximately 30%, based on the preceding 30-day volume-weighted average price of the Far West Shares traded on the TSX and the April 15, 2011 closing price of the Capstone Shares traded on the TSX.

Prior Sales

For the 12-month period prior to the date of the Circular, Far West has issued the Far West Shares listed in the table set forth below:

Date

Security

Price per Security (Cdn.$)

Number of Securities

June 11, 2010 Far West Shares(1) 1.38 10,000 June 21, 2010 Far West Shares(2) 5.25 2,500 July 10, 2010 Far West Shares(1) 1.38 10,000 August 4, 2010 Far West Shares(1) 1.38 10,000 October 15, 2010 Far West Shares(3) 4.10 2,646,860 November 8, 2010 Far West Shares(1) 3.23 100,000 January 11, 2011 Far West Shares(1) 1.38 15,000 February 2, 2011 Far West Shares(1) 1.38 15,000 February 16, 2011 Far West Shares(1) 1.38 5,000 April 5, 2011 Far West Shares(1) 3.52 40,000 April 20, 2011 Far West Shares(1) 3.68 35,000 April 26, 2011 Far West Shares(1) 4.10 25,000 April 26, 2011 Far West Shares(1) 3.68 55,000 April 26, 2011 Far West Shares(1) 3.52 65,000 Notes: (1) Issued upon exercise of previously issued Far West Options. (2) Issued upon exercise of previously issued Far West Warrants. (3) Issued in connection with a private placement of units of Far West. For the 12-month period prior to the date of the Circular, Far West has issued the Far West Options listed in the

table set forth below:

Date

Security

Exercise Price per Security (Cdn.$)

Number of

Securities

August 19, 2010 Options 4.69 40,000 November 18, 2010 Options 5.01 1,182,000

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Consolidated Capitalization

The following table sets forth Far West’s consolidated capitalization as at December 31, 2010, adjusted to give effect to any material changes in the share capital of Far West since December 31, 2010 and further adjusted to give effect to the Circular. The table should be read in conjunction with the audited consolidated annual financial statements of Far West as at and for the year ended December 31, 2010 including the notes thereto, and management’s discussion and analysis thereof and the other financial information contained in or incorporated by reference in this Circular.

As at December 31, 2010

As at December 31, 2010

With Adjustment for Subsequent Material

Changes

Far West Share Capital $69.4 million $70.9 million Far West Shares 65,174,876 65,429,876 Cash and Cash Equivalents $10.6 million $10.5 million Total Debt $0.4 million $0.4 million

Far West Documents Incorporated by Reference and Further Information

Information regarding Far West has been incorporated by reference in the Circular from documents filed by Far West with the securities regulatory authority in each of the provinces of Canada. Capstone understands that copies of the documents incorporated herein by reference regarding Far West may be obtained on request without charge from Far West’s Corporate Secretary at Suite 420 - 1090 West Georgia Street, Vancouver, British Columbia, V6E 3V7, telephone: (604) 602-9144. Copies of documents incorporated by reference may also be obtained by accessing the website located at www.sedar.com.

The following documents of Far West have been filed with the securities regulatory authority in each of the provinces of British Columbia, Alberta and Ontario and are specifically incorporated by reference into, and form an integral part of, the Circular:

• annual information form dated March 31, 2011 for the year ended December 31, 2010;

• annual audited consolidated financial statements for the year ended December 31, 2010, including consolidated balance sheets as at December 31, 2010 and 2009 and the consolidated statements of operations, comprehensive loss and deficit and cash flows for the years then ended and related notes, together with the auditors’ report thereon, contained therein;

• management’s discussion and analysis for the annual audited consolidated financial statements for the year ended December 31, 2010;

• management information circular dated April 19, 2010 in connection with the annual and special meeting of shareholders held on May 13, 2010;

• material change report dated April 20, 2011 announcing the entering into of the Arrangement Agreement.

All documents of the type referred to above (excluding confidential material change reports) and any business acquisition reports subsequently filed by Far West with any securities commission or similar regulatory authority in Canada on or after the date of this Circular and prior to the completion of the Arrangement in accordance with the terms of the Arrangement Agreement and the Plan of Arrangement shall be deemed to be incorporated by reference into this Circular.

Any statement contained herein or in any document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purposes of this Circular to the extent that a statement contained herein, or in any subsequently filed document which also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. The modifying statement or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the

68

document which it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute part of this Circular.

Information contained in or otherwise accessed through Far West’s website, www.farwestmining.com, or any other website does not form part of this Circular.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

Since January 1, 2010, no informed person of the Company or any associate or affiliate of an informed person, has or had any material interest, direct or indirect, in any transaction or any proposed transaction which has materially affected or will materially affect the Company or its subsidiaries.

INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON

No (a) director or executive officer of the Company who has held such position at any time since January 1, 2010, or (b) associate or affiliate of a person in (a), has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting.

AUDITOR

Deloitte & Touche LLP is the Company’s current auditor.

EXPERTS OF CAPSTONE AND FAR WEST

The audited consolidated financial statements of Capstone as at December 31, 2010 and 2009 and for each of the years in the two-year period ended December 31, 2010, incorporated by reference in this Circular, have been audited by Deloitte & Touche LLP, Chartered Accountants, as set forth in their report thereon, included therein and incorporated herein by reference.

The audited consolidated financial statements of Far West as at December 31, 2010 and 2009 and for each of the years in the two-year period ended December 31, 2010, incorporated by reference in this Circular, have been audited by PricewaterhouseCoopers LLP, Chartered Accountants, as set forth in their report thereon, included therein and incorporated herein by reference.

With respect to technical information relating to Capstone contained in this Circular and its most recently filed annual information form, John Sagman, BASc., P.Eng., PMP, Vice President, Technical Services of Capstone has supervised the preparation of such disclosure as a “qualified person” for the purposes of NI 43-101. As of the date hereof, the foregoing person beneficially owns, directly or indirectly, less than 1% of the issued and outstanding Capstone Shares or Far West Shares.

With respect to technical information relating to Far West contained in this Circular and in Far West’s most recently filed annual information form, Richard N. Zimmer, P.Eng., MBA, Chief Executive Officer, President and a director of Far West and David Rennie, P.Eng., of Scott Wilson Roscoe Postle Associates have supervised the preparation of such disclosure as a “qualified person” for the purposes of NI 43-101. As of the date hereof, each of the foregoing persons beneficially owns, directly or indirectly, less than 1% of the issued and outstanding Far West Shares or Capstone Shares.

ADDITIONAL INFORMATION

Additional information relating to the Company can be found on SEDAR at www.sedar.com and on the Company’s web site at www.capstone.com. Financial information is provided in the Company’s audited consolidated financial statements and management’s discussion and analysis for the year ended December 31, 2010 and can also be found on SEDAR at www.sedar.com. Shareholders may also contact the Investor Relations department of the Company by phone at (604) 637-8157 or by e-mail at cburnett@capstonemining.com to request copies of these documents.

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DIRECTORS’ APPROVAL

The contents of this Circular and the sending thereof to the Shareholders of the Company have been approved by the Board.

BY ORDER OF THE BOARD OF DIRECTORS

“John J. Kim” John J. Kim

Vancouver, British Columbia Corporate Secretary May 12, 2011

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CONSENTS

Consent of Deloitte & Touche LLP

To the Board of Directors of Capstone Mining Corp.:

We have read the management information circular (the “Circular”) dated May 12, 2011 of Capstone Mining Corp. (the “Company”) prepared in connection with the special meeting of the shareholders of the Company to approve certain matters relating to the proposed arrangement involving the Company and Far West Mining Ltd. (“Far West”). We have complied with Canadian generally accepted standards for an auditor’s involvement with offering documents.

We consent to the incorporation by reference, in the above-mentioned Circular of our auditor’s report to the shareholders of the Company on the consolidated balance sheets of the Company as at December 31, 2010 and 2009 and the consolidated statements of earnings (loss), comprehensive earnings, cash flows and shareholders’ equity for the years then ended. Our report is dated March 10, 2011.

Vancouver, British Columbia (Signed) Deloitte & Touche LLP May 12, 2011 Chartered Accountants

Consent of PricewaterhouseCoopers LLP

To the Board of Directors of Capstone Mining Corp.:

We have read the management information circular (the “Circular”) dated May 12, 2011 of Capstone Mining Corp. (“Capstone”) prepared in connection with the special meeting of the shareholders of Capstone to approve certain matters relating to the proposed arrangement involving Capstone and Far West Mining Ltd. (“Far West”). We have complied with Canadian generally accepted standards for an auditor’s involvement with offering documents.

We consent to the incorporation by reference in the above-mentioned Circular of our report to the shareholders of Far West on the consolidated balance sheets of Far West as at December 31, 2010 and 2009 and the consolidated statements of operations, comprehensive loss and deficit, and cash flows for each of the years in the two year period ended December 31, 2010. Our report is dated March 15, 2011.

Vancouver, British Columbia (Signed) PricewaterhouseCoopers LLP May 12, 2011 Chartered Accountants

Consent of Scotia Capital Inc.

To the Board of Directors of Capstone Mining Corp.:

We refer to the written fairness opinion dated April 15, 2011, which we prepared for the Board of Directors of Capstone Mining Corp. (“Capstone”) in connection with the plan of arrangement involving Capstone and Far West Mining Ltd.

We consent to the inclusion of the fairness opinion and a summary of the fairness opinion in the management information circular of Capstone dated May 12, 2011.

Vancouver, British Columbia (Signed) Scotia Capital Inc. May 12, 2011

A - 1

SCHEDULE A SHARE ISSUANCE RESOLUTION

RESOLVED THAT:

(1) The issuance of such number of common shares of Capstone Mining Corp (“Capstone”) as may be required to be issued:

a) pursuant to the terms of the Arrangement (as defined below) in connection with the acquisition of all of

the issued and outstanding common shares of Far West Mining Ltd. (“Far West”) pursuant to an arrangement under section 288 of the Business Corporations Act (British Columbia) (the “Arrangement”) between Capstone and Far West, including such number of Capstone common shares as may be required to be issued pursuant to the terms of the Arrangement, including on exercise of replacement warrants of Capstone, to be issued in exchange for all of the outstanding Far West Warrants (as defined in the management information circular of Capstone dated May 12, 2011 (the “Circular”)), and on exercise of replacement options of Capstone, to be issued in exchange for all of the outstanding Far West Options (as defined in the Circular); and

b) to Korea Chile Mining Corporation (“KORES Sub”), and/or its affiliate or assigns, pursuant to the terms

of the Subscription Agreement dated April 15, 2011 among Capstone, KOREA Resources Corporation and KORES Sub,

up to an approximate maximum of 203.6 million shares, is hereby authorized and approved.

(2) Any director or officer of Capstone is hereby authorized and directed to execute or cause to be executed,

whether under corporate seal of Capstone or otherwise, and to deliver or cause to be delivered, all such documents, agreements or instruments and to do or cause to be done all such acts and things, as in the opinion of such director or officer may be necessary or desirable in connection with the foregoing, such determination to be conclusively evidenced by the execution and delivery of any such documents, agreements or instruments or the doing of any such act or thing.

(3) The board of directors of Capstone be and is authorized to abandon all or any part of these resolutions at any

time prior to giving effect thereto.

B - 1

SCHEDULE B

ARRANGEMENT AGREEMENT

(see attached)

EXECUTION VERSION

50755005.11

CAPSTONE MINING CORP.

AND

FAR WEST MINING LTD.

ARRANGEMENT AGREEMENT

DATED April 15, 2011

TABLE OF CONTENTS

Page

50755005.11 -i-

ARTICLE 1 INTERPRETATION................................................................................................. 2

1.1 Definitions.............................................................................................................. 2 1.2 Interpretation Not Affected by Headings............................................................. 14 1.3 Number and Gender............................................................................................. 14 1.4 Date for Any Action............................................................................................. 14 1.5 Currency............................................................................................................... 14 1.6 Accounting Matters.............................................................................................. 14 1.7 Knowledge ........................................................................................................... 14 1.8 Schedules ............................................................................................................. 15

ARTICLE 2 THE ARRANGEMENT ......................................................................................... 15

2.1 Arrangement ........................................................................................................ 15 2.2 Interim Order ....................................................................................................... 15 2.3 Far West Meeting................................................................................................. 16 2.4 Far West Circular................................................................................................. 17 2.5 Preparation of Filings........................................................................................... 19 2.6 Final Order ........................................................................................................... 19 2.7 Court Proceedings................................................................................................ 20 2.8 Effective Date ...................................................................................................... 20 2.9 Payment of Consideration.................................................................................... 21 2.10 Announcement and Shareholder Communications.............................................. 21 2.11 Withholding Taxes............................................................................................... 21 2.12 List of Securityholders......................................................................................... 22

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF Far West ................................. 22

3.1 Representations and Warranties........................................................................... 22 3.2 Survival of Representations and Warranties........................................................ 39

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF Capstone................................. 39

4.1 Representations and Warranties........................................................................... 39 4.2 Survival of Representations and Warranties........................................................ 54

ARTICLE 5 COVENANTS ........................................................................................................ 54

5.1 Covenants of Far West Regarding the Conduct of Business ............................... 54 5.2 Covenants of Far West Relating to the Arrangement .......................................... 60 5.3 Covenants of Capstone Regarding the Conduct of Business............................... 61 5.4 Covenants of Capstone Relating to the Arrangement.......................................... 61 5.5 Survival of Certain Covenants ............................................................................. 63 5.6 Capstone Meeting ................................................................................................ 63 5.7 Capstone Circular................................................................................................. 63 5.8 Pre-Acquisition Reorganization........................................................................... 65

ARTICLE 6 CONDITIONS ........................................................................................................ 66

TABLE OF CONTENTS (continued)

Page

50755005.11 -ii-

6.1 Mutual Conditions Precedent............................................................................... 66 6.2 Additional Conditions Precedent to the Obligations of Capstone ....................... 67 6.3 Additional Conditions Precedent to the Obligations of Far West........................ 68 6.4 Satisfaction of Conditions.................................................................................... 69

ARTICLE 7 ADDITIONAL AGREEMENTS............................................................................ 69

7.1 Far West Non-Solicitation ................................................................................... 69 7.2 Access to Information; Confidentiality................................................................ 74 7.3 Notices of Certain Events .................................................................................... 74 7.4 Insurance and Indemnification............................................................................. 75

ARTICLE 8 TERM, TERMINATION, AMENDMENT AND WAIVER ................................. 76

8.1 Term..................................................................................................................... 76 8.2 Termination.......................................................................................................... 76 8.3 Expenses and Termination Fees........................................................................... 79 8.4 Amendment.......................................................................................................... 81 8.5 Waiver.................................................................................................................. 81

ARTICLE 9 GENERAL PROVISIONS ..................................................................................... 82

9.1 Privacy ................................................................................................................. 82 9.2 Notices ................................................................................................................. 82 9.3 Governing Law; Waiver of Jury Trial ................................................................. 83 9.4 Injunctive Relief................................................................................................... 84 9.5 Time of Essence................................................................................................... 84 9.6 Entire Agreement, Binding Effect and Assignment ............................................ 84 9.7 No Liability.......................................................................................................... 84 9.8 Severability .......................................................................................................... 85 9.9 Counterparts, Execution....................................................................................... 85

SCHEDULE A - PLAN OF ARRANGEMENT SCHEDULE B - ARRANGEMENT RESOLUTION SCHEDULE C - FAR WEST KEY THIRD PARTY CONSENTS SCHEDULE D - CAPSTONE KEY THIRD PARTY CONSENTS SCHEDULE E - SANTO DOMINGO PROJECT

50755005.11

ARRANGEMENT AGREEMENT

THIS ARRANGEMENT AGREEMENT dated April 15, 2011,

BETWEEN:

CAPSTONE MINING CORP., a corporation incorporated under the Laws of the Province of British Columbia (“Capstone”)

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FAR WEST MINING LTD., a corporation incorporated under the Laws of the Province of British Columbia (“Far West”)

RECITALS:

A. Capstone desires to acquire all of the Far West Shares.

B. The Parties intend to carry out the transactions contemplated in this Agreement by way of an arrangement under the provisions of the BCBCA.

C. The Far West Board has determined, after receiving financial and legal advice and following the receipt and review of a unanimous recommendation from the Special Committee that the Consideration per Far West Share to be received by Far West Shareholders pursuant to the Arrangement is fair and that the Arrangement is in the best interests of Far West, and the Far West Board has resolved to recommend that the Far West Securityholders, voting as a single class, vote in favour of the Arrangement Resolution, all subject to the terms and the conditions contained in this Agreement.

D. Capstone has entered into the Far West Voting Agreements with the Far West Locked-Up Shareholders, pursuant to which, among other things, such Far West Shareholders have agreed, subject to the terms and conditions thereof, to vote the Far West Shares, Far West Options and Far West Warrants held by them in favour of the Arrangement Resolution.

E. The Capstone Board has resolved, after receiving financial and legal advice, to recommend that Capstone Shareholders vote in favour of the issuance of the Consideration Shares at the Capstone Meeting, in accordance with the requirements of the TSX.

F. Far West has entered into the Capstone Voting Agreements with the Capstone Locked-Up Shareholders, pursuant to which, among other things, such Capstone Shareholders have agreed, subject to the terms and conditions thereof, to vote the Capstone Shares held by them in favour of the transactions contemplated by this Agreement.

G. Upon completion of the Arrangement, the Far West Shares will be transferred to, AcquisitionCo, a newly-incorporated subsidiary of Capstone, of which KORES will become a 30% shareholder pursuant to the KORES Acquisition Support and Purchase Agreement.

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50755005.11

THIS AGREEMENT WITNESSES THAT in consideration of the covenants and agreements herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the Parties hereto covenant and agree as follows:

ARTICLE 1 INTERPRETATION

1.1 Definitions

In this Agreement, unless the context otherwise requires:

“Acquisition Proposal” means, other than the transactions contemplated by this Agreement and other than any transaction involving only a Party and/or one or more of its wholly-owned Subsidiaries, any offer, proposal or inquiry from any Person or group of Persons, whether or not in writing and whether or not delivered to the shareholders of a Party, after the date hereof relating to: (a) any acquisition or purchase, direct or indirect, of: (i) assets of that Party and/or one or more of its Subsidiaries that, individually or in the aggregate, constitute 20% or more of the consolidated assets of that Party and its Subsidiaries, taken as a whole, or which in the case of Capstone, contribute 20% or more of the consolidated revenue of Capstone and its Subsidiaries, taken as a whole, or (ii) 20% or more of any voting or equity securities of that Party or any one or more of its Subsidiaries that, individually or in the aggregate, constitute 20% or more of the consolidated assets of that Party and its Subsidiaries, taken as a whole or, in the case of Capstone, contribute 20% or more of the consolidated revenues of Capstone and its Subsidiaries, taken as a whole; (b) any take-over bid, tender offer or exchange offer that, if consummated, would result in such Person beneficially owning 20% or more of any class of voting or equity securities of that Party; (c) a plan of arrangement, merger, amalgamation, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving that Party and/or any of its Subsidiaries whose assets, individually or in the aggregate, constitute 20% or more of the consolidated assets of that Party and its Subsidiaries, taken as a whole, or, in the case of Capstone, whose revenues, individually or in the aggregate, constitute 20% or more of the consolidated revenues of Capstone and its Subsidiaries, taken as a whole; or (d) any other transaction, the consummation of which would or could reasonably be expected to impede, interfere with, prevent or delay the transactions contemplated in this Agreement or which would or could reasonably be expected to materially reduce the benefit to a Party under this Agreement or the Arrangement;

“AcquisitionCo” means 0908113 B.C. Ltd., a corporation incorporated pursuant to the Laws of the Province of British Columbia;

“AcquisitionCo Shareholders Agreement” means the Shareholders Agreement to be entered into among KORES, KORES Sub, Capstone and AcquisitionCo;

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50755005.11

“affiliate” has the meaning ascribed thereto in the National Instrument 45-106 – Prospectus and Registration Exemptions;

“Agreement” means this arrangement agreement, including all schedules annexed hereto, together with the Far West Disclosure Letter and the Capstone Disclosure Letter, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof;

“Arrangement” means the arrangement of Far West under Section 288 of the BCBCA on the terms and subject to the conditions set out in the Plan of Arrangement, subject to any amendments or variations thereto made in accordance with Section 8.4 hereof or the Plan of Arrangement or made at the direction of the Court in the Final Order (provided that any such amendment or variation is acceptable to both Far West and Capstone, each acting reasonably);

“Arrangement Resolution” means the special resolution of the Far West Securityholders approving the Plan of Arrangement which is to be considered at the Far West Meeting and shall be substantially in the form of Schedule B hereto;

“Authorization” means any authorization, order, permit, approval, grant, licence, registration, consent, right, notification, condition, franchise, privilege, certificate, judgment, writ, injunction, award, determination, direction, decision, decree, bylaw, rule or regulation, whether or not having the force of Law, and includes any Environmental Permit;

“BCBCA” means the Business Corporations Act (British Columbia) and the regulations made thereunder, as now in effect and as they may be promulgated or amended from time to time;

“business day” means any day, other than a Saturday, a Sunday or a statutory or civic holiday in Vancouver, British Columbia;

“Capstone Board” means the board of directors of Capstone as the same is constituted from time to time;

“Capstone Circular” means the notice of the Capstone Meeting and accompanying management information circular, including all schedules, appendices and exhibits thereto and enclosures therewith, to be sent to the Capstone Shareholders in connection with the Capstone Meeting, as amended, supplemented or otherwise modified from time to time;

“Capstone Confidentiality Agreement” means the confidentiality agreement between Capstone and Far West dated March 28, 2011, pursuant to which Capstone has provided confidential information about its business to Far West;

“Capstone Disclosure Letter” means the disclosure letter executed by Capstone and delivered to Far West prior to the execution of this Agreement;

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“Capstone Key Third Party Consents” means those consents, approvals and notices required by Capstone from any third party in respect of the completion of the Arrangement that are set out in Schedule D hereto;

“Capstone Locked-up Shareholders” means Pala Investment Holdings Limited and each of the directors and senior officers of Capstone;

“Capstone Material Adverse Effect” means any one or more changes, effects, events, occurrences or states of fact, either individually or in the aggregate, that is, or would reasonably be expected to be, material and adverse to the (x) assets, liabilities (including any contingent liabilities that may arise through outstanding, pending or threatened litigation or otherwise), business, operations, results of operations, capital, property, obligations (whether absolute, accrued, conditional or otherwise) or financial condition of Capstone and its Subsidiaries taken as a whole, or (y) the continued ownership, development and operation of the (i) the Cozamin Polymetalic Mine, Mexico, (ii) the Minto Copper-Gold Mine, Yukon, and (iii) the Kutcho Copper-Zinc-Gold-Silver Project, Northwestern British Columbia, other than changes, effects, events, occurrences or states of fact resulting from: (a) a change in the market price of the Capstone Shares following and reasonably attributable to the public announcement of the execution of this Agreement and the transactions contemplated hereby; (b) any changes affecting the global copper mining industry generally; (c) any change in the market price of copper; (d) any change in pplicable Laws or GAAP; or (e) general economic, financial, currency exchange, securities or commodity market conditions in Canada or the United States; provided, however, that with respect to clauses (b), (c), (d) or (e), such change does not relate primarily to Capstone and its Subsidiaries, taken as a whole, or do not have a disproportionate effect on Capstone and its Subsidiaries, taken as a whole, compared to other companies of similar size operating in the copper mining industry; and references in this Agreement to dollar amounts are not intended to be and shall not be deemed to be illustrative or interpretative for purposes of determining whether a “Capstone Material Adverse Effect” has occurred;

“Capstone Material Subsidiaries” means the Capstone subsidiaries listed on Schedule 4.1(d) of the Capstone Disclosure Letter;

“Capstone Meeting” means the special meeting of Capstone Shareholders, including any adjournment or postponement thereof, to be called for the purpose of obtaining Capstone Shareholder Approval;

“Capstone Mineral Rights” has the meaning ascribed thereto in Section 4.1(l)(i);

“Capstone Property” has the meaning ascribed thereto in Section 4.1(i);

“Capstone Public Documents” means all forms, reports, schedules, statements and other documents filed by Capstone since December 31, 2010 on SEDAR;

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50755005.11

“Capstone Shareholder Approval” means the approval by the Capstone Shareholders by ordinary resolution at the Capstone Meeting approving the issuance of the Consideration Shares in accordance with the requirements of the TSX;

“Capstone Shareholders” means the holders of Capstone Shares;

“Capstone Shares” means the common shares of Capstone;

“Capstone Termination Fee” has the meaning ascribed thereto in Subsection 8.3(b);

“Capstone Termination Fee Event” has the meaning ascribed thereto in Subsection 8.3(c);

“Capstone Voting Agreements” means the voting agreements (including all amendments thereto) between Far West and the Capstone Locked-up Shareholders setting forth the terms and conditions upon which they have agreed, among other things, to vote their Capstone Shares in favour of the transactions contemplated by this Agreement;

“Code” means the U.S. Internal Revenue Code of 1986, as amended;

“Competition Act” means the Competition Act (Canada), as amended from time to time;

“Consideration” means the consideration to be received by the Far West Shareholders pursuant to the Plan of Arrangement as consideration for their Far West Shares, consisting of 1.825 Capstone Shares and $1.00 in cash per Far West Share, or more Capstone Shares or more cash as elected by each Far West Shareholder, subject to pro ration on the basis of the Maximum Cash Pool, and provided that in no circumstance will a Far West Shareholder electing to receive cash receive less than $1.00 in cash per Far West Share and provided further that that a Far West Shareholder who has elected to receive the maximum of Capstone Shares shall also receive no less than $0.001 per Far West Share in cash;

“Consideration Shares” means the Capstone Shares to be issued to Far West Shareholders pursuant to the Arrangement;

“Contract” means any contract, agreement, license, franchise, lease, arrangement, commitment, understanding, joint venture, partnership or other right or obligation (written or oral) to which a Party or any of its Subsidiaries is a party or by which it or any of its Subsidiaries is bound or affected or to which any of their respective properties or assets is subject;

“Court” means the Supreme Court of British Columbia;

“Depositary” means Computershare Investor Services Inc.;

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50755005.11

“Dissent Rights” means the rights of dissent exercisable by the Far West Shareholders in respect of the Arrangement described in Article 6 of the Plan of Arrangement;

“Effective Date” means the effective date of the Arrangement, being the second business day after the date upon which all conditions precedent (excluding conditions that, by their terms, cannot be satisfied until the Effective Date) to the completion of the Arrangement as set out in Article 6 have been satisfied or waived in accordance with this Agreement, or such other date as may be agreed to by the Parties, and the Parties shall execute a certificate confirming the Effective Date, not to be unreasonably withheld;

“Effective Time” has the meaning ascribed thereto in the Plan of Arrangement;

“Eligible Holder” has the meaning ascribed to such term in the Plan of Arrangement;

“Environmental Laws” means all Laws, imposing obligations, responsibilities, liabilities or standards of conduct for or relating to: (a) the regulation or control of pollution, contamination, activities, materials, substances or wastes in connection with or for the protection of human health or safety, the environment or natural resources (including climate, air, surface water, groundwater, wetlands, land surface, subsurface strata, wildlife, aquatic species and vegetation); or (b) the use, storage, generation, disposal, treatment, processing, recycling, handling, transport, distribution, destruction, transfer, import, export or sale of Hazardous Substances;

“Environmental Liabilities” means, with respect to any Person, all liabilities, obligations, responsibilities, responses, losses, damages, punitive damages, property damages, consequential damages, treble damages, costs (including control, remedial and removal costs, investigation costs, capital costs, operation and maintenance costs), expenses, fines, penalties and sanctions incurred as a result of or related to any claim, suit, action, administrative or court order, investigation, proceeding or demand by any Person, arising under or related to any Environmental Laws, Environmental Permits, or in connection with any: (a) Release or threatened Release or presence of a Hazardous Substance; (b) tank, drum, pipe or other container that contains or contained a Hazardous Substance; or (c) use, storage, generation, disposal, treatment, processing, recycling, handling, transport, distribution, destruction, transfer, import, export or sale of Hazardous Substance;

“Environmental Permits” means all Authorizations or program participation requirements with or from any Governmental Entity under any Environmental Laws;

“Far West Board” means the board of directors of Far West as the same is constituted from time to time;

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“Far West Change in Recommendation” has the meaning ascribed thereto in Subsection 8.2(a)(iii)(A);

“Far West Circular” means the notice of the Far West Meeting and accompanying management information circular, including all schedules, appendices and exhibits thereto and enclosures therewith, to be sent to the Far West Securityholders in connection with the Far West Meeting, as amended, supplemented or otherwise modified from time to time;

“Far West Confidentiality Agreement” means the confidentiality agreement between Capstone and Far West dated March 6, 2011, pursuant to which Far West has provided confidential information about its business to Capstone;

“Far West Disclosure Letter” means the disclosure letter executed by Far West and delivered to Capstone prior to the execution of this Agreement;

“Far West Key Third Party Consents” means those consents, approvals and notices required by Far West from any third party in respect of the completion of the Arrangement that are set out in Schedule C hereto;

“Far West Locked-up Shareholders” means QuadraFNX, Pacific Road Resources, Seaman Family Trust and each of the directors and senior officers of Far West;

“Far West Material Adverse Effect” means any one or more changes, effects, events, occurrences or states of fact, either individually or in the aggregate, that is, or would reasonably be expected to be, material and adverse to the (x) assets, liabilities (including any contingent liabilities that may arise through outstanding, pending or threatened litigation or otherwise), business, operations, results of operations, capital, property, obligations (whether absolute, accrued, conditional or otherwise) or financial condition of Far West and its Subsidiaries taken as a whole, or (y) the continued ownership, development and operation of the Santo Domingo Project, in each case other than changes, effects, events, occurrences or states of fact resulting from: (a) a change in the market price of the Far West Shares following and reasonably attributable to the public announcement of the execution of this Agreement and the transactions contemplated hereby, (b) any changes affecting the global copper or iron mining industries generally, (c) any change in the market price of copper or iron; (d) any change in applicable Laws or GAAP; or (e) general economic, financial, currency exchange, securities or commodity market conditions in Canada or the United States; provided however that with respect to clauses (b), (c), (d) or (e), such change does not relate primarily to Far West and its Subsidiaries, taken as a whole, or does not have a disproportionate effect on Far West and its Subsidiaries, taken as a whole, compared to other companies of similar size operating in the copper or iron mining industries; and references in this Agreement to dollar amounts are not intended to be and shall not be deemed to be illustrative or interpretative for

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50755005.11

purposes of determining whether a “Far West Material Adverse Effect” has occurred;

“Far West Meeting” means the special meeting of Far West Securityholders, including any adjournment or postponement thereof, to be called and held in accordance with the Interim Order to consider the Arrangement Resolution;

“Far West Mineral Rights” has the meaning ascribed thereto in Subsection 3.1(m)(i);

“Far West Option Plan” means the stock option plan of Far West, approved by the Far West Board on March 26, 2007 and by Far West Shareholders on May 9, 2007 and on May 13, 2010;

“Far West Optionholders” means the holders of Far West Options;

“Far West Options” means the outstanding options to purchase Far West Shares granted under the Far West Option Plan;

“Far West Property” has the meaning ascribed thereto in Subsection 3.1(m)(i);

“Far West Public Documents” means all forms, reports, schedules, statements and other documents filed by Far West since December 31, 2010 on SEDAR;

“Far West Record Date” has the meaning ascribed thereto in Subsection 2.3(a);

“Far West Securityholder Approval” has the meaning ascribed thereto in Subsection 2.2(c);

“Far West Securityholders” means Far West Shareholders, Far West Optionholders and Far West Warrantholders;

“Far West Shareholder Rights Plan” means the Far West shareholder rights plan agreement dated March 25, 2004, as amended March 17, 2008;

“Far West Shareholders” means the holders of Far West Shares;

“Far West Shares” means the common shares in the authorized share capital of Far West;

“Far West Termination Fee” has the meaning ascribed thereto in Subsection 8.3(b);

“Far West Termination Fee Event” has the meaning ascribed thereto in Subsection 8.3(c);

“Far West Voting Agreements” means the voting agreements (including all amendments thereto) between Capstone and the Far West Locked-up Shareholders setting forth the terms and conditions upon which they have agreed,

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among other things, to vote their Far West Shares, Far West Options and Far West Warrants, as applicable, in favour of the Arrangement Resolution;

“Far West Warrantholders” means the holders of Far West Warrants;

“Far West Warrants” means outstanding warrants to purchase Far West Shares;

“Final Order” means the final order of the Court, after a hearing upon the fairness of the terms and conditions of the Arrangement, approving the Arrangement, in a form acceptable to Far West and Capstone, each acting reasonably, as such order may be amended by the Court (with the consent of both Far West and Capstone, each acting reasonably) at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended (provided that any such amendment is acceptable to both Far West and Capstone, each acting reasonably) on appeal;

“GAAP” means Canadian generally accepted accounting principles;

“Governmental Entity” means: (a) any multinational, federal, provincial, territorial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau, agency or entity, domestic or foreign; (b) any stock exchange, including the TSX; (c) any subdivision, agent, commission, board or authority of any of the foregoing; or (d) any quasi-governmental or private body, including any tribunal, commission, regulatory agency or self-regulatory organization, exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing;

“Hazardous Substance” means any pollutant, contaminant, waste or chemical or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous or deleterious substance, waste or material, including hydrogen sulphide, arsenic, cadmium, copper, lead, mercury, petroleum, polychlorinated biphenyls, asbestos and urea-formaldehyde insulation, and any other material, substance, pollutant or contaminant regulated or defined pursuant to, or that could result in liability under, any Environmental Law;

“including” means including without limitation, and “include” and “includes” have a corresponding meaning;

“Interim Order” means the interim order of the Court contemplated by Section 2.2 and made pursuant to Section 291 of the BCBCA, in a form acceptable to Far West and Capstone, each acting reasonably, providing for, among other things, the calling and holding of the Far West Meeting, as the same may be amended by the Court (with the consent of Far West and Capstone, each acting reasonably);

“KORES” means Korea Resources Corporation;

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“KORES Acquisition Support and Purchase Agreement” means the Acquisition Support and Purchase Agreement between KORES and Capstone dated as of the date of this Agreement, as the same may be amended from time to time;

“KORES Agreements” means, collectively: (i) the KORES Acquisition Support and Purchase Agreement, (ii) the Subscription Agreement among KORES, KORES Sub and Capstone to be dated as of the date of this Agreement and (iii) the AcquisitionCo Shareholders Agreement;

“KORES Condition” means the execution and delivery of the KORES Agreements by all parties thereto, the satisfaction or waiver of all relevant closing conditions under the KORES Agreements and the taking of all actions required to be taken by the parties thereto on, concurrently with or prior to the Effective Time under the KORES Agreements by such parties;

“KORES Sub” means Korea Chile Mining Corporation, an indirect subsidiary incorporated by KORES for the purpose of holding an interest in AcquisitionCo;

“Law” or “Laws” means all laws (including common law), by-laws, statutes, rules, regulations, principles of law and equity, orders, rulings, ordinances, judgements, injunctions, determinations, awards, decrees or other requirements, whether domestic or foreign, and the terms and conditions of any Authorization of or from any Governmental Entity or self-regulatory authority (including the TSX), and the term “applicable” with respect to such Laws and in a context that refers to a Party, means such Laws as are applicable to such Party and/or its Subsidiaries or their business, undertaking, property or securities and emanate from a Person having jurisdiction over the Party and/or its Subsidiaries or its or their business, undertaking, property or securities;

“Liens” means any hypothecs, mortgages, pledges, assignments, liens, charges, security interests, adverse rights or claims, other third party interests or encumbrances of any kind, whether contingent or absolute, and any agreement, option, right or privilege (whether by Law, contract or otherwise) capable of becoming any of the foregoing;

“Mailing Deadline” means May 20, 2011;

“Material Contract” means a Contract which Far West one of its Subsidiaries is a party or by which such a Person is bound or under which such a Person has, or will have, any liability or contingent liability (in each case, whether written or oral, express or implied): (a) involving payments to or by such Person in excess of $250,000 annually or $250,000 in aggregate over the term of the contract; (b) involving rights or obligations that may reasonably extend beyond three years and which does not terminate or cannot be terminated without penalty on less than three months’ notice; (c) which provide any rights to one or more third parties with respect to the Santo Domingo Project; (d) which is outside the ordinary

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course of business; (e) which contain covenants that: (i) in any way purport to restrict the business activity of Far West or any of its affiliates; or (ii) limit the freedom of Far West or any of its affiliates to engage in any line of business or to compete with any Person; (f) which, if terminated without the consent of the Person would result in a Far West Material Adverse Effect; or (g) is a contract pursuant to which Far West or one of its Subsidiaries provides any indemnification to any other Person other than in the ordinary course of business;

“material fact” and “material change” have the meanings ascribed to those terms in the Securities Act;

“Maximum Cash Pool” has the meaning ascribed thereto in the Plan of Arrangement;

“Meeting Deadline” means June 20, 2011;

“misrepresentation” has the meaning ascribed thereto in the Securities Act;

“ordinary course of business”, “ordinary course of business consistent with past practice”, or any similar reference, means, with respect to an action taken by a Person, that such action is consistent with the past practices of such Person and is taken in the ordinary course of the normal day-to-day business and operations of such Person; provided that in any event such action is not unreasonable or unusual;

“Outside Date” means August 31, 2011, or such later date as may be agreed to in writing by the Parties;

“Parties” means Far West and Capstone, and “Party” means any of them;

“Person” includes an individual, partnership, association, body corporate, trustee, executor, administrator, legal representative, government (including any Governmental Entity) or any other entity, whether or not having legal status;

“Plan of Arrangement” means the plan of arrangement substantially in the form of Schedule A hereto, and any amendments or variations thereto made in accordance with the Plan of Arrangement or upon the direction of the Court in the Final Order with the consent of Far West and Capstone, each acting reasonably;

“Proposed Agreement” has the meaning ascribed thereto in Subsection 7.1(e);

“QuadraFNX” means QuadraFNX Mining Ltd.;

“QuadraFNX Subscription Agreement” means the subscription agreement between Far West and Quadra Mining Ltd. (now QuadraFNX) dated October 30, 2009;

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“Registrar” means the Registrar of Companies appointed pursuant to Section 400 of the BCBCA;

“Regulatory Approvals” means those sanctions, rulings, consents, orders, exemptions, permits and other approvals (including the waiver or lapse, without objection, of a prescribed time under a statute or regulation that states that a transaction may be implemented if a prescribed time lapses following the giving of notice without an objection being made) of Governmental Entities, required in connection with the consummation of the Arrangement or any of the transactions contemplated hereby;

“Release” means any release, spill, emission, leaking, pumping, pouring, emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Substance in the indoor or outdoor environment, including the movement of Hazardous Substance through or in the air, soil, surface water, ground water or property;

“Santo Domingo Project” means the Santo Domingo copper-iron-gold deposit in Chile, as more particularly described in Schedule E hereto;

“Securities Act” means the Securities Act (British Columbia) and the rules, regulations and published instruments and policies made thereunder, as now in effect and as they may be promulgated or amended from time to time;

“Securities Laws” means the Securities Act and the U.S. Securities Act, together with all other applicable state, federal and provincial securities Laws, rules and regulations and published instruments and policies thereunder, as now in effect and as they may be promulgated or amended from time to time;

“SEDAR” means the System for Electronic Document Analysis and Retrieval;

“Special Committee” means the special committee of the Far West Board;

“Subsidiary” has the meaning ascribed thereto in the National Instrument 45-106 – Prospectus and Registration Exemptions;

“Superior Proposal” means an unsolicited bona fide Acquisition Proposal made by a third party to Far West in writing after the date hereof: (i) to purchase or otherwise acquire, directly or indirectly, by means of a merger, take-over bid, amalgamation, plan of arrangement, business combination, consolidation, recapitalization, liquidation, winding-up or similar transaction, all of the Far West Shares; (ii) that is reasonably capable of being completed without undue delay, taking into account all legal, financial, regulatory and other aspects of such Acquisition Proposal and the third party making such Acquisition Proposal; (iii) is not subject to any financing condition and in respect of which any required financing to complete such Acquisition Proposal has been demonstrated to the satisfaction of the Board, acting in good faith (after receipt of advice from its financial advisors and outside legal counsel), will be obtained; (iv) which is not

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subject to a due diligence and/or access condition; (v) that did not result from a breach of Section 7.1 by Far West or its representatives; (vi) is made available to all Far West Securityholders on the same terms and conditions; (vii) in respect of which the board of directors of Far West determines in good faith (after receipt of advice from its outside legal counsel with respect to (x) below and financial advisors with respect to (y) below) that (x) failure to recommend such Acquisition Proposal to its shareholders would be inconsistent with its fiduciary duties and (y) such Acquisition Proposal would, taking into account all of the terms and conditions of such Acquisition Proposal, if consummated in accordance with its terms (but not assuming away any risk of non-completion), result in a transaction more favourable to its shareholders from a financial point of view than the Arrangement (including any adjustment to the terms and conditions of the Arrangement proposed by Capstone pursuant to Subsection 7.1(f));

“Tax Act” means the Income Tax Act (Canada) and the regulations made thereunder, as now in effect and as they may be promulgated or amended from time to time;

“Tax Returns” includes all returns, reports, declarations, elections, notices, filings, forms, statements and other documents (whether in tangible, electronic or other form) and including any amendments, schedules, attachments, supplements, appendices and exhibits thereto, made, prepared, filed or required by a Governmental Entity to be made, prepared or filed by Law in respect of Taxes;

“Taxes” includes any taxes, duties, fees, premiums, assessments, imposts, levies, expansion fees and other charges of any kind whatsoever imposed by any Governmental Entity, including all interest, penalties, fines, additions to tax or other additional amounts imposed by any Governmental Entity in respect thereof, and including those levied on, or measured by, or referred to as, income, gross receipts, profits, windfall, royalty, capital, transfer, land transfer, sales, goods and services, harmonized sales, use, value-added, excise, stamp, withholding, business, franchising, property, development, occupancy, employer health, payroll, employment, health, social services, education and social security taxes, all surtaxes, all customs duties and import and export taxes, countervail and anti-dumping, all licence, franchise and registration fees and all employment insurance, health insurance and Canada, Québec and other pension plan premiums or contributions imposed by any Governmental Entity, and any transferee liability in respect of any of the foregoing;

“TSX” means the Toronto Stock Exchange;

“United States” means the United States of America, its territories and possessions, any State of the United States and the District of Columbia;

“U.S. Exchange Act” means the United States Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder, as the same has been and hereafter from time to time may be amended; and

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“U.S. Securities Act” means the United States Securities Act of 1933 and the rules and regulations promulgated thereunder, as the same has been and hereafter from time to time may be amended.

1.2 Interpretation Not Affected by Headings

The division of this Agreement into Articles, Sections and Subsections and the insertion of headings are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. Unless the contrary intention appears, references in this Agreement to an Article, Section, Subsection or Schedule by number or letter or both refer to the Article, Section, Subsection or Schedule, respectively, bearing that designation in this Agreement.

1.3 Number and Gender

In this Agreement, unless the contrary intention appears, words importing the singular include the plural and vice versa, and words importing gender include all genders.

1.4 Date for Any Action

If the date on which any action is required to be taken hereunder by a Party is not a business day, such action shall be required to be taken on the next succeeding day which is a business day.

1.5 Currency

Unless otherwise stated, all references in this Agreement to sums of money are expressed in lawful money of Canada and “$” refers to Canadian dollars.

1.6 Accounting Matters

Unless otherwise stated, all accounting terms used in this Agreement shall have the meanings attributable thereto under GAAP and all determinations of an accounting nature required to be made shall be made in a manner consistent with GAAP consistently applied.

1.7 Knowledge

(a) In this Agreement, references to “the knowledge of Far West” means the actual knowledge of the Chief Executive Officer and Chief Financial Officer of Far West, in each case, after making due enquiries regarding the relevant matter.

(b) In this Agreement, references to “the knowledge of Capstone” means the actual knowledge of the Chief Executive Officer and Chief Financial Officer of Capstone, in each case, after making due enquiries regarding the relevant matter.

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1.8 Schedules

The following Schedules are annexed to this Agreement and are incorporated by reference into this Agreement and form a part hereof:

Schedule A - Plan of Arrangement Schedule B - Arrangement Resolution Schedule C - Far West Key Third Party Consents Schedule D - Capstone Key Third Party Consents Schedule E - Santo Domingo Project

ARTICLE 2

THE ARRANGEMENT

2.1 Arrangement

Far West and Capstone agree that the Arrangement will be implemented in accordance with and subject to the terms and conditions contained in this Agreement and the Plan of Arrangement.

2.2 Interim Order

As soon as reasonably practicable following the execution of this Agreement, and in any event in sufficient time to hold the Far West Meeting in accordance with Section 2.3, Far West shall apply to the Court in a manner acceptable to Capstone, acting reasonably, and prepare, file and diligently pursue an application for the Interim Order, which shall provide, among other things:

(a) for the class of Persons to whom notice is to be provided in respect of the Arrangement and the Far West Meeting and for the manner in which such notice is to be provided;

(b) for confirmation of the record date for the Far West Meeting referred to in Subsection 2.3(a);

(c) that the requisite approval for the Arrangement Resolution shall be 662/3% of the votes cast on the Arrangement Resolution by the Far West Securityholders present in Person or by proxy at the Far West Meeting and voting as a single class, (with each holder of Far West Shares on the Far West Record Date being entitled to one vote for each Far West Share held, each holder of Far West Options on the Far West Record Date being entitled to one vote for each Far West Share issuable upon exercise of the Far West Option and each holder of Far West Warrants on the Far West Record Date being entitled to one vote for each Far West Share issuable upon exercise of the Far West Warrant) (the “Far West Securityholder Approval”);

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(d) that, in all other respects, the terms, conditions and restrictions of Far West’s constating documents, including quorum requirements and other matters, shall apply in respect of the Far West Meeting;

(e) for the grant of Dissent Rights to the Far West Shareholders who are registered Far West Shareholders;

(f) for the notice requirements with respect to the presentation of the application to the Court for the Final Order;

(g) that the Far West Meeting may be adjourned or postponed from time to time by management of Far West, subject to the terms of this Agreement, without the need for additional approval of the Court;

(h) that the record date for Far West Securityholders entitled to notice of and to vote at the Far West Meeting will not change in respect of any adjournment(s) or postponement of the Far West Meeting;

(i) that it is Capstone’s intention to rely, by virtue of the Final Order, upon the exemption from registration provided by s.3(a)(10) of the U.S. Securities Act with respect to the issuance of Consideration Shares in exchange for Far West Shares pursuant to the Arrangement to implement the transactions contemplated hereby in respect of the Far West Shareholders who are resident in the United States; and

(j) for such other matters as Capstone may reasonably require, subject to obtaining the prior consent of Far West, such consent not to be unreasonably withheld or delayed.

2.3 Far West Meeting

Subject to the terms of this Agreement:

(a) Far West agrees to convene and conduct the Far West Meeting in accordance with the Interim Order, Far West’s constating documents and applicable Law as soon as reasonably practicable, and in any event on or before the Meeting Deadline. Far West and Capstone agree to use their commercially reasonably efforts to schedule the Far West Meeting and Capstone Meeting on the same day. Far West agrees that it shall, in consultation with Capstone, fix and publish a record date (the “Far West Record Date”) for the purposes of determining the Far West Securityholders entitled to receive notice of and vote at the Far West Meeting in accordance with the Interim Order.

(b) Subject to Section 7.1(l), except as required for quorum purposes, as required by Law or otherwise permitted under this Agreement, Far West shall not adjourn (except as required by Law or by valid Far West Shareholder action), postpone or cancel (or propose or permit the adjournment, postponement or cancellation of) the Far West Meeting without Capstone’s prior consent.

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(c) Far West will advise Capstone as Capstone may reasonably request, and at least on a daily basis on each of the last ten (10) business days prior to the date of the Far West Meeting, as to the aggregate tally of the proxies received by Far West in respect of the Arrangement Resolution.

(d) Far West will promptly advise Capstone of any written notice of dissent or purported exercise by any Far West Shareholder of Dissent Rights received by Far West in relation to the Arrangement and any withdrawal of Dissent Rights received by Far West and any written communications sent by or on behalf of Far West to any Far West Shareholder exercising or purporting to exercise Dissent Rights in relation to the Arrangement.

2.4 Far West Circular

(a) As promptly as reasonably practicable following execution of this Agreement and in any event prior to the close of business on the Mailing Deadline, Far West shall (i) prepare the Far West Circular together with any other documents required by applicable Laws in connection with the Far West Meeting, (ii) file the Far West Circular in all jurisdictions where the same is required to be filed, and (iii) mail the Far West Circular as required under applicable Laws and by the Interim Order. On the date of mailing thereof, the Far West Circular shall comply in all material respects with all applicable Laws and the Interim Order and shall contain sufficient detail to permit the Far West Securityholders to form a reasoned judgement concerning the matters to be placed before them at the Far West Meeting and, subject to Subsection 2.4(e) below, shall contain full, true and plain disclosure of all material facts required by all applicable Laws to be disclosed thereunder.

(b) If Far West provides a notice to Capstone of an Acquisition Proposal pursuant to Subsection 7.1(c) prior to the mailing of the Far West Circular, then unless the Parties agree otherwise, the Mailing Deadline will be extended until the date that is seven days following the earlier of either (i) written notification from Far West to Capstone that the Far West Board has determined that the Acquisition Proposal is not a Superior Proposal, or (ii) the date on which Far West and Capstone enter into an amended agreement pursuant to Subsection 7.1(f) which results in the Acquisition Proposal in question not being a Superior Proposal. If the Mailing Deadline is so extended, the Meeting Deadline and the Outside Date shall be extended by the same number of days as the Mailing Deadline has been extended.

(c) Far West shall ensure that the Far West Circular complies in all material respects with all applicable Laws, and, without limiting the generality of the foregoing, that the Far West Circular will not contain any misrepresentation (except that Far West shall not be responsible for any information relating to Capstone and its affiliates, including the Capstone Shares, or KORES and its affiliates).

(d) Subject to Section 7.1, Far West shall (i) solicit proxies in favour of the Arrangement Resolution, and against any resolution submitted by any other Far

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West Shareholder, including, if so requested by Capstone, using the services of dealers and proxy solicitation services and permitting Capstone to otherwise assist Far West in such solicitation and, notwithstanding any other provision in this Agreement, the costs and expenses associated with any such proxy solicitation requested by Capstone shall be paid by Capstone, and take all other actions that are reasonably necessary or desirable to seek the approval of the Arrangement by Far West Securityholders, (ii) recommend to holders of Far West Shares, Far West Options and Far West Warrants that they vote in favour of the Arrangement Resolution, (iii) not make a Far West Change in Recommendation and (iv) include in the Far West Circular a statement that each director and officer of Far West intends to vote all of such Person’s Far West Shares, Far West Options and Far West Warrants (including any Far West Shares issued upon the exercise of any Far West Options and Far West Warrants) in favour of the Arrangement Resolution, subject to the other terms of this Agreement and the Voting Agreements.

(e) Capstone shall provide to Far West all information regarding Capstone, its affiliates and the Consideration Shares, including any pro forma financial statements prepared in accordance with GAAP and applicable Laws as required by the Interim Order or applicable Laws for inclusion in the Far West Circular or in any amendments or supplements to such Far West Circular. Capstone shall also use commercially reasonable efforts to obtain any necessary consents from any of its auditors and any other advisors to the use of any financial, technical or other expert information required to be included in the Far West Circular and to the identification in the Far West Circular of each such advisor. Capstone shall ensure that such information shall be complete and correct in all material respects, shall comply in all material respects with all applicable Laws and, without limiting the generality of the foregoing, shall not include any misrepresentation.

(f) Capstone and its legal counsel shall be given a reasonable opportunity to review and comment on the Far West Circular prior to the Far West Circular being printed and filed with any Governmental Entity, and reasonable consideration shall be given to any comments made by Capstone and its legal counsel, provided that all information relating solely to Capstone, its affiliates and the Capstone Shares included in the Far West Circular shall be in form and content satisfactory to Capstone, acting reasonably. Far West shall provide Capstone with a final copy of the Far West Circular prior to the mailing to the Far West Securityholders.

(g) Capstone will indemnify and save harmless Far West and its representatives from and against any and all liabilities, claims, demands, losses, costs, damages and expenses to which Far West or any of its representatives may be subject or may suffer, in any way caused by, or arising, directly or indirectly, from or in consequence of:

(i) any misrepresentation or alleged misrepresentation in any information included in the Far West Circular that is provided by Capstone for the purpose of inclusion in the Far West Circular; and

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(ii) any order made, or any inquiry, investigation or proceeding pursuant to any Securities Laws or by any Governmental Entity, based on any misrepresentation or any alleged misrepresentation in any information provided by Capstone for the purpose of inclusion in the Far West Circular.

(h) Far West and Capstone shall each promptly notify each other if at any time before the Effective Date either becomes aware that the Far West Circular contains a misrepresentation, or that otherwise requires an amendment or supplement to the Far West Circular and the Parties shall co-operate in the preparation of any amendment or supplement to the Far West Circular as required or appropriate, and Far West shall promptly mail or otherwise publicly disseminate any amendment or supplement to the Far West Circular to Far West Securityholders and, if required by the Court or applicable Laws, file the same with any Governmental Entity and as otherwise required.

2.5 Preparation of Filings

Capstone and Far West shall co-operate and use their reasonable commercial efforts in good faith to take, or cause to be taken, all reasonable actions, including the preparation of any applications for Regulatory Approvals and other orders, registrations, consents, filings, rulings, exemptions, no-action letters, circulars and approvals required in connection with this Agreement and the Arrangement and the preparation of any required documents, in each case as reasonably necessary to discharge their respective obligations under this Agreement, the Arrangement and the Plan of Arrangement, and to complete any of transactions contemplated by this Agreement, including their obligations under applicable Laws. It is acknowledged and agreed that, except as set forth below, Capstone shall not be required to file a prospectus or similar document or otherwise become subject to the securities Laws of any jurisdiction (other than a Province of Canada) in order to complete the Arrangement. Capstone may elect, at its sole discretion, to make such securities and other regulatory filings in the United States, including state “blue sky” securities laws, or other jurisdictions as may be necessary or desirable in connection with the completion of the Arrangement. Far West shall provide to Capstone all information regarding Far West and its affiliates as required by applicable Securities Laws in connection with such filings. Far West shall also use commercially reasonable efforts to obtain any necessary consents from any of its auditors and any other advisors to the use of any financial, technical or other expert information required to be included in such filings and to the identification in such filings of each such advisor.

2.6 Final Order

If (a) the Interim Order is obtained; (b) the Arrangement Resolution is passed at the Far West Meeting by the Far West Securityholders as provided for in the Interim Order and as required by applicable Law; and (c) the Capstone Shareholder Approval is obtained, subject to the terms of this Agreement, Far West shall diligently pursue and take all steps necessary or desirable to have the hearing before the Court of the application for the Final Order held as soon as reasonably practicable and, in any event, within three (3) business days following the approval

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of the Arrangement Resolution at the Far West Meeting, unless otherwise agreed to by Capstone, acting reasonably.

2.7 Court Proceedings

Subject to the terms of this Agreement, Capstone will cooperate with and assist Far West in seeking the Interim Order and the Final Order, including by providing Far West on a timely basis any information required to be supplied by Capstone in connection therewith. Far West will provide legal counsel to Capstone with reasonable opportunity to review and comment upon drafts of all material to be filed with the Court in connection with the Arrangement, and will give reasonable consideration to all such comments. Subject to applicable Law, Far West will not file any material with the Court in connection with the Arrangement or serve any such material, and will not agree to modify or amend materials so filed or served, except as contemplated by this Section 2.7 or with Capstone’s prior written consent, such consent not to be unreasonably withheld, conditioned or delayed; provided that nothing herein shall require Capstone to agree or consent to any increase in Consideration or other modification or amendment to such filed or served materials that expands or increases Capstone’s obligations set forth in any such filed or served materials or under this Agreement or the Arrangement. Far West shall also provide to Capstone’s outside counsel on a timely basis copies of any notice of appearance or other Court documents served on Far West respect of the application for the Interim Order or the Final Order or any appeal therefrom and of any notice, whether written or oral, received by Far West indicating any intention to oppose the granting of the Interim Order or the Final Order or to appeal the Interim Order or the Final Order. Far West will ensure that all materials filed with the Court in connection with the Arrangement are consistent in all material respects with the terms of this Arrangement Agreement and the Plan of Arrangement. In addition, Far West will not object to legal counsel to Capstone making such submissions on the hearing of the motion for the Interim Order and the application for the Final Order as such counsel considers appropriate, provided that Far West is advised of the nature of any submissions prior to the hearing and such submissions are consistent with this Arrangement Agreement and the Plan of Arrangement. Far West will also oppose any proposal from any party that the Final Order contain any provision inconsistent with this Arrangement Agreement, and, if at any time after the issuance of the Final Order and prior to the Effective Date, Far West is required by the terms of the Final Order or by Law to return to Court with respect to the Final Order, it shall do so after notice to, and in consultation and cooperation with, Capstone.

2.8 Effective Date

On the later of (i) the second (2nd) business day after the satisfaction or, where not prohibited, the waiver (subject to applicable Law) of the conditions (excluding conditions that, by their terms, cannot be satisfied until the Effective Date, but subject to the satisfaction or, where not prohibited, the waiver of those conditions as of the Effective Date) set forth in Article 6 hereof, and (ii) the date that is three business days following the date of the Final Order, unless another time or date is agreed to in writing by the Parties, Far West shall file with the Registrar any records, information or other documents required to be filed with the Registrar in connection with the Arrangement. From and after the Effective Time, the Plan of Arrangement will have all of the effects provided by applicable Law, including the BCBCA. Far West agrees to amend the Plan of Arrangement at any time prior to the Effective Time in accordance with Section 8.4 of

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this Agreement to include such other terms determined to be necessary or desirable by Capstone, acting reasonably, provided that the Plan of Arrangement shall not be amended in any manner which (x) has the effect of reducing the Consideration or which is otherwise prejudicial to the Far West Shareholders or other parties to be bound by the Plan of Arrangement (other than in an insignificant manner); or (y) is inconsistent with the provisions of this Agreement; or (z) creates a reasonable risk of delay, impairment or impediment in any material respect to the receipt of any Regulatory Approval or satisfaction of any of the conditions set forth in Article 6 hereof. The closing of the Arrangement will take place at the offices of Blake, Cassels & Graydon LLP, Suite 2600, 595 Burrard Street, Three Bentall Centre, Vancouver, British Columbia at 8:00 a.m. on the Effective Date, or at such other time and place as may be agreed to by the Parties.

2.9 Payment of Consideration

Capstone will, following receipt by Far West of the Final Order and prior to the Effective Time, deposit in escrow with the Depositary the Consideration Shares and sufficient cash to satisfy the Consideration payable to the Far West Shareholders pursuant to the Plan of Arrangement (other than Far West Shareholders exercising Dissent Rights and who have not withdrawn their notice of objection).

2.10 Announcement and Shareholder Communications

Capstone and Far West shall each publicly announce the transactions contemplated hereby promptly following the execution of this Agreement by Capstone and Far West, the text and timing of each Party’s announcement to be approved by the other Party in advance, acting reasonably. Capstone and Far West agree to co-operate in the preparation of presentations, if any, to Far West Securityholders or the Capstone Shareholders regarding the transactions contemplated by this Agreement, and no Party shall (a) issue any press release or otherwise make public announcements with respect to this Agreement or the Plan of Arrangement without the consent of the other Party (which consent shall not be unreasonably withheld or delayed) or (b) make any filing with any Governmental Entity with respect thereto without prior consultation with the other Party; provided, however, that the foregoing shall be subject to each Party’s overriding obligation to make any disclosure or filing required under applicable Laws or stock exchange rules, and the Party making such disclosure shall use all commercially reasonable efforts to give prior oral or written notice to the other Party and reasonable opportunity to review or comment on the disclosure or filing, and if such prior notice is not possible, to give such notice immediately following the making of such disclosure or filing. To the extent possible, each Party shall provide prior notice to the other Party of any material public disclosure that it proposes to make regarding its business or operations, together with a draft copy of such disclosure. Such other Party and its legal counsel shall be given a reasonable opportunity to review and comment on such information prior to such information being disseminated publicly or filed with any Governmental Entity, and reasonable consideration shall be given to any comments made by such other Party and its counsel.

2.11 Withholding Taxes

Capstone, Far West and the Depositary shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable to any Person hereunder and from all

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dividends (including deemed dividends), interest or other amounts payable to any former Far West Securityholder such amounts as Capstone, Far West or the Depositary may be required or permitted to deduct and withhold therefrom under any provision of applicable Laws in respect of Taxes. To the extent that such amounts are so deducted, withheld and remitted, such amounts shall be treated for all purposes under this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.

2.12 List of Securityholders

At the reasonable request of Capstone from time to time, Far West shall provide Capstone with a list (in both written and electronic form) of the registered Far West Shareholders, together with their addresses and respective holdings of Far West Shares, with a list of the names and addresses and holdings of all persons having rights issued by the Far West to acquire Far West Shares (including holders of Far West Options and Far West Warrants) and a list of non-objecting beneficial owners of Far West Shares, together with their addresses and respective holdings of Far West Shares. Far West shall from time to time require that its registrar and transfer agent furnish Capstone with such additional information, including updated or additional lists of Far West Shareholders and lists of holdings and other assistance as Capstone may reasonably request.

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF FAR WEST

3.1 Representations and Warranties

Except as disclosed in the Far West Disclosure Letter (which shall make reference to the applicable section, subsection, paragraph or subparagraph below in respect of which such qualification is being made), Far West hereby represents and warrants to Capstone as follows, and acknowledges that Capstone is relying upon such representations and warranties in connection with the entering into of this Agreement:

(a) Organization and Qualification. Far West is duly continued and validly existing under the BCBCA and has full corporate power and authority to own its assets and conduct its business as now owned and conducted. Far West is duly qualified to carry on business and is in good standing in each jurisdiction in which the character of its properties or the nature of its activities makes such qualification necessary, except where the failure to be so qualified will not, individually or in the aggregate, have a Far West Material Adverse Effect. True and complete copies of the constating documents of Far West have been delivered or made available to Capstone, and Far West has not taken any action to amend or supersede such documents.

(b) Authority Relative to this Agreement. Far West has the requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by Far West and the consummation by Far West of the transactions contemplated by this Agreement have been duly authorized by the Far West Board and no other corporate

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proceedings on the part of Far West are necessary to authorize this Agreement. This Agreement has been duly executed and delivered by Far West and constitutes a valid and binding obligation of Far West, enforceable by Capstone against Far West in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency and other applicable Laws affecting the enforcement of creditors’ rights generally and subject to the qualification that equitable remedies may be granted only in the discretion of a court of competent jurisdiction.

(c) No Conflict; Required Filings and Consent. The execution and delivery by Far West of this Agreement and the performance by it of its obligations hereunder and the completion of the Arrangement will not violate, conflict with or result in a breach of any provision of the constating documents of Far West or those of any of its Subsidiaries, and except as would not, individually or in the aggregate, have or reasonably be expected to have a Far West Material Adverse Effect, will not: (a) violate, conflict with or result in a breach of: (i) any agreement, contract, indenture, deed of trust, mortgage, bond, instrument, Authorization, licence or permit to which Far West or any of its Subsidiaries is a party or by which Far West or any of its Subsidiaries is bound; or (ii) any Law to which Far West or any of its Subsidiaries is subject or by which Far West or any of its Subsidiaries is bound; (b) give rise to any right of termination, or the acceleration of any indebtedness, under any such agreement, contract, indenture, Authorization, deed of trust, mortgage, bond, instrument, licence or permit; or (c) give rise to any rights of first refusal or rights of first offer, trigger any change in control or influence provisions or any restriction or limitation under any such agreement, contract, indenture, Authorization, deed of trust, mortgage, bond, instrument, licence or permit, or result in the imposition of any Lien upon any of Far West’s assets or the assets of any of its Subsidiaries. Other than the Interim Order, the Final Order, the Far West Key Third Party Consents, filing with the Registrar any records, information or other documents required to be filed with him in connection with the Arrangement and Competition Act Approval, no Authorization, consent or approval of, or filing with, any other Person is necessary on the part of Far West for the consummation by Far West of its obligations in connection with the Arrangement under this Agreement or for the completion of the Arrangement not to cause or result in any loss of any rights or assets or any interest therein held by Far West or any of its Subsidiaries in any material properties, except for such Authorizations, consents, approvals and filings as to which the failure to obtain or make would not, individually or in the aggregate, prevent or materially delay consummation of the Arrangement or result in a Far West Material Adverse Effect.

(d) Subsidiaries. Far West does not have Subsidiaries or any interests in any Person, other than those listed on Schedule 3.1(d) to the Far West Disclosure Letter. Each Subsidiary of Far West is duly organized and is validly existing under the Laws of its jurisdiction of incorporation or organization, has full corporate power and authority to own its assets and conduct its business as now owned and conducted by it and is duly qualified to carry on business in each jurisdiction in which the

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character of its properties or the nature of its activities makes such qualification necessary, except where the failure to be so qualified would not have a Far West Material Adverse Effect. Except as disclosed on Schedule 3.1(d) of the Far West Disclosure Letter, Far West beneficially owns, directly or indirectly, all of the issued and outstanding securities of each of its Subsidiaries. All of the outstanding shares in the capital of each of the Subsidiaries that is a corporation are: (a) validly issued, fully-paid and non-assessable and all such shares are owned free and clear of all pledges, security interests, liens, claims or encumbrances of any kind or nature whatsoever; and (b) are free of any other restrictions including any restriction on the right to vote, sell or otherwise dispose of shares. Far West does not hold any equity interest, or right to acquire an equity interest, in any Person, other than its interests in the Subsidiaries listed on Schedule 3.1(d) to the Far West Disclosure Letter.

(e) Compliance with Laws.

(i) The operations of Far West and its Subsidiaries have been and are now conducted in compliance with all Laws of each jurisdiction, the Laws of which have been and are now applicable to the operations of Far West or of any of its Subsidiaries and none of Far West or any of its Subsidiaries has received any notice of any alleged violation of any such Laws, other than non-compliance or violations which, individually or in the aggregate, would not have a Far West Material Adverse Effect.

(ii) None of Far West or any of its Subsidiaries is in conflict with, or in default (including cross defaults) under or in violation of: (a) its articles or by-laws or equivalent organizational documents; or (b) any agreement or understanding to which it or by which any of its properties or assets is bound or affected, except for failures which, individually or in the aggregate, would not have a Far West Material Adverse Effect.

(f) Company Authorizations. Far West and its Subsidiaries have obtained all Authorizations necessary for the ownership, operation, development, maintenance, or use of the material assets of Far West or its Subsidiaries or otherwise in connection with the material business or operations of Far West or its Subsidiaries and such Authorizations are in full force and effect. Far West and its Subsidiaries have fully complied with and are in compliance with all Authorizations, except, in each case, for such non-compliance which, individually or in the aggregate, would not have a Far West Material Adverse Effect. There is no action, investigation or proceeding pending or, to the knowledge of Far West, threatened regarding any of the Authorizations. None of Far West or any of its Subsidiaries has received any notice, whether written or oral, of revocation or non-renewal of any such Authorizations, or of any intention of any Person to revoke or refuse to renew any of such Authorizations, except in each case, for revocations or non-renewals which, individually or in the aggregate, would not have a Far West Material Adverse Effect and, to the knowledge of Far West, all such Authorizations continue to be effective in order for Far West and its

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Subsidiaries to continue to conduct their respective businesses as they are currently being conducted. No Person other than Far West or a Subsidiary thereof owns or has any proprietary, financial or other interest (direct or indirect) in any of the Authorizations.

(g) Capitalization and Listing.

(i) The authorized share capital of Far West consists of an unlimited number of Far West Shares and an unlimited number of preferred shares. As at the date of this Agreement there are: (A) 65,209,876 Far West Shares validly issued and outstanding as fully-paid and non-assessable shares of Far West; (B) outstanding Far West Options providing for the issuance of 6,152,000 Far West Shares upon the exercise thereof; (C) outstanding Far West Warrants providing for the issuance of 7,548,821 Far West Shares upon the exercise thereof; and (D) rights to purchase Far West Shares under the Far West Shareholder Rights Plan. The material terms of the Far West Options and Far West Warrants (including exercise price) are disclosed in Schedule 3.1(g) to the Far West Disclosure Letter. Except for the securities referred to in this Subsection 3.1(g)(i) and, except for the pre-emptive rights granted to QuadraFNX under the QuadraFNX Subscription Agreement, there are no options, warrants, conversion privileges, calls or other rights, shareholder rights plans, agreements, arrangements, commitments, or obligations of Far West or any of its Subsidiaries to issue or sell any shares of Far West or of any of its Subsidiaries or securities or obligations of any kind convertible into, exchangeable for or otherwise carrying the right or obligation to acquire any shares of Far West or any of its Subsidiaries, and there are no outstanding stock appreciation rights, phantom equity or similar rights, agreements, arrangements or commitments of Far West or any of its Subsidiaries based upon the book value, income or any other attribute of Far West or any of its Subsidiaries. The Far West Shares are listed on the TSX, and are not listed or quoted on any market other than the TSX.

(ii) Schedule 3.1(g) to the Far West Disclosure Letter sets forth, as of the date hereof, the holders of all outstanding Far West Options and Far West Warrants and the number, exercise prices and expiration dates of each grant to such holders. All Far West Shares that may be issued pursuant to the exercise of outstanding Far West Options and Far West Warrants will, when issued in accordance with the terms of the Far West Options or Far West Warrants, as the case may be, be duly authorized, validly issued, fully-paid and non-assessable and are not and will not be subject to or issued in violation of, any pre-emptive rights.

(iii) There are no outstanding contractual obligations of Far West or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Far West Shares or any shares of any of its Subsidiaries. No Subsidiary of Far West owns any Far West Shares.

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(iv) No order ceasing or suspending trading in securities of Far West nor prohibiting the sale of such securities has been issued and is outstanding against Far West or its directors, officers or promoters.

(h) Shareholder and Similar Agreements. Far West is not party to any shareholder, pooling, voting trust or other similar agreement relating to the issued and outstanding shares in the capital of Far West or any of its Subsidiaries.

(i) U.S. Securities Law Matters.

(i) Far West is a “foreign private issuer” as defined in Rule 3b-4 under the U.S. Exchange Act.

(ii) There is no class of securities of Far West which is registered pursuant to Section 12 of the U.S. Exchange Act, nor is Far West subject to any reporting obligation pursuant to s.15(d) of the U.S. Exchange Act. Far West is not, and has never been, subject to any requirement to register any class of its equity securities pursuant to s.12(g) of the U.S. Exchange Act.

(iii) Far West is not an investment company registered or required to be registered under the U.S. Investment Company Act of 1940, as amended.

(iv) The Far West Shares have not been traded on any national securities exchange in the United States during the past 12 calendar months, and will not be so traded prior to the Effective Date.

(j) Reports. Far West has filed with all applicable Governmental Entities true and complete copies of the Far West Public Documents that Far West is required to file therewith. All forms, reports, schedules, statements and other documents filed by Far West under applicable Securities Laws since December 31, 2009 at the time filed: (a) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (b) complied in all material respects with the requirements of applicable Securities Laws. Far West has not filed any confidential material change report with any Governmental Entity which at the date hereof remains confidential.

(k) Financial Statements.

(i) The audited consolidated financial statements for Far West as at and for each of the fiscal years ended on December 31, 2010, December 31, 2009, and December 31, 2008 including the notes thereto and the reports by Far West’s auditors thereon have been, and all financial statements of Far West which are publicly disseminated by Far West in respect of any subsequent periods prior to the Effective Date will be, prepared in accordance with GAAP applied on a basis consistent with prior periods and all applicable Laws and present fairly, in all material respects, the

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assets, liabilities (whether accrued, absolute, contingent or otherwise), consolidated financial position and results of operations of Far West and its Subsidiaries as of the respective dates thereof and its results of operations and cash flows for the respective periods covered thereby (except as may be indicated expressly in the notes thereto). There are no outstanding loans made by Far West or any of its Subsidiaries to any executive officer or director of Far West.

(ii) The management of Far West has established and maintained a system of disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed by Far West in its annual filings, interim filings or other reports filed or submitted by it under the applicable Laws imposed by Governmental Entities is recorded, processed, summarized and reported within the time periods specified in such Laws imposed by such Governmental Entities. Such disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by Far West in its annual filings, interim filings or other reports filed or submitted under the applicable Laws imposed by Governmental Entities is accumulated and communicated to Far West’s management, including its chief executive officers and chief financial officers (or Persons performing similar functions), as appropriate to allow timely decisions regarding required disclosure.

(iii) Far West maintains internal control over financial reporting. Such internal control over financial reporting is effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes policies and procedures that: (A) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of Far West and its Subsidiaries; (B) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of Far West and its Subsidiaries are being made only with Authorizations of management and directors of Far West and its Subsidiaries; and (C) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of Far West or its Subsidiaries that could have a material effect on its financial statements. To the knowledge of Far West, prior to the date of this Agreement: (x) there are no significant deficiencies in the design or operation of, or material weaknesses in, the internal controls over financial reporting of Far West that are reasonably likely to adversely affect the ability of Capstone to record, process, summarize and report financial information; and (y) there is no fraud, whether or not material, that involves management or other employees who have a significant role in the internal control over financial reporting of Far West.

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(iv) Since December 31, 2010, neither Far West nor any of its Subsidiaries nor, to Far West’s knowledge, any director, officer, employee, auditor, accountant or representative of Far West or any of its Subsidiaries has received or otherwise had or obtained knowledge of any complaint, allegation, assertion, or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of Far West or any of its Subsidiaries or their respective internal accounting controls, including any complaint, allegation, assertion, or claim that Far West or any of its Subsidiaries has engaged in questionable accounting or auditing practices, which has not been resolved to the satisfaction of the audit committee of the Board.

(l) Undisclosed Liabilities. Except as disclosed in Schedule 3.1(l) of the Far West Disclosure Letter, neither Far West nor any of its Subsidiaries has any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, except for: (a) liabilities and obligations that are specifically presented on the audited balance sheet of Far West as of December 31, 2010 (the “Far West Balance Sheet”) or disclosed in the notes thereto; or (b) liabilities and obligations incurred in the ordinary course of business consistent with past practice since December 31, 2010, that are not and would not, individually or in the aggregate with all other liabilities and obligations of Far West and its Subsidiaries (other than those disclosed on the Far West Balance Sheet and/or in the notes to the Far West financial statements), reasonably be expected to have a Far West Material Adverse Effect, or have a Far West Material Adverse Effect, or, as a consequence of the consummation of the Arrangement, have a Far West Material Adverse Effect. Without limiting the foregoing, the Far West Balance Sheet reflects reasonable reserves in accordance with GAAP for contingent liabilities relating to pending litigation and other contingent obligations of Far West and its Subsidiaries except as disclosed in the Far West Disclosure Letter.

(m) Interest in Properties and Mineral Rights.

(i) All of Far West’s and its Subsidiaries’ real properties (collectively, and where material, the “Far West Property”) and all of Far West’s and its Subsidiaries’ mineral interests and rights (including any material claims, concessions, exploration licences, exploitation licences, prospecting permits, mining leases and mining rights, in each case, either existing under contract, by operation of Law or otherwise) (collectively, and where material, the “Far West Mineral Rights”), are set out in Schedule 3.1(m)(i) of the Far West Disclosure Letter. Other than the Far West Property and the Far West Mineral Rights set out in Schedule 3.1(m)(i) of the Far West Disclosure Letter, neither Far West nor its Subsidiaries, owns or has any interest in any real property or any mineral interests and rights. Schedule E hereto contains a true, complete and accurate description of all of the mineral interests and rights that comprise Far West’s Santo Domingo project in Chile.

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(ii) Except as disclosed on Schedule 3.1(m)(ii) of the Far West Disclosure Letter, Far West or a Subsidiary of Far West is the sole legal and beneficial owner of all right, title and interest in and to the Far West Property and the Far West Mineral Rights, free and clear of any Liens.

(iii) All of the Far West Mineral Rights have been properly located and recorded in compliance with applicable Law and are comprised of valid and subsisting mineral claims.

(iv) The Far West Property and the Far West Mineral Rights are in good standing under applicable Law and, to the knowledge of Far West, all work required to be performed and filed in respect thereof has been performed and filed, all Taxes, rentals, fees, expenditures and other payments in respect thereof have been paid or incurred and all filings in respect thereof have been made.

(v) There is no adverse claim against or challenge to the title to or ownership of the Far West Property or any of the Far West Mineral Rights.

(vi) Far West or a Subsidiary of Far West has the exclusive right to deal with the Far West Property and all of the Far West Mineral Rights.

(vii) Except as disclosed in Schedule 3.1(m)(vii) of the Far West Disclosure Letter, no Person other than Far West and its Subsidiaries has any interest in the Far West Property or any of the Far West Mineral Rights or the production or profits therefrom or any royalty in respect thereof or any right to acquire any such interest.

(viii) Except as disclosed in Schedule 3.1(m)(viii) of the Far West Disclosure Letter, there are no back-in rights, earn-in rights, rights of first refusal or similar provisions or rights which would affect Far West’s or a Subsidiary’s interest in the Far West Property or any of the Far West Mineral Rights.

(ix) There are no material restrictions on the ability of Far West and its Subsidiaries to use, transfer or exploit the Far West Property or any of the Far West Mineral Rights, except pursuant to the applicable Law.

(x) Neither Far West nor any of its Subsidiaries has received any notice, whether written or oral, from any Governmental Entity of any revocation or intention to revoke any interest of Far West or a Subsidiary in any of the Far West Property or any of the Far West Mineral Rights.

(xi) Far West and its Subsidiaries have all surface rights, including fee simple estates, leases, easements, rights of way and permits or licences operations from landowners or Governmental Entities permitting the use of land by Far West and its Subsidiaries, and mineral interests that are required to exploit the development potential of the Far West Property and the Far

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West Mineral Rights as contemplated in Far West Public Documents filed (and available on SEDAR) on or before the date hereof and no third party or group holds any such rights that would be required by Far West to develop the Far West Property or any of the Far West Mineral Rights as contemplated in Far West Public Documents filed (and available on SEDAR) on or before the date hereof.

(xii) All mines located in or on the lands of Far West or any of its Subsidiaries, or lands pooled or unitized therewith, which have been abandoned by Far West or any of its Subsidiaries, have been abandoned in accordance with good mining practices and in compliance with all applicable Laws, and all future abandonment, remediation and reclamation obligations known to Far West as of the date hereof have been accurately set forth in Far West Public Documents without omission of information necessary to make the disclosure not misleading

(n) Mineral Resources. The mineral resource estimates for the Far West Property and the Far West Mineral Rights, as set forth in Schedule 3.1(n) of the Far West Disclosure Letter, were prepared in all material respects in accordance with sound mining, engineering, geoscience and other applicable industry standards and practices, and in all material respects in accordance with all applicable Laws, including the requirements of National Instrument 43-101 – Standards of Disclosure for Mineral Projects. There has been no material reduction in the aggregate amount of estimated mineral resources or mineralized material of Far West, its Subsidiaries and its material joint ventures, taken as a whole, from the amounts set forth in the Far West Public Documents. All information regarding the Far West Property and the Far West Mineral Rights, including all drill results, technical reports and studies that are required to be disclosed at Law, have been disclosed in the Far West Public Documents on or before the date hereof.

(o) Operational Matters. Except as would not, individually or in the aggregate, be reasonably expected to result in a Far West Material Adverse Effect:

(i) all rentals, royalties, overriding royalty interests, production payments, net profits, interest burdens, payments and obligations due and payable, or performable, as the case may be, on or prior to the date hereof under, with respect to, or on account of, any direct or indirect assets of Far West, its Subsidiaries and its material joint ventures, have been: (A) duly paid; (B) duly performed; or (C) provided for prior for the date hereof; and

(ii) all costs, expenses, and liabilities payable on or prior to the date hereof under the terms of any contracts and agreements to which Far West or any of its Subsidiaries or material joint ventures is directly or indirectly bound have been properly and timely paid, except for such expenses that are being currently paid prior to delinquency in the ordinary course of business.

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(p) Employment Matters.

(i) Other than as disclosed in Far West’s management information circular dated April 12, 2010 or in Schedule 3.1(p) of the Far West Disclosure Letter, neither Far West nor any of its Subsidiaries has entered into any written or oral agreement or understanding providing for severance or termination payments to any director, officer or employee in connection with the termination of their position or their employment as a direct result of a change in control of Far West.

(ii) Except as disclosed in Schedule 3.1(p)(ii) of the Far West Disclosure Letter, neither Far West nor any of its Subsidiaries (i) is a party to any collective bargaining agreement, or (ii) is subject to any application for certification or, to the knowledge of Far West, threatened or apparent union-organizing campaigns for employees not covered under a collective bargaining agreement. To the knowledge of Far West, no fact or event exists that is likely to give rise to a change in the representation in this Subsection 3.1(p) on or before the Effective Date.

(iii) Neither Far West nor any of its Subsidiaries is subject to any claim for wrongful dismissal, constructive dismissal or any other tort claim, actual or, to the knowledge of Far West, threatened, or any litigation actual, or to the knowledge of Far West, threatened, relating to employment or termination of employment of employees or independent contractors, except for such claims or litigation which individually or in the aggregate would not be reasonably to be expected to have a Far West Material Adverse Effect. To the knowledge of Far West, no labour strike, lock-out, slowdown or work stoppage is pending or threatened against or directly affecting Far West.

(iv) Far West and its Subsidiaries have operated in accordance with all applicable Laws with respect to employment and labour, including employment and labour standards, occupational health and safety, employment equity, pay equity, workers’ compensation, human rights, labour relations and privacy and there are no current, pending, or to the knowledge of Far West, threatened proceedings before any board or tribunal with respect to any of the areas listed herein, except where the failure to so operate would not have a Far West Material Adverse Effect.

(q) Absence of Certain Changes or Events. Since December 31, 2010:

(i) Far West and its Subsidiaries have conducted their respective businesses only in the ordinary course of business and consistent with past practice;

(ii) no liability or obligation of any nature (whether absolute, accrued, contingent or otherwise) which has had or is reasonably likely to have a Far West Material Adverse Effect has been incurred;

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(iii) there has not been any event, circumstance or occurrence which has had or is reasonably likely to give rise to a Far West Material Adverse Effect;

(iv) except as required by GAAP, there has not been any change in the accounting practices used by Far West and its Subsidiaries;

(v) except as disclosed in Schedule 3.1(q)(v) of the Far West Disclosure Letter and except for ordinary course adjustments to non-executive employees, there has not been any increase in the salary, bonus, or other remuneration payable to any non-executive employees of any of Far West or its Subsidiaries;

(vi) there has not been any redemption, repurchase or other acquisition of Far West Shares by Far West, or any declaration, setting aside or payment of any dividend or other distribution (whether in cash, shares or property) with respect to the Far West Shares;

(vii) there has not been a material change in the level of accounts receivable or payable, inventories or employees, other than those changes in the ordinary course of business consistent with past practice;

(viii) there has not been any entering into, or an amendment of, any Material Contract other than in the ordinary course of business consistent with past practice;

(ix) except as disclosed in Schedule 3.1(q) of the Far West Disclosure Letter and there has not been any satisfaction or settlement of any claims or liabilities that were not reflected in Far West’s audited financial statements, other than the settlement of claims or liabilities incurred in the ordinary course of business consistent with past practice; and

(x) except for ordinary course adjustments, there has not been any increase in the salary, bonus, or other remuneration payable to any officers or senior or executive officers of Far West or its Subsidiaries.

(r) Litigation. Except as disclosed in Schedule 3.1(r) of the Far West Disclosure Letter, there is no claim, action, proceeding or investigation pending or, to the knowledge of Far West, threatened against or relating to Far West or any of its Subsidiaries, the business of Far West or any of its Subsidiaries or affecting any of their properties, assets, before or by any Governmental Entity which, if adversely determined, would have, or reasonably could be expected to have, a Far West Material Adverse Effect or prevent or materially delay the consummation of the Arrangement, nor to knowledge of Far West are there any events or circumstances which could reasonably be expected to give rise to any such claim, action, proceeding or investigation (provided that the representation in this Subsection 3.1(r) shall not apply to claims, actions, proceedings, or investigations which may arise after the date of this Agreement which do not have a reasonable prospect of succeeding or, if successful, would not give rise to, nor reasonably be

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expected to give rise to, a Far West Material Adverse Effect). Neither Far West nor any of its Subsidiaries is subject to any outstanding order, writ, injunction or decree which has had or is reasonably likely to have a Far West Material Adverse Effect or which would prevent or materially delay consummation of the transactions contemplated by this Agreement.

(s) Taxes.

(i) Each of Far West and the Subsidiaries has duly and in a timely manner made or prepared all Tax Returns required to be made or prepared by it, and duly and in a timely manner filed all Tax Returns required to be filed by it with the appropriate Governmental Entity, such Tax Returns were complete and correct in all material respects and Far West and each of its Subsidiaries has paid all Taxes, including instalments on account of Taxes for the current year required by applicable Law, which are due and payable by it whether or not assessed by the appropriate Governmental Entity and Far West has provided adequate accruals in accordance with GAAP in the most recently published financial statements of Far West for any Taxes of Far West and each of the Subsidiaries for the period covered by such financial statements that have not been paid whether or not shown as being due on any Tax Returns. Since such publication date, no material liability in respect of Taxes not reflected in such statements or otherwise provided for has been assessed, proposed to be assessed, incurred or accrued, other than in the ordinary course of business.

(ii) Each of Far West and the Subsidiaries has duly and timely withheld all Taxes and other amounts required by Law to be withheld by it (including Taxes and other amounts required to be withheld by it in respect of any amount paid or credited or deemed to be paid or credited by it to or for the benefit of any Person) and has duly and timely remitted to the appropriate Governmental Entity such Taxes or other amounts required by Law to be remitted by it.

(iii) Each of Far West and its Subsidiaries has duly and timely collected all amounts on account of any sales, use or transfer Taxes, including goods and services, harmonized sales, provincial and territorial taxes and state and local taxes, required by Law to be collected by it and has duly and timely remitted to the appropriate Governmental Entity such amounts required by Law to be remitted by it.

(iv) None of Far West or any of the Subsidiaries has made, prepared and/or filed any elections, designations or similar filings relating to Taxes or entered into any agreement or other arrangement in respect of Taxes or Tax Returns that has effect for any period ending after the Closing Date.

(v) Except as disclosed as Schedule 3.1(s)(v) of the Far West Disclosure Letter, there are no proceedings, investigations, audits or claims now

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pending or threatened against Far West or any of its Subsidiaries in respect of any Taxes and there are no matters under discussion, audit or appeal with any Governmental Entity relating to Taxes.

(vi) None of Far West or any of its Subsidiaries has acquired property from a non-arm’s length Person, within the meaning of the Tax Act: (i) for consideration the value of which is less than the fair market value of the property; or (ii) as a contribution of capital for which no shares were issued by the acquirer of the property.

(vii) Far West has made available to Capstone copies of all Tax Returns for the years 2010 and 2009 and all written communication to or from any Governmental Entity relating to the Taxes of any of Far West and its Subsidiaries, including, but not limited to, any closing agreements under Section 7121 of the Code or any similar provision of state, local or non-U.S. law or any private letter ruling of the Internal Revenue Service or comparable ruling of any other Governmental Entity, to the extent relating to periods or events in respect of which any Governmental Entity may by Law assess or otherwise impose any such tax on Far West or any of its Subsidiaries.

(viii) For the purposes of the Tax Act and any other relevant Tax purposes:

(A) Far West is resident in Canada; and

(B) Each of the Subsidiaries of Far West is resident in the jurisdiction in which it was formed, and is not resident in any other country.

(ix) There are no Liens for Taxes upon any properties or assets of Far West or any of its Subsidiaries (other than Liens relating to Taxes not yet due and payable and for which adequate reserves have been recorded on the most recent balance sheet included in Far West’s audited financial statements).

(t) Books and Records. The corporate records and minute books of Far West and its Subsidiaries have been maintained in accordance with all applicable Laws, and the minute books of Far West and its Subsidiaries as provided to Capstone are complete and accurate in all material respects. The corporate minute books for Far West and its Subsidiaries contain minutes of all meetings and resolutions of the directors and securityholders held. The financial books and records and accounts of Far West and its Subsidiaries in all material respects: (a) have been maintained in accordance with good business practices and in accordance with GAAP and with the accounting principles generally accepted in the country of domicile of each such entity, on a basis consistent with prior years; (b) are stated in reasonable detail and, in the case of its Subsidiaries, during the period of time when owned by Far West, accurately and fairly reflect the transactions and dispositions of assets of Far West and its Subsidiaries; and (c) in the case of the

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Subsidiaries, during the period of time when owned by Far West, accurately and fairly reflect the basis for Far West’s consolidated financial statements.

(u) Insurance.

(i) Far West has in place reasonable and prudent insurance policies appropriate for its size, nature and stage of development. All premiums payable prior to the date hereof under such policies of insurance have been paid and neither Far West nor any of its Subsidiaries has failed to make a claim thereunder on a timely basis.

(ii) Each of such policies and other forms of insurance is in full force and effect on the date hereof and shall (or comparable replacement or substitutions therefore shall) be kept in full force and effect by Far West through the Effective Date. No written (or to the knowledge of Far West other) notice of cancellation or termination has been received by Far West or any Subsidiary with respect to any such policy.

(v) Non-Arm’s Length Transactions. Except as disclosed in Schedule 3.1(p) or Schedule 3.1(v) of the Far West Disclosure Letter, there are no current contracts, commitments, agreements, arrangements or other transactions (including relating to indebtedness by Far West or any of its Subsidiaries) between Far West or any of its Subsidiaries on the one hand, and any (a) officer or director of Far West or any of its Subsidiaries, (b) any holder of record or, to the knowledge of Far West, beneficial owner of five percent or more of the voting securities of Far West, or (c) any affiliate or associate of any officer, director or beneficial owner, on the other hand.

(w) Benefit Plans.

(i) Schedule 3.1(w) of the Far West Disclosure Letter contains a true and complete list of all pension plans, deferred compensation plans, retirement income plans, stock option or stock purchase plans, profit sharing plans, bonus plans, employee benefit plans or policies, employee group insurance plans, programs or policies, formal or informal, with respect to Far West’s employees (collectively, the “Far West Benefit Plans”). Complete copies of all Far West Benefit Plans including, but not limited to, any trust instruments, insurance contracts and all amendments thereto have been provided to Capstone.

(ii) Far West and its Subsidiaries have no liability for life, health, medical or other welfare benefits to former employees or beneficiaries or dependents thereof, and there has been no communication to employees by Far West or any of its Subsidiaries which could reasonably be interpreted to promise or guarantee such employees retiree health or life insurance or other retiree death benefits on a permanent basis.

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(iii) No Far West Benefit Plan is a “registered pension plan” as such term is defined in the Tax Act.

(iv) Each Far West Benefit Plan has been operated in accordance with its terms and any contributions required to be made under each Far West Benefit Plan, as of the date hereof, have been timely made and all obligations in respect of each Far West Benefit Plan have been properly accrued and reflected in the audited consolidated financial statements for Far West as at and for the fiscal year ended on December 31, 2010, including the notes thereto and the report by Far West’s auditors thereon.

(v) There has been no amendment to, announcement by Far West or any of its Subsidiaries relating to, or change in employee participation or coverage under, any Far West Benefit Plan which would increase materially the expense of maintaining such plan above the level of the expense incurred therefor for the most recent fiscal year. Except as disclosed on Schedule 3.1(w)(v) of the Far West Disclosure Letter neither the execution of this Agreement, nor the consummation of the Arrangement will (i) entitle any employees of Far West or any of its Subsidiaries to severance pay or any increase in severance pay upon any termination of employment after the date hereof, (ii) accelerate the time of payment or vesting or result in any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, increase the amount payable or result in any other material obligation pursuant to, any of the Far West Benefit Plans, or (iii) limit or restrict the right of Far West or, after the consummation of the Arrangement, Capstone to merge, amend or terminate any of the Far West Benefit Plans.

(x) Environmental. Except for any matters that, individually or in the aggregate, would not have or would not reasonably be expected to have a Far West Material Adverse Effect:

(i) all facilities and operations of Far West and its Subsidiaries have been conducted, and are now, in compliance with all Environmental Laws;

(ii) Far West and its Subsidiaries are in possession of, and in compliance with, all Environmental Permits that are required to own, lease and operate the Far West Property and Far West Mineral Rights and to conduct their respective business as they are now being conducted;

(iii) no environmental, reclamation or closure obligation, demand, notice, work order or other liabilities presently exist with respect to any portion of any currently or formerly owned, leased, used or otherwise controlled property, interests and rights or relating to the operations and business of Far West and its Subsidiaries and, to the knowledge of Far West, there is no basis for any such obligations, demands, notices, work orders or

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liabilities to arise in the future as a result of any activity in respect of such property, interests, rights, operations and business;

(iv) neither Far West nor any of its Subsidiaries is subject to any proceeding, application, order or directive which relates to environmental, health or safety matters, and which may require any material work, repairs, construction or expenditures;

(v) to the knowledge of Far West, there are no changes in the status, terms or conditions of any Environmental Permits held by Far West or any of its Subsidiaries or any renewal, modification, revocation, reassurance, alteration, transfer or amendment of any such environmental approvals, consents, waivers, permits, orders and exemptions, or any review by, or approval of, any Governmental Entity of such environmental approvals, consents, waivers, permits, orders and exemptions that are required in connection with the execution or delivery of this Agreement, the consummation of the transactions contemplated herein or the continuation of the business of Far West or any of its Subsidiaries following the Effective Date;

(vi) Far West and its Subsidiaries have made available to Capstone all material audits, assessments, investigation reports, studies, plans, regulatory correspondence and similar information with respect to environmental matters; and

(vii) to the knowledge of Far West, Far West and its Subsidiaries are not subject to any past or present fact, condition or circumstance that could reasonably be expected to result in liability under any Environmental Laws that would individually or in the aggregate, constitute a Far West Material Adverse Effect.

(y) Restrictions on Business Activities. There is no agreement, judgement, injunction, order or decree binding upon Far West or any Subsidiary that has or could reasonably be expected to have the effect of prohibiting, restricting or materially impairing any business practice of Far West or any Subsidiary, any acquisition of property by Far West or any Subsidiary or the conduct of business by Far West or any Subsidiary as currently conducted (including following the transaction contemplated by this Agreement) other than such agreements, judgements, injunctions, orders or decrees which would not, individually or in the aggregate, reasonably be expected to have a Far West Material Adverse Effect.

(z) Material Contracts. Schedule 3.1(z) of the Far West Disclosure Letter sets forth all Material Contracts of Far West. Far West and its Subsidiaries have performed in all material respects all respective obligations required to be performed by them to date under the Material Contracts. Neither Far West nor any of its Subsidiaries is in breach or default under any Material Contract to which it is a party or bound, nor does Far West have knowledge of any condition that with the passage of time

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or the giving of notice or both would result in such a breach or default, except in each case where any such breaches or defaults would not, individually or in the aggregate, reasonably be expected to result in, or result in, a Far West Material Adverse Effect. Neither Far West nor any Subsidiary of Far West knows of, or has received written notice of, any breach or default under (nor, to the knowledge of Far West, does there exist any condition which with the passage of time or the giving of notice or both would result in such a breach or default under) any such Material Contract by any other party thereto except where any such violation or default would not, individually or in the aggregate, reasonably be expected to result in, or result in, a Far West Material Adverse Effect. Prior to the date hereof, Far West has made available to Capstone true and complete copies of all of the Material Contracts of Far West. All Material Contracts are legal, valid, binding and in full force and effect and are enforceable by Far West (or a Subsidiary thereof, as the case may be) in accordance with their respective terms (subject to bankruptcy, insolvency and other applicable Laws affecting creditors’ rights generally, and to general principles of equity) and are the product of fair and arms’ length negotiations between the parties thereto.

(aa) Relationships with Customers and Suppliers. Far West has not received any written (or to the knowledge of Far West other) notice that any customer or supplier intends to cancel, terminate or otherwise modify or not renew its relationship with Far West or any Subsidiary, and, to the knowledge of Far West, no such action has been threatened, which, in either case, individually or in the aggregate, would reasonably be expected to have a Far West Material Adverse Effect.

(bb) Brokers. Except for the fee to be paid to BMO Nesbitt Burns Inc. pursuant to its engagement letter with Far West, a true and complete copy of which has been delivered to Capstone, none of Far West, any of its Subsidiaries, or any of their respective officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finder’s fees in connection with the transactions contemplated by this Agreement. An estimate of the amount of the fee payable to BMO Nesbitt Burns Inc. on the Effective Date in connection with the Arrangement is set out in Schedule 3.1(bb) to the Far West Disclosure Letter.

(cc) Reporting Issuer Status. As of the date hereof, Far West is a reporting issuer not in default under the Securities Laws of the Provinces of British Columbia, Alberta and Ontario.

(dd) Stock Exchange Compliance. Far West is in compliance in all material respects with the applicable listing and corporate governance rules and regulations of the TSX.

(ee) No Expropriation. No property or asset of Far West or its Subsidiaries (including any Far West Property or Far West Mineral Rights) has been taken or expropriated by any Governmental Entity nor has any notice or proceeding in

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respect thereof been given or commenced nor, to the knowledge of Far West, is there any intent or proposal to give any such notice or to commence any such proceeding.

(ff) Corrupt Practices Legislation. Neither Far West, its Subsidiaries and affiliates, nor any of their respective officers, directors or employees acting on behalf of Far West or any of its Subsidiaries or affiliates has taken, committed to take or been alleged to have taken any action which would cause Far West or any of its Subsidiaries or affiliates to be in violation of the United States’ Foreign Corrupt Practices Act (and the regulations promulgated thereunder), the Corruption of Foreign Public Officials Act (Canada) (and the regulations promulgated thereunder) or any applicable Law of similar effect of Chile, Australia or any other jurisdiction, and to the knowledge of Far West no such action has been taken by any of its agents, representatives or other Persons acting on behalf of Far West or any of its Subsidiaries or affiliates.

(gg) Competition Act. Neither the aggregate value of Far West’s assets in Canada nor Far West’s gross revenues from sales in or from Canada, as calculated in accordance with the Competition Act, exceed the applicable thresholds for notifiable transactions under Part IX of the Competition Act.

3.2 Survival of Representations and Warranties

The representations and warranties of Far West contained in this Agreement shall not survive the completion of the Arrangement and shall expire and be terminated on the earlier of the Effective Time and the date on which this Agreement is terminated in accordance with its terms.

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF CAPSTONE

4.1 Representations and Warranties

Except as disclosed in the Capstone Disclosure Letter (which shall make reference to the applicable section, subsection, paragraph or subparagraph below in respect of which such qualification is being made) Capstone hereby represents and warrants to Far West as follows, and acknowledges that Far West is relying upon such representations and warranties in connection with the entering into of this Agreement:

(a) Organization and Qualification. Capstone is duly incorporated and validly existing under the BCBCA and has full corporate power and authority to own its assets and conduct its business as now owned and conducted. Capstone is duly qualified to carry on business and is in good standing in each jurisdiction in which the character of its properties or the nature of its activities makes such qualification necessary, except where the failure to be so qualified will not, individually or in the aggregate, have a Capstone Material Adverse Effect. True and complete copies of the constating documents of Capstone have been delivered

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or made available to Far West, and Capstone has not taken any action to amend or supersede such documents.

(b) Authority Relative to this Agreement and the KORES Agreements. Capstone has the requisite corporate power and authority to enter into this Agreement and the KORES Agreements and to perform its obligations hereunder and thereunder. The execution and delivery of this Agreement and the KORES Agreements by Capstone and the consummation by Capstone of the transactions contemplated by this Agreement and the KORES Agreements have been duly authorized by the board of directors of Capstone and no other corporate proceedings on the part of Capstone are necessary to authorize this Agreement and the KORES Agreements. This Agreement and the KORES Agreements (other than the AcquisitionCo Shareholders Agreement) have been duly executed and delivered by Capstone and this Agreement constitutes a valid and binding obligation of Capstone, enforceable by Far West against Capstone in accordance with its terms and the KORES Agreements (other than the AcquisitionCo Shareholders Agreement) constitute valid and binding obligations of Capstone, enforceable by KORES against Capstone in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency and other applicable Laws affecting the enforcement of creditors’ rights generally and subject to the qualification that equitable remedies may be granted only in the discretion of a court of competent jurisdiction. In addition, the copies of the KORES Agreements (other than the AcquisitionCo Shareholders Agreement) provided by Capstone to Far West on the date of this Agreement are true and correct copies of such agreements.

(c) No Conflict; Required Filings and Consent. The execution and delivery by Capstone of this Agreement and the KORES Agreements and the performance by it of its obligations hereunder and thereunder and the completion of the Arrangement will not violate, conflict with or result in a breach of any provision of the constating documents of Capstone or those of any of the Capstone Material Subsidiaries, and except as would not, individually or in the aggregate, have or reasonably be expected to have a Capstone Material Adverse Effect, will not: (a) violate, conflict with or result in a breach of: (i) any agreement, contract, indenture, deed of trust, mortgage, bond, instrument, Authorization, licence or permit to which Capstone or any of the Capstone Material Subsidiaries is a party or by which Capstone or any of the Capstone Material Subsidiaries is bound; or (ii) any Law to which Capstone or any of the Capstone Material Subsidiaries is subject or by which Capstone or any of the Capstone Material Subsidiaries is bound; (b) give rise to any right of termination, or the acceleration of any indebtedness, under any such agreement, contract, indenture, Authorization, deed of trust, mortgage, bond, instrument, licence or permit; or (c) give rise to any rights of first refusal or rights of first offer, trigger any change in control or influence provisions or any restriction or limitation under any such agreement, contract, indenture, Authorization, deed of trust, mortgage, bond, instrument, licence or permit, or result in the imposition of any Lien upon any of Capstone’s assets or the assets of any of the Capstone Material Subsidiaries. Other than

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Capstone Shareholder Approval, the Capstone Key Third Party Consents applicable to Capstone, state “blue sky” securities law filings and conditional listing approval of the TSX, no Authorization, consent or approval of, or filing with, any other Person is necessary on the part of Capstone for the consummation by Capstone of its obligations in connection with the Arrangement under this Agreement, its obligations under the KORES Agreements or for the completion of the Arrangement not to cause or result in any loss of any rights or assets or any interest therein held by Capstone or any of the Capstone Material Subsidiaries in any material properties, except for such Authorizations, consents, approvals and filings as to which the failure to obtain or make would not, individually or in the aggregate, prevent or materially delay consummation of the transactions contemplated by this Agreement or the KORES Agreements or result in a Capstone Material Adverse Effect.

(d) Subsidiaries. Each Capstone Material Subsidiary is duly organized and is validly existing under the Laws of its jurisdiction of incorporation or organization, has full corporate power and authority to own its assets and conduct its business as now owned and conducted by it and is duly qualified to carry on business in each jurisdiction in which the character of its properties or the nature of its activities makes such qualification necessary, except where the failure to be so qualified would not have a Capstone Material Adverse Effect. Except as disclosed in Schedule 4.1(d) of the Capstone Disclosure Letter, Capstone beneficially owns, directly or indirectly, all of the issued and outstanding securities of each of the Capstone Material Subsidiaries. All of the outstanding shares in the capital of each of the Capstone Material Subsidiaries that is a corporation are: (a) validly issued, fully-paid and non-assessable and all such shares are owned free and clear of all pledges, security interests, liens, claims or encumbrances of any kind or nature whatsoever; and (b) are free of any other restrictions including any restriction on the right to vote, sell or otherwise dispose of shares. Capstone does not have any material equity interests, other than its interests in the Capstone Material Subsidiaries.

(e) Compliance with Laws.

(i) The operations of Capstone and the Capstone Material Subsidiaries have been and are now conducted in compliance with all Laws of each jurisdiction, the Laws of which have been and are now applicable to the operations of Capstone or of any of the Capstone Material Subsidiaries of Capstone and none of Capstone or any of the Capstone Material Subsidiaries has received any notice of any alleged violation of any such Laws, other than non-compliance or violations which, individually or in the aggregate, would not have a Capstone Material Adverse Effect.

(ii) None of Capstone or any of its Subsidiaries is in conflict with, or in default (including cross defaults) under or in violation of: (a) its articles or by-laws or equivalent organizational documents; or (b) any agreement or understanding to which it or by which any of its properties or assets is

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bound or affected, except for failures which, individually or in the aggregate, would not have a Capstone Material Adverse Effect.

(f) Capstone Authorizations. Capstone and the Capstone Material Subsidiaries have obtained all Authorizations necessary for the ownership, operation, development, maintenance, or use of the material assets of Capstone or its Subsidiaries or otherwise in connection with the material business or operations of Capstone or its Subsidiaries and such Authorizations are in full force and effect. Capstone and the Capstone Material Subsidiaries have fully complied with and are in compliance with all Authorizations, except, in each case, for such non-compliance which, individually or in the aggregate, would not have a Capstone Material Adverse Effect. There is no action, investigation or proceeding pending or, to the knowledge of Capstone, threatened regarding any of the Authorizations. None of Capstone or any of the Capstone Material Subsidiaries has received any notice, whether written or oral, of revocation or non-renewal of any such Authorizations, or of any intention of any Person to revoke or refuse to renew any of such Authorizations, except in each case, for revocations or non-renewals which, individually or in the aggregate, would not have a Capstone Material Adverse Effect and, to the knowledge of Capstone, all such Authorizations continue to be effective in order for Capstone and the Capstone Material Subsidiaries to continue to conduct their respective businesses as they are currently being conducted. No Person other than Capstone or a Capstone Material Subsidiary thereof owns or has any proprietary, financial or other interest (direct or indirect) in any of the Authorizations.

(g) Capitalization and Listing.

(i) The authorized share capital of Capstone consists of an unlimited number of Capstone Shares. As at the date of this Agreement there are: (i) 203,945,873 Capstone Shares validly issued and outstanding as fully-paid and non-assessable shares of Capstone; (ii) outstanding options providing for the issuance of 12,786,994 Capstone Shares upon the exercise thereof; (iii) no outstanding warrants to purchase Capstone Shares, and (v) rights to purchase Capstone Shares under the Capstone shareholder rights plan. Except for the securities referred to in this Subsection 4.1(g)(i), there are no options, warrants, conversion privileges, calls or other rights, shareholder rights plans, agreements, arrangements, commitments, or obligations of Capstone or any of its Subsidiaries to issue or sell any shares of Capstone or of any of its Subsidiaries or securities or obligations of any kind convertible into, exchangeable for or otherwise carrying the right or obligation to acquire any shares of Capstone or any of its Subsidiaries, and, other than deferred share units, restricted share units and restricted performance share units, there are no outstanding stock appreciation rights, phantom equity or similar rights, agreements, arrangements or commitments of Capstone or any of its Subsidiaries based upon the book value, income or any other attribute of Capstone or any of its Subsidiaries, and no Person is entitled to any pre-emptive or other

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similar right granted by Capstone or any of its Subsidiaries. Capstone Shares are listed on the TSX, and are not listed or quoted on any market other than the TSX.

(ii) All Capstone Shares that may be issued pursuant to the exercise of outstanding Capstone options, restricted share units and restricted performance share units will, when issued in accordance with the terms of such securities, as the case may be, be duly authorized, validly issued, fully-paid and non-assessable and are not and will not be subject to or issued in violation of, any pre-emptive rights.

(iii) There are no outstanding contractual obligations of Capstone or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Capstone Shares or any shares of any of its Subsidiaries. No Subsidiary of Capstone owns any Capstone Shares.

(iv) No order ceasing or suspending trading in securities of Capstone nor prohibiting the sale of such securities has been issued and is outstanding against Capstone or its directors, officers or promoters.

(h) Shareholder and Similar Agreements. Capstone is not party to any shareholder, pooling, voting trust or other similar agreement relating to the issued and outstanding shares in the capital of Capstone or any of its Subsidiaries.

(i) Reports. Capstone has filed with all applicable Governmental Entities true and complete copies of Capstone Public Documents that Capstone is required to file therewith. All forms, reports, schedules, statements and other documents filed by Capstone under applicable Securities Laws since December 31, 2009 at the time filed: (a) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (b) complied in all material respects with the requirements of applicable Securities Laws. Capstone has not filed any confidential material change report with any Governmental Entity which at the date hereof remains confidential.

(j) Financial Statements.

(i) The audited consolidated financial statements for Capstone as at and for each of the fiscal years ended on December 31, 2010, December 31, 2009, and December 31, 2008 including the notes thereto and the report by Capstone’s auditors thereon have been, and all financial statements of Capstone which are publicly disseminated by Capstone in respect of any subsequent periods prior to the Effective Date will be, prepared in accordance with GAAP applied on a basis consistent with prior periods and all applicable Laws and present fairly, in all material respects, the assets, liabilities (whether accrued, absolute, contingent or otherwise),

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consolidated financial position of Capstone as of the respective dates thereof and its results of operations and cash flows for the respective periods covered thereby (except as may be indicated expressly in the notes thereto). There are no outstanding loans made by Capstone or any of its Subsidiaries to any executive officer or director of Capstone.

(ii) The management of Capstone has established and maintained a system of disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed by Capstone in its annual filings, interim filings or other reports filed or submitted by it under the applicable Laws imposed by Governmental Entities is recorded, processed, summarized and reported within the time periods specified in such Laws imposed by such Governmental Entities. Such disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by Capstone in its annual filings, interim filings or other reports filed or submitted under the applicable Laws imposed by Governmental Entities is accumulated and communicated to Capstone’s management, including its chief executive officers and chief financial officers (or Persons performing similar functions), as appropriate to allow timely decisions regarding required disclosure.

(iii) Capstone maintains internal control over financial reporting. Such internal control over financial reporting is effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of Capstone and its Subsidiaries; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of Capstone and its Subsidiaries are being made only with Authorizations of management and directors of Capstone and its Subsidiaries, as applicable; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition or disposition of the assets of Capstone or its Subsidiaries that could have a material effect on its financial statements. To the knowledge of Capstone, and other than as disclosed in Schedule 4.1(j) of the Capstone Disclosure Letter, prior to the date of this Agreement: (x) there are no significant deficiencies in the design or operation of, or material weaknesses in, the internal controls over financial reporting of Capstone that are reasonably likely to adversely affect the ability of Capstone to record, process, summarize and report financial information; and (y) there is no fraud, whether or not material, that involves management or other employees who have a significant role in the internal control over financial reporting of Capstone.

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(iv) Since December 31, 2010, neither Capstone nor any of its Subsidiaries nor, to Capstone’s knowledge, any director, officer, employee, auditor, accountant or representative of Capstone or any of its Subsidiaries has received or otherwise had or obtained knowledge of any complaint, allegation, assertion, or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of Capstone or any of its Subsidiaries or their respective internal accounting controls, including any complaint, allegation, assertion, or claim that Capstone or any of its Subsidiaries has engaged in questionable accounting or auditing practices, which has not been resolved to the satisfaction of the audit committee of the Board.

(k) Undisclosed Liabilities. Except as disclosed in Schedule 4.1(k) of the Capstone Disclosure Letter, neither Capstone nor any of its Subsidiaries has any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, except for: (a) liabilities and obligations that are specifically presented on the audited balance sheet of Capstone as of December 31, 2010 (the “Capstone Balance Sheet”) or disclosed in the notes thereto; or (b) liabilities and obligations incurred in the ordinary course of business consistent with past practice since December 31, 2010, that are not and would not, individually or in the aggregate with all other liabilities and obligations of Capstone and its Subsidiaries (other than those disclosed on the Capstone Balance Sheet and/or the notes to the Capstone financial statements), reasonably be expected to have a Capstone Material Adverse Effect, or have a Capstone Material Adverse Effect, or, as a consequence of the consummation of the Arrangement, have a Capstone Material Adverse Effect. Without limiting the foregoing, the Capstone Balance Sheet reflects reasonable reserves in accordance with GAAP for contingent liabilities relating to pending litigation and other contingent obligations of Capstone and its Subsidiaries except as disclosed in Capstone Disclosure Letter.

(l) Interest in Properties and Mineral Rights.

(i) All of Capstone’s and its Subsidiaries’ material real properties (collectively, the “Capstone Property”) and all of Capstone’s and its Subsidiaries’ material mineral interests and rights (including any material claims, concessions, exploration licences, exploitation licences, prospecting permits, mining leases and mining rights, in each case, either existing under contract, by operation of Law or otherwise) (collectively, the “Capstone Mineral Rights”), are accurately disclosed in Schedule 4.1(l)(i) of the Capstone Disclosure Letter. Other than the Capstone Property and the Capstone Mineral Rights disclosed in Schedule 4.1(l)(i) of the Capstone Disclosure Letter, neither Capstone nor its Subsidiaries, owns or has any interest in any material real property or any material mineral interests and rights.

(ii) Except as disclosed in Schedule 4.1(l)(ii) of the Capstone Disclosure Letter, Capstone or a Capstone Material Subsidiary is the sole legal and

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beneficial owner of all right, title and interest in and to the Capstone Property and the Capstone Mineral Rights, free and clear of any Liens.

(iii) All of the Capstone Mineral Rights have been properly located and recorded in compliance with applicable Law and are comprised of valid and subsisting mineral claims.

(iv) The Capstone Property and the Capstone Mineral Rights are in good standing under applicable Law and, to the knowledge of Capstone, all work required to be performed and filed in respect thereof has been performed and filed, all Taxes, rentals, fees, expenditures and other payments in respect thereof have been paid or incurred and all filings in respect thereof have been made.

(v) There is no adverse claim against or challenge to the title to or ownership of the Capstone Property or any of the Capstone Mineral Rights.

(vi) Capstone or a Capstone Material Subsidiary has the exclusive right to deal with the Capstone Property and all of the Capstone Mineral Rights.

(vii) Except as disclosed in Schedule 4.1(l)(vii) of the Capstone Disclosure Letter, no Person other than Capstone and the Capstone Material Subsidiaries has any interest in the Capstone Property or any of the Capstone Mineral Rights or the production or profits therefrom or any royalty in respect thereof or any right to acquire any such interest.

(viii) Except as disclosed in Schedule 4.1(l)(viii) of the Capstone Disclosure Letter, there are no back-in rights, earn-in rights, rights of first refusal or similar provisions or rights which would affect Capstone’s or a Subsidiary’s interest in the Capstone Property or any of the Capstone Mineral Rights.

(ix) There are no material restrictions on the ability of Capstone and its Subsidiaries to use, transfer or exploit the Capstone Property or any of the Capstone Mineral Rights, except pursuant to the applicable Law.

(x) Neither Capstone nor any of its Subsidiaries has received any notice, whether written or oral, from any Governmental Entity of any revocation or intention to revoke any interest of Capstone or a Subsidiary in any of the Capstone Property or any of the Capstone Mineral Rights.

(xi) Capstone and the Capstone Material Subsidiaries have all surface rights, including fee simple estates, leases, easements, rights of way and permits or licences operations from landowners or Governmental Entities permitting the use of land by Capstone and its Subsidiaries, and mineral interests that are required to exploit the development potential of the Capstone Property and the Capstone Mineral Rights as contemplated in Capstone Public Documents filed (and available on SEDAR) on or before

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the date hereof and no third party or group holds any such rights that would be required by Capstone to develop the Capstone Property or any of the Capstone Mineral Rights as contemplated in Capstone Public Documents filed (and available on SEDAR) on or before the date hereof.

(xii) All mines located in or on the lands of Capstone or any of its Subsidiaries, or lands pooled or unitized therewith, which have been abandoned by Capstone or any of its Subsidiaries, have been abandoned in accordance with good mining practices and in compliance with all applicable Laws, and all future abandonment, remediation and reclamation obligations known to Capstone as of the date hereof have been accurately disclosed in Schedule 4.1(l)(xii) of the Capstone Disclosure Letter without omission of information necessary to make the disclosure not misleading.

(m) Mineral Reserves and Resources. The proven and probable mineral reserves and mineral resources for the Capstone Property and the Capstone Mineral Rights were prepared in all material respects in accordance with sound mining, engineering, geoscience and other applicable industry standards and practices, and in all material respects in accordance with all applicable Laws, including the requirements of National Instrument 43-101 – Standards of Disclosure for Mineral Projects. There has been no material reduction in the aggregate amount of estimated mineral reserves, estimated mineral resources or mineralized material of Capstone, its Subsidiaries and its material joint ventures, taken as a whole, from the amounts set forth in Capstone Public Documents. All information regarding the Capstone Property and the Capstone Mineral Rights, including all drill results, technical reports and studies that are required to be disclosed at Law, have been disclosed in Capstone Public Documents on or before the date hereof.

(n) Operational Matters. Except as would not, individually or in the aggregate, be reasonably expected to result in a Capstone Material Adverse Effect:

(i) all rentals, royalties, overriding royalty interests, production payments, net profits, interest burdens, payments and obligations due and payable, or performable, as the case may be, on or prior to the date hereof under, with respect to, or on account of, any direct or indirect assets of Capstone, its Subsidiaries and its material joint ventures, have been: (i) duly paid; (ii) duly performed; or (iii) provided for prior for the date hereof; and

(ii) all costs, expenses, and liabilities payable on or prior to the date hereof under the terms of any contracts and agreements to which Capstone or any of its Subsidiaries or material joint ventures is directly or indirectly bound have been properly and timely paid, except for such expenses that are being currently paid prior to delinquency in the ordinary course of business.

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(o) Employment Matters.

(i) Except in the ordinary course of business, neither Capstone nor any of its Subsidiaries (i) is a party to any collective bargaining agreement, or (ii) is subject to any application for certification or, to the knowledge of Capstone, threatened or apparent union-organizing campaigns for employees not covered under a collective bargaining agreement. To the knowledge of Capstone, no fact or event exists that is likely to give rise to a change in the representation in this Subsection 4.1(o) on or before the Effective Date.

(ii) Neither Capstone nor any of its Subsidiaries is subject to any claim for wrongful dismissal, constructive dismissal or any other tort claim, actual or, to the knowledge of Capstone, threatened, or any litigation actual, or to the knowledge of Capstone, threatened, relating to employment or termination of employment of employees or independent contractors, except for such claims or litigation which individually or in the aggregate would not be reasonably to be expected to have a Capstone Material Adverse Effect. To the knowledge of Capstone, no labour strike, lock-out, slowdown or work stoppage is pending or threatened against or directly affecting Capstone.

(iii) Capstone and the Capstone Material Subsidiaries have operated in accordance with all applicable Laws with respect to employment and labour, including employment and labour standards, occupational health and safety, employment equity, pay equity, workers’ compensation, human rights, labour relations and privacy and there are no current, pending, or to the knowledge of Capstone, threatened proceedings before any board or tribunal with respect to any of the areas listed herein, except where the failure to so operate would not have a Capstone Material Adverse Effect.

(p) Absence of Certain Changes or Events. Since December 31, 2010:

(i) Capstone and the Capstone Material Subsidiaries have conducted their respective businesses only in the ordinary course of business and consistent with past practice;

(ii) no liability or obligation of any nature (whether absolute, accrued, contingent or otherwise) which has had or is reasonably likely to have a Capstone Material Adverse Effect has been incurred;

(iii) there has not been any event, circumstance or occurrence which has had or is reasonably likely to give rise to a Capstone Material Adverse Effect; and

(iv) there has not been any change in the accounting practices used by Capstone and its Subsidiaries.

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(q) Litigation. Except as disclosed in Schedule 4.1(q) of the Capstone Disclosure Letter, there is no claim, action, proceeding or investigation pending or, to the knowledge of Capstone, threatened against or relating to Capstone or any of the Capstone Material Subsidiaries, the business of Capstone or any of the Capstone Material Subsidiaries or affecting any of their properties, assets, before or by any Governmental Entity which, if adversely determined, would have, or reasonably could be expected to have, a Capstone Material Adverse Effect or prevent or materially delay the consummation of the Arrangement, nor to knowledge of Capstone are there any events or circumstances which could reasonably be expected to give rise to any such claim, action, proceeding or investigation (provided that the representation in this Subsection 4.1(q) shall not apply to claims, actions, proceedings, or investigations which may arise after the date of this Agreement which do not have a reasonable prospect of succeeding or, if successful, would not give rise to, nor reasonably be expected to give rise to, a Capstone Material Adverse Effect). Neither Capstone nor any of the Capstone Material Subsidiaries is subject to any outstanding order, writ, injunction or decree which has had or is reasonably likely to have a Capstone Material Adverse Effect or which would prevent or materially delay consummation of the transactions contemplated by this Agreement.

(r) Taxes.

(i) Each of Capstone and the Capstone Material Subsidiaries has duly and in a timely manner made or prepared all Tax Returns required to be made or prepared by it, and duly and in a timely manner filed all material Tax Returns required to be filed by it with the appropriate Governmental Entity, such Tax Returns were complete and correct in all material respects and Capstone and each of the Capstone Material Subsidiaries has paid all Taxes, including instalments on account of Taxes for the current year required by applicable Law, which are due and payable by it whether or not assessed by the appropriate Governmental Entity and Capstone has provided adequate accruals in accordance with GAAP in the most recently published financial statements of Capstone for any Taxes of Capstone and each of the Capstone Material Subsidiaries for the period covered by such financial statements that have not been paid whether or not shown as being due on any material Tax Returns. Since such publication date, no material liability in respect of Taxes not reflected in such statements or otherwise provided for has been assessed, proposed to be assessed, incurred or accrued, other than in the ordinary course of business.

(ii) Each of Capstone and the Capstone Material Subsidiaries has duly and timely withheld all Taxes and other amounts required by Law to be withheld by it (including Taxes and other amounts required to be withheld by it in respect of any amount paid or credited or deemed to be paid or credited by it to or for the benefit of any Person) and has duly and timely remitted to the appropriate Governmental Entity such Taxes or other amounts required by Law to be remitted by it.

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(iii) Each of Capstone and the Capstone Material Subsidiaries has duly and timely collected all amounts on account of any sales, use or transfer Taxes, including goods and services, harmonized sales, provincial and territorial taxes and state and local taxes, required by Law to be collected by it and has duly and timely remitted to the appropriate Governmental Entity such amounts required by Law to be remitted by it.

(iv) Except as disclosed as Schedule 4.1(r)(iv) of the Capstone Disclosure Letter, there are no proceedings, investigations, audits or claims now pending or threatened against Capstone or any of the Capstone Material Subsidiaries in respect of any Taxes and there are no matters under discussion, audit or appeal with any Governmental Entity relating to Taxes.

(v) For the purposes of the Tax Act and any other relevant Tax purposes:

(A) Capstone is resident in Canada; and

(B) Each of the Capstone Material Subsidiaries of Capstone is resident in the jurisdiction in which it was formed, and is not resident in any other country.

(vi) There are no Liens for Taxes upon any properties or assets of Capstone or any of the Capstone Material Subsidiaries (other than Liens relating to Taxes not yet due and payable and for which adequate reserves have been recorded on the most recent balance sheet included in Capstone’s audited financial statements).

(s) Books and Records. The corporate records and minute books of Capstone and the Capstone Material Subsidiaries have been maintained in accordance with all applicable Laws, and the minute books of Capstone and the Capstone Material Subsidiaries as provided to Capstone are complete and accurate in all material respects. The corporate minute books for Capstone and the Capstone Material Subsidiaries contain minutes of all meetings and resolutions of the directors and securityholders held. The financial books and records and accounts of Capstone and the Capstone Material Subsidiaries in all material respects: (a) have been maintained in accordance with good business practices and in accordance with GAAP and with the accounting principles generally accepted in the country of domicile of each such entity, on a basis consistent with prior years; (b) are stated in reasonable detail and, in the case of the Capstone Material Subsidiaries, during the period of time when owned by Capstone, accurately and fairly reflect the transactions and dispositions of assets of Capstone and the Capstone Material Subsidiaries; and (c) in the case of the Capstone Material Subsidiaries, during the period of time when owned by Capstone, accurately and fairly reflect the basis for Capstone’s consolidated financial statements.

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(t) Insurance.

(i) Capstone has in place reasonable and prudent insurance policies appropriate for its size, nature and stage of development. All premiums payable prior to the date hereof under such policies of insurance have been paid and neither Capstone nor any of the Capstone Material Subsidiaries has failed to make a claim thereunder on a timely basis.

(ii) Each of such policies and other forms of insurance is in full force and effect on the date hereof and shall (or comparable replacement or substitutions therefore shall) be kept in full force and effect by Capstone through the Effective Date. No written (or to the knowledge of Capstone other) notice of cancellation or termination has been received by Capstone or any Capstone Material Subsidiary with respect to any such policy.

(u) Non-Arm’s Length Transactions. Except as disclosed in Schedule 4.1(u) of Capstone Disclosure Letter, there are no current contracts, commitments, agreements, arrangements or other transactions (including relating to indebtedness by Capstone or any of the Capstone Material Subsidiaries) between Capstone or any of the Capstone Material Subsidiaries on the one hand, and any (a) officer or director of Capstone or any of the Capstone Material Subsidiaries, (b) any holder of record or, to the knowledge of Capstone, beneficial owner of five percent or more of the voting securities of Capstone, or (c) any affiliate or associate of any officer, director or beneficial owner, on the other hand.

(v) Benefit Plans. Each pension plan, deferred compensation plan, retirement income plan, stock option or stock purchase plan, profit sharing plan, bonus plan, employee benefit plan or policy, employee group insurance plan, program or policy, formal or informal, with respect to Capstone’s employees (each, a “Capstone Benefit Plan”) has been operated in accordance with its terms and any contributions required to be made under each Capstone Benefit Plan, as of the date hereof, have been timely made and all obligations in respect of each Capstone Benefit Plan have been properly accrued and reflected in the audited consolidated financial statements for Capstone as at and for the fiscal year ended on December 31, 2010, including the notes thereto and the report by Capstone’s auditors thereon.

(w) Environmental. Except for any matters that, individually or in the aggregate, would not have or would not reasonably be expected to have a Capstone Material Adverse Effect:

(i) all facilities and operations of Capstone and the Capstone Material Subsidiaries have been conducted, and are now, in compliance with all Environmental Laws;

(ii) Capstone and the Capstone Material Subsidiaries are in possession of, and in compliance with, all Environmental Permits that are required to own,

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lease and operate the Capstone Property and Capstone Mineral Rights and to conduct their respective business as they are now being conducted;

(iii) no environmental, reclamation or closure obligation, demand, notice, work order or other liabilities presently exist with respect to any portion of any currently or formerly owned, leased, used or otherwise controlled property, interests and rights or relating to the operations and business of Capstone and the Capstone Material Subsidiaries and, to the knowledge of Capstone, there is no basis for any such obligations, demands, notices, work orders or liabilities to arise in the future as a result of any activity in respect of such property, interests, rights, operations and business;

(iv) neither Capstone nor any of the Capstone Material Subsidiaries is subject to any proceeding, application, order or directive which relates to environmental, health or safety matters, and which may require any material work, repairs, construction or expenditures;

(v) to the knowledge of Capstone, there are no changes in the status, terms or conditions of any Environmental Permits held by Capstone or any of the Capstone Material Subsidiaries or any renewal, modification, revocation, reassurance, alteration, transfer or amendment of any such environmental approvals, consents, waivers, permits, orders and exemptions, or any review by, or approval of, any Governmental Entity of such environmental approvals, consents, waivers, permits, orders and exemptions that are required in connection with the execution or delivery of this Agreement, the consummation of the transactions contemplated herein or the continuation of the business of Capstone or any of the Capstone Material Subsidiaries following the Effective Date;

(vi) Capstone and the Capstone Material Subsidiaries have made available to Far West all material audits, assessments, investigation reports, studies, plans, regulatory correspondence and similar information with respect to environmental matters; and

(vii) to the knowledge of Capstone, Capstone and the Capstone Material Subsidiaries are not subject to any past or present fact, condition or circumstance that could reasonably be expected to result in liability under any Environmental Laws that would individually or in the aggregate, constitute a Capstone Material Adverse Effect.

(x) Restrictions on Business Activities. There is no agreement, judgement, injunction, order or decree binding upon Capstone or any Capstone Material Subsidiary that has or could reasonably be expected to have the effect of prohibiting, restricting or materially impairing any business practice of Capstone or any Capstone Material Subsidiary, any acquisition of property by Capstone or any Capstone Material Subsidiary or the conduct of business by Capstone or any Capstone Material Subsidiary as currently conducted (including following the transaction

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contemplated by this Agreement) other than such agreements, judgements, injunctions, orders or decrees which would not, individually or in the aggregate, reasonably be expected to have a Capstone Material Adverse Effect.

(y) Material Contracts. Capstone and the Capstone Material Subsidiaries have performed in all material respects all respective obligations required to be performed by them to date under any material contracts to which any of them is a party. Neither Capstone nor any of the Capstone Material Subsidiaries is in breach or default under any material contract to which it is a party or bound, nor does Capstone have knowledge of any condition that with the passage of time or the giving of notice or both would result in such a breach or default, except in each case where any such breaches or defaults would not, individually or in the aggregate, reasonably be expected to result in, or result in, a Capstone Material Adverse Effect. Neither Capstone nor any Capstone Material Subsidiary of Capstone knows of, or has received written notice of, any breach or default under (nor, to the knowledge of Capstone, does there exist any condition which with the passage of time or the giving of notice or both would result in such a breach or default under) any such material contract by any other party thereto except where any such violation or default would not, individually or in the aggregate, reasonably be expected to result in, or result in, a Capstone Material Adverse Effect. Prior to the date hereof, Capstone has made available to Far West true and complete copies of all of the material contracts of Capstone. All material contracts are legal, valid, binding and in full force and effect and are enforceable by Capstone (or a Capstone Material Subsidiary, as the case may be) in accordance with their respective terms (subject to bankruptcy, insolvency and other applicable Laws affecting creditors’ rights generally, and to general principles of equity) and are the product of fair and arms’ length negotiations between the parties thereto.

(z) Relationships with Customers and Suppliers. Capstone has not received any written (or to the knowledge of Capstone other) notice that any customer or supplier intends to cancel, terminate or otherwise modify or not renew its relationship with Capstone or any Capstone Material Subsidiary, and, to the knowledge of Capstone, no such action has been threatened, which, in either case, individually or in the aggregate, would reasonably be expected to have a Capstone Material Adverse Effect.

(aa) Brokers. Except for the fees to be paid to Scotia Capital Inc. and RCI Capital Group Inc. pursuant to their respective engagement letters with Capstone, none of Capstone, any of the Capstone Material Subsidiaries, or any of their respective officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finder’s fees in connection with the transactions contemplated by this Agreement.

(bb) Reporting Issuer Status. As of the date hereof, Capstone is a reporting issuer not in default under the Securities Laws of each of the Provinces of Canada.

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(cc) Stock Exchange Compliance. Capstone is in compliance in all material respects with the applicable listing and corporate governance rules and regulations of the TSX.

(dd) No Expropriation. No property or asset of Capstone or the Capstone Material Subsidiaries (including any Capstone Property or Capstone Mineral Rights) has been taken or expropriated by any Governmental Entity nor has any notice or proceeding in respect thereof been given or commenced nor, to the knowledge of Capstone, is there any intent or proposal to give any such notice or to commence any such proceeding.

(ee) Corrupt Practices Legislation. Neither Capstone, its Subsidiaries and affiliates, nor any of their respective officers, directors or employees acting on behalf of Capstone or any of its Subsidiaries or affiliates has taken, committed to take or been alleged to have taken any action which would cause Capstone or any of its Subsidiaries or affiliates to be in violation of the United States’ Foreign Corrupt Practices Act (and the regulations promulgated thereunder), the Corruption of Foreign Public Officials Act (Canada) (and the regulations promulgated thereunder) or any applicable Law of similar effect of another jurisdiction, and to the knowledge of Capstone no such action has been taken by any of its agents, representatives or other Persons acting on behalf of Capstone or any of its Subsidiaries or affiliates.

4.2 Survival of Representations and Warranties

The representations and warranties of Capstone contained in this Agreement shall not survive the completion of the Arrangement and shall expire and be terminated on the earlier of the Effective Time and the date on which this Agreement is terminated in accordance with its terms.

ARTICLE 5 COVENANTS

5.1 Covenants of Far West Regarding the Conduct of Business

Far West covenants and agrees that, during the period from the date of this Agreement until the earlier of the Effective Time and the time that this Agreement is terminated in accordance with its terms, except: (i) as required by applicable Law or by any Governmental Entity having jurisdiction; (ii) with respect to matters qualified by the Far West Disclosure Letter (which shall make reference to the applicable Subsection of this Section 5.1 in respect of which such qualification being made); (iii) as Capstone shall otherwise consent to in writing; or (iv) as otherwise expressly contemplated or permitted by this Agreement:

(a) Far West shall, and shall cause each of its Subsidiaries to, conduct its and their respective businesses only in, not take any action except in, and maintain their respective facilities, in the ordinary course of business consistent with past practice and to use commercially reasonable efforts to preserve intact its and their present business organization and goodwill, to preserve intact Far West and the

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Santo Domingo Project, to keep available the services of its officers, consultants and employees as a group and to maintain satisfactory relationships with suppliers, distributors, employees and others having business relationships with them;

(b) without limiting the generality of Subsection 5.1(a), Far West shall not, directly or indirectly, and shall cause each of its Subsidiaries not to:

(i) issue, sell, grant, award, pledge, dispose of, encumber or agree to issue, sell, grant, award, pledge, dispose of or encumber any Far West Shares, any Far West Options or Far West Warrants or any options, warrants, calls, conversion privileges or rights of any kind to acquire any Far West Shares or other securities or any shares of Far West or any of its Subsidiaries, other than pursuant to the exercise of existing Far West Options or Far West Warrants;

(ii) sell, pledge, lease, dispose of, mortgage, licence, encumber or agree to sell, pledge, dispose of, mortgage, licence, encumber or otherwise transfer any assets of Far West or any of its Subsidiaries or any interest in any asset of Far West or any of its Subsidiaries other than in the ordinary course of business;

(iii) amend or propose to amend the articles, by-laws or other constating documents or the terms of any securities of Far West or any of its Subsidiaries;

(iv) split, combine or reclassify any outstanding Far West Shares or the securities of any of its Subsidiaries;

(v) redeem, purchase or offer to purchase any Far West Shares or other securities of Far West or any shares or other securities of its Subsidiaries;

(vi) declare, set aside or pay any dividend or other distribution (whether in cash, securities or property or any combination thereof) in respect of any Far West Shares (except, in the case of any of Far West’s wholly-owned Subsidiaries, for dividends payable to Far West);

(vii) reorganize, amalgamate or merge Far West or any of its Subsidiaries with any other Person;

(viii) reduce the stated capital of the shares of Far West or of any of its Subsidiaries;

(ix) acquire or agree to acquire (by merger, amalgamation, acquisition of shares or assets or otherwise) any Person, or make any investment either by purchase of shares or securities, contributions of capital (other than to wholly-owned Subsidiaries), property transfer or purchase of any property

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or assets of any other Person, that has a value greater than $50,000 individually or $50,000 in the aggregate;

(x) enter into, directly or indirectly, an investment in or acquisition of, whether individually or with any other Person, (A) any asset or an interest in any asset that has a value greater than $50,000, or (B) any group of assets or interests in any assets that has a value greater than $50,000 in the aggregate, provided however that Far West may make such investments in short-term government grade instruments consistent with past practice;

(xi) except in the ordinary course of business consistent with past practice, incur, create, assume or otherwise become liable for any indebtedness for borrowed money or any other material liability or obligation or issue any debt securities, or guarantee, endorse or otherwise as an accommodation become responsible for, the obligations of any other Person or make any loans or advances;

(xii) adopt a plan of liquidation or resolutions providing for the liquidation or dissolution of Far West or any of its Subsidiaries;

(xiii) pay, discharge, settle, satisfy, compromise, waive, assign or release any claims, liabilities or obligations other than the payment, discharge or satisfaction, in the ordinary course of business consistent with past practice, of liabilities reflected or reserved against in Far West’s financial statements or incurred in the ordinary course of business consistent with past practice;

(xiv) authorize, recommend or propose any release or relinquishment of any contractual right, except in the ordinary course of business consistent with past practice;

(xv) waive, release, grant, transfer, exercise, modify or amend in any material respect, other than in the ordinary course of the business consistent with past practice, (i) any existing contractual rights in respect of any Far West Mineral Rights or Far West Property, (ii) any material Authorization, lease, concession, contract or other document, or (iii) any other material legal rights or claims;

(xvi) waive, release, grant or transfer any rights of value or modify or change in any material respect any existing licence, lease, contract or other document, other than in the ordinary course of business consistent with past practice;

(xvii) take any action or fail to take any action which action or failure to act would result in the material loss, expiration or surrender of, or the loss of any material benefit under, or reasonably be expected to cause any Governmental Entities to institute proceedings for the suspension, revocation or limitation of rights under, any material Authorizations

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necessary to conduct its businesses as now conducted; or fail to prosecute with commercially reasonable due diligence any pending applications to any Governmental Entities;

(xviii) incur business expenses other than in the ordinary course and consistent with past practice or in connection with the Arrangement and the transactions contemplated hereby;

(xix) take any action or fail to take any action that is intended to, or would reasonably be expected to, individually or in the aggregate, prevent, materially delay or materially impede the ability of Far West to consummate the Arrangement or the other transactions contemplated by this Agreement, other than in connection with a Pre-Acquisition Reorganization;

(xx) increase the benefits payable or to become payable to its directors or officers (whether from Far West or any of its Subsidiaries), enter into or modify any employment, severance, or similar agreements or arrangements with, or grant any bonuses, salary increases, severance or termination pay to, any officer of Far West or member of the Far West Board other than pursuant to agreements already entered into as disclosed in Far West Public Documents publicly available on SEDAR; or

(xxi) in the case of employees who are not officers of Far West or members of the Far West Board, take any action other than in the ordinary course of business and consistent with past practice (none of which actions shall be unreasonable or unusual) with respect to the grant of any bonuses, salary increases, severance or termination pay or with respect to any increase of benefits payable in effect on the date hereof;

(c) Far West shall not, and shall cause each of its Subsidiaries not to, establish, adopt, enter into, amend or waive any performance or vesting criteria or accelerate vesting, exercisability or funding under any bonus, profit sharing, thrift, incentive, compensation, stock option, restricted stock, pension, retirement, deferred compensation, savings, welfare, employment, termination, severance or other employee benefit plan, agreement, trust, fund, policy or arrangement for the benefit or welfare of any directors, officers, current or former employees of Far West or its Subsidiaries;

(d) Far West shall use all reasonable commercial efforts to cause its current insurance (or re-insurance) policies not to be cancelled or terminated or any of the coverage thereunder to lapse, unless simultaneously with such termination, cancellation or lapse, replacement policies underwritten by insurance and re-insurance companies of nationally recognized standing providing coverage equal to or greater than the coverage under the cancelled, terminated or lapsed policies for substantially similar premiums are in full force and effect;

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(e) Far West shall use its best efforts to maintain and preserve all of its rights under each of the Far West Mineral Rights and Far West Property and under each of its Authorizations;

(f) Far West shall:

(i) not take any action, or permit any of its Subsidiaries to take any action, which would render, or which reasonably may be expected to render, any representation or warranty made by it in this Agreement untrue or inaccurate (without giving effect to, applying or taking into consideration any materiality or Far West Material Adverse Effect qualification already contained within such representation or warranty) in any material respect;

(ii) provide Capstone with prompt written notice of: (A) any Far West Material Adverse Effect; (B) the occurrence, or failure to occur, of any event or state of facts which occurrence or failure would or would be likely to (x) cause any of the representations of Far West contained herein to be untrue or inaccurate (without giving effect to, applying or taking into consideration any materiality or Far West Material Adverse Effect qualification already contained within such representation or warranty) in any material respect; or (y) result in the failure in any material respect of Far West to comply with or satisfy any covenant, condition or agreement (without giving effect to, applying or taking into consideration qualification already contained in such covenant, condition or agreement) to be complied with or satisfied prior to the Effective Time;

(iii) not enter into or renew any agreement, contract, lease, licence or other binding obligation of Far West or its Subsidiaries (A) containing (1) any limitation or restriction on the ability of Far West or its Subsidiaries or, following completion of the transactions contemplated hereby, the ability of Capstone or its Subsidiaries, to engage in any type of activity or business, (2) any limitation or restriction on the manner in which, or the localities in which, all or any portion of the business of Far West or its Subsidiaries or, following consummation of the transactions contemplated hereby, all or any portion of the business of Capstone or its Subsidiaries, is or would be conducted, or (3) any limit or restriction on the ability of Far West or its Subsidiaries or, following completion of the transactions contemplated hereby, the ability of Capstone or its Subsidiaries, to solicit customers or employees, or (B) that would reasonably be expected to materially delay or prevent the consummation of the transactions contemplated by this Agreement;

(iv) except in the ordinary course of business consistent with past practice, not enter into or renew any agreement, contract, lease, licence or other binding obligation of Far West or its Subsidiaries that is not terminable within 30 days after the Effective Date without payment by Capstone or its

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Subsidiaries in excess of $50,000 individually or $100,000 in the aggregate; and

(v) except for exploration and development expenditures on the Santo Domingo Project carried out in the ordinary course of business, not incur any capital expenditures or enter into any agreement obligating Far West or its Subsidiaries to provide for future capital expenditures involving payments in excess of $50,000 individually or $100,000 in the aggregate;

(g) Far West and each of its Subsidiaries shall:

(i) duly and timely file all Tax Returns required to be filed by it on or after the date hereof and all such Tax Returns will be true, complete and correct in all respects;

(ii) timely withhold, collect, remit and pay all Taxes which are to be withheld, collected, remitted or paid by it to the extent due and payable;

(iii) not make or rescind any material express or deemed election relating to Taxes;

(iv) not make a request for a Tax ruling or enter into any agreement with any taxing authorities or consent to any extension or waiver of any limitation period with respect to Taxes;

(v) not settle or compromise any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes; and

(vi) not amend any Tax Return or change any of its methods of reporting income, deductions or accounting for income Tax purposes from those employed in the preparation of its income Tax Returns, except as may required by applicable Laws;

(h) Far West shall not initiate any material discussions, negotiations or filings with any Governmental Entity regarding any matter (including with respect to the Arrangement or the transactions contemplated by this Agreement or regarding the status of the Far West Property or the Far West Mineral Rights) without the prior consent of Capstone, such consent not to be unreasonably withheld, and further agrees to provide Capstone with immediate notice of any material communication (whether oral or written) from a Governmental Entity, including a copy of any written communication;

(i) Far West shall not authorize or propose, or enter into or modify any contract, agreement, commitment or arrangement, to do any of the matters prohibited by the other Subsections of this Section 5.1;

(j) Far West shall provide (i) no later than 3 business days prior to the date of the Far West Meeting, a reasonable written estimate, certified by an officer of Far West,

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of the amount of cash and cash equivalents Far West is expected to hold immediately after the Effective Time, less the estimated amount of any unpaid current liabilities of Far West immediately after the Effective Time, and (ii) on the Effective Date, a statement, certified by an officer of Far West, of the amount of cash and cash equivalents Far West will hold, less the estimated amount of any unpaid current liabilities of Far West, in each case immediately after the Effective Time; and

(k) Far West shall provide the notice contemplated in Subsection 6(g) of the terms and conditions of the Far West Warrants, within the time periods contemplated therein, to holders of Far West Warrants, which notice shall set out the revised exercise price and the number of Capstone Shares to be issued upon exercise.

5.2 Covenants of Far West Relating to the Arrangement

Far West shall and shall cause its Subsidiaries to perform all obligations required to be performed by Far West or any of its Subsidiaries under this Agreement, co-operate with Capstone in connection therewith, and do all such other acts and things as may be necessary or desirable in order to consummate and make effective the transactions contemplated in this Agreement and, without limiting the generality of the foregoing or the obligations in Section 2.5, Far West shall and, where applicable, shall cause its Subsidiaries to:

(a) use its commercially reasonable efforts to obtain and assist Capstone in obtaining all required Regulatory Approvals;

(b) use its commercially reasonable efforts to obtain as soon as practicable following execution of this Agreement all third party consents, approvals and notices required under any of the Material Contracts, and all Far West Key Third Party Consents;

(c) defend all lawsuits or other legal, regulatory or other proceedings against Far West challenging or affecting this Agreement or the consummation of the transactions contemplated hereby;

(d) provide such assistance as may be reasonably requested by Capstone for the purposes of completing the Capstone Meeting;

(e) subject to applicable Law, make available and cause to be made available to Capstone, and the agents and advisors thereto, information reasonably requested by Capstone for the purposes of preparing, considering and implementing integration and strategic plans for the combined businesses of Capstone and Far West following completion of the Arrangement and confirming the representations and warranties of Far West set out in Section 3.1; and

(f) use commercially reasonable efforts to satisfy all conditions precedent in this Agreement and take all steps set forth in the Interim Order.

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5.3 Covenants of Capstone Regarding the Conduct of Business

Capstone covenants and agrees that, during the period from the date of this Agreement until the earlier of the Effective Time and the time that this Agreement is terminated in accordance with its terms, except (i) as required by applicable Law or by any Governmental Entity having jurisdiction; (ii) as Far West shall otherwise consent to in writing; or (iii) as otherwise expressly contemplated or permitted by this Agreement, Capstone shall, and shall cause each of its Subsidiaries to:

(a) conduct its business in the ordinary course of business consistent with past practice, which business includes, without limitation, the acquisition (directly or indirectly), exploration, development and operation of mineral projects;

(b) use commercially reasonable efforts to maintain and preserve their business organization, assets, employees, goodwill and business relationships; and

(c) not (i) amend its constating or other comparable organizational documents; (ii) split, combine or reclassify any shares in the capital of Capstone or its Subsidiaries; (iii) amend the terms of any of its securities; (iv) adopt a plan of liquidation or resolution providing for the liquidation or dissolution of Capstone or any of its Subsidiaries; (v) amend its accounting policies or adopt new accounting policies, in each case except as required to comply with GAAP; (vi) declare, set aside or pay any dividend or other distribution (whether in cash, securities or property or any combination thereof) in respect of any Capstone Shares except, in the case of any of Capstone’s wholly-owned Subsidiaries, for dividends payable to Capstone; (vii) issue or sell, or agree to issue or sell, any Capstone Shares, or securities convertible into or exchangeable for Capstone Shares, which represent 25% or more of the issued and outstanding Capstone Shares as of the date of this Agreement; (viii) acquire or agree to acquire (by merger, amalgamation, acquisition of shares or assets or otherwise) any Person or any property or assets, that has a value greater than, in the aggregate, 25% of the cash and cash equivalents held by Capstone as of the date of this Agreement; or (ix) take any action, or fail to take any action that is intended to, or would reasonably be expected to, individually or in the aggregate, prevent, materially delay or materially impede the ability of Capstone to consummate the Arrangement or the other transactions contemplated by this Agreement.

5.4 Covenants of Capstone Relating to the Arrangement

Capstone shall, and shall cause the Capstone Subsidiaries to, perform all obligations required to be performed by Capstone or any Capstone Subsidiary under this Agreement, co-operate with Far West in connection therewith, and do all such other acts and things as may be necessary or desirable in order to consummate and make effective, as soon as reasonably practicable, the transactions contemplated in this Agreement and, without limiting the generality of the foregoing or the obligations in Section 2.5, Capstone shall and where appropriate shall cause each Capstone Subsidiary to:

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(a) use its commercially reasonable efforts to obtain and assist Far West in obtaining all required Regulatory Approvals;

(b) defend all lawsuits or other legal, regulatory or other proceedings against Capstone challenging or affecting this Agreement or the consummation of the transactions contemplated hereby;

(c) apply for and use commercially reasonable efforts to obtain conditional approval of the listing and posting for trading on the TSX of the Consideration Shares, subject only to satisfaction by Capstone of customary listing conditions of the TSX;

(d) subject to applicable Law, make available and cause to be made available to Far West, and its agents and advisors, information reasonably requested by Far West for the purposes of confirming the representations and warranties of Capstone set out in Section 4.1 of this Agreement;

(e) use commercially reasonable efforts to satisfy all conditions precedent in this Agreement;

(f) make joint income tax elections with Eligible Holders in respect of the disposition of their Far West Shares pursuant to Subsections 85(1) or 85(2) of the Tax Act (and in each case, where applicable, the corresponding provision of any applicable provincial income tax legislation) in accordance with the procedures and within the time limits set out in the Plan of Arrangement. The agreed amount under such joint elections shall be determined by each Eligible Holder in his or her sole discretion within the limits set out in the Tax Act, In order to make an election, the Eligible Holders must provide the required election form containing all necessary information on or before ninety (90) calendar days after the Effective Date in accordance with the procedures set out in a tax information package to be sent to Eligible Holders that indicate an interest in making and filing an election by checking the appropriate box on the Far West letter of transmittal. The information will include the number of Far West Shares transferred, the consideration received and the applicable elected amount for purposes of such election;

(g) ensure that all Far West Options exercised in accordance with their terms following the Effective Time are treated in accordance with the Plan of Arrangement;

(h) ensure that all Far West Warrants exercised in accordance with their terms following the Effective Time are treated in accordance with the Plan of Arrangement;

(i) ensure that, with effect as and from the Effective Time, an additional director shall be appointed to the Board of Directors of Capstone, who will be a nominee of Far West and will be one of the current directors of Far West, acceptable to Capstone, acting reasonably;

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(j) use its commercially reasonable efforts to take all such steps as are required to cause the KORES Condition to be met; and

(k) promptly (and, in any event, prior to giving effect to any amendment to the KORES Agreements) notify Far West in writing of the existence, form and content of any amendment or proposed amendment to the KORES Agreements.

5.5 Survival of Certain Covenants

For greater certainty the covenants of Capstone set out in Subsections 5.4(f) to 5.4(i) shall survive the Effective Time and the termination of this Agreement in accordance with its terms.

5.6 Capstone Meeting

Subject to the terms of this Agreement:

(a) Capstone agrees to convene and conduct the Capstone Meeting in accordance with Capstone’s constating documents and applicable Law as soon as reasonably practicable, and in any event on or before the Meeting Deadline. Far West and Capstone agree to use their commercially reasonably efforts to schedule the Far West Meeting and Capstone Meeting on the same day; and

(b) Capstone will advise Far West as Far West may reasonably request, and at least on a daily basis on each of the last ten (10) business days prior to the date of the Capstone Meeting, as to the aggregate tally of the proxies received by Capstone in respect of the resolution approving the issuance of the Consideration Shares.

5.7 Capstone Circular

(a) As promptly as reasonably practicable following execution of this Agreement and in any event prior to the close of business on the Mailing Deadline, Capstone shall (i) prepare the Capstone Circular together with any other documents required by applicable Laws in connection with the Capstone Meeting, (ii) file the Capstone Circular in all jurisdictions where the same is required to be filed, and (iii) mail the Capstone Circular as required in accordance with all applicable Laws. On the date of mailing thereof, the Capstone Circular shall comply in all material respects with all applicable Laws and shall contain sufficient detail to permit the Capstone Shareholders to form a reasoned judgement concerning the matters to be placed before them at the Capstone Meeting.

(b) Capstone shall ensure that the Capstone Circular complies in all material respects with all applicable Laws, and, without limiting the generality of the foregoing, that the Capstone Circular will not contain any misrepresentation (except that Capstone shall not be responsible for any information relating to Far West and its affiliates, including the Far West Shares).

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(c) Capstone shall (i) solicit proxies in favour of the approval of a resolution authorizing the issuance of the Consideration Shares and against any resolution submitted by any other Capstone Shareholder, including, if so requested by Far West, using the services of dealers and proxy solicitation services and permitting Far West to otherwise assist Capstone in such solicitation, and take all other actions that are reasonably necessary or desirable to seek the approval of the issuance of the Consideration Shares by Capstone Shareholders, (ii) recommend to holders of Capstone Shares that they vote in favour of the issuance of the Consideration Shares, and (iii) include in the Capstone Circular a statement that each director and officer of Capstone intends to vote all of such Person’s Capstone Shares (including any Capstone Shares issued upon the exercise of any options to acquire Capstone Shares) in favour of the issuance of the Consideration Shares, subject to the other terms of this Agreement and the Capstone Voting Agreements.

(d) Far West shall provide to Capstone all information regarding Far West, its affiliates and the Far West Shares as required by applicable Laws for inclusion in the Capstone Circular or in any amendments or supplements to such Capstone Circular. Far West shall also use commercially reasonable efforts to obtain any necessary consents from any of its auditors and any other advisors to the use of any financial, technical or other expert information required to be included in the Capstone Circular and to the identification in the Capstone Circular of each such advisor. Far West shall ensure that such information shall be complete and correct in all material respects, shall comply in all material respects with all applicable Laws and, without limiting the generality of the foregoing, shall not include any misrepresentation.

(e) Far West and its legal counsel shall be given a reasonable opportunity to review and comment on the Capstone Circular prior to the Capstone Circular being printed and filed with the Governmental Entities, and reasonable consideration shall be given to any comments made by Far West and its legal counsel, provided that all information relating solely to Far West, its affiliates and the Far West Shares included in the Capstone Circular shall be in form and content satisfactory to Far West, acting reasonably. Capstone shall provide Far West with a final copy of the Capstone Circular prior to the mailing to the Capstone Shareholders.

(f) Far West and Capstone shall each promptly notify each other if at any time before the Effective Date either becomes aware that the Capstone Circular contains a misrepresentation, or otherwise requires an amendment or supplement to the Capstone Circular and the Parties shall co-operate in the preparation of any amendment or supplement to the Capstone Circular as required or appropriate, and Capstone shall promptly mail or otherwise publicly disseminate any amendment or supplement to the Capstone Circular to Capstone Shareholders and, if required by the Court or applicable Laws, file the same with the Governmental Entities and as otherwise required.

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(g) Far West will indemnify and save harmless Capstone and its representatives from and against any and all liabilities, claims, demands, losses, costs, damages and expenses to which Capstone or any of its representatives may be subject or may suffer, in any way caused by, or arising, directly or indirectly, from or in consequence of:

(i) any misrepresentation or alleged misrepresentation in any information included in the Capstone Circular that is provided by Far West for the purpose of inclusion in the Capstone Circular; and

(ii) any order made, or any inquiry, investigation or proceeding pursuant to any Securities Laws or by any Governmental Entity, based on any misrepresentation or any alleged misrepresentation in any information provided by Far West for the purpose of inclusion in the Capstone Circular.

5.8 Pre-Acquisition Reorganization

Far West agrees that, upon request by Capstone, Far West shall, and shall cause each of its Subsidiaries to: (i) effect such reorganizations of Far West’s or its Subsidiaries’ business, operations and assets or such other transactions as Capstone may request, acting reasonably (each a “Pre-Acquisition Reorganization”) and (ii) co-operate with Capstone and its advisors in order to determine the nature of the Pre-Acquisition Reorganizations that might be undertaken and the manner in which they might most effectively be undertaken; provided that the Pre-Acquisition Reorganizations (a) are not prejudicial to Far West or the Far West Shareholders in any material respect; (b) do not require Far West to obtain the prior approval of Far West Shareholders, other than approval of the Arrangement Resolution at the Far West Meeting; (c) do not interfere with the operations of Far West and its Subsidiaries in the ordinary course; or (d) do not impede or materially delay the consummation of the Arrangement (including any delays caused by the necessity to seek required Regulatory Approvals or third party approvals). Capstone shall provide written notice to Far West of any proposed Pre-Acquisition Reorganization at least five (5) business days prior to the Effective Time. Upon receipt of such notice, Capstone and Far West shall work co-operatively and use commercially reasonable efforts to prepare prior to the Effective Time all documentation necessary and do all such other acts and things as are necessary to give effect to such Pre-Acquisition Reorganization. If Capstone does not acquire all of the Far West Shares not already owned by it, Capstone shall reimburse Far West for all costs and expenses, including all legal fees and disbursements, incurred in connection with any proposed Pre-Acquisition Reorganization or reversing or voiding any Pre-Acquisition Reorganization that is effected at Capstone’s request.

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ARTICLE 6 CONDITIONS

6.1 Mutual Conditions Precedent

The obligations of the Parties to complete the Arrangement are subject to the fulfillment of each of the following conditions precedent on or before the Effective Time, each of which may only be waived with the mutual consent of the Parties:

(a) the Arrangement Resolution shall have been approved and adopted by the Far West Securityholders, voting as a single class, at the Far West Meeting in accordance with the Interim Order;

(b) the Court shall have determined that the terms and conditions of the Arrangement are procedurally and substantively fair to the Far West Securityholders and the Interim Order and the Final Order shall each have been obtained on terms consistent with this Agreement, and shall not have been set aside or modified in a manner unacceptable to either Far West or Capstone, acting reasonably, on appeal or otherwise;

(c) Capstone Shareholder Approval shall have been obtained;

(d) no Governmental Entity shall have enacted, issued, promulgated, enforced or entered any Law which is then in effect and has the effect of making the Arrangement illegal or otherwise preventing or prohibiting consummation of the Arrangement;

(e) the Capstone Shares to be issued in the United States pursuant to the Arrangement shall be exempt from the registration requirements of the U.S. Securities Act pursuant to s.3(a)(10) of the U.S. Securities Act; provided, however, that Far West shall not be entitled to rely on the provisions of this Subsection 6.1(e) in failing to complete the transactions contemplated by this Agreement if Far West fails to advise the Court prior to the hearing in respect of the Final Order, as required by the terms of the foregoing exemptions, that Capstone will rely on the foregoing exemptions based on the Court’s approval of the Arrangement;

(f) all Regulatory Approvals shall have been obtained on terms and conditions satisfactory to each of Capstone and Far West, acting reasonably;

(g) there shall not be pending or threatened in writing any suit, action or proceeding by any Governmental Entity or any other Person that would reasonably be expected to:

(i) prohibit or restrict the acquisition by Capstone of any Far West Shares, the payment of consideration by Capstone to Far West Shareholders, or the consummation of the Arrangement or give rise to any material damages to Far West or Capstone directly or indirectly in connection with the Arrangement;

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(ii) prohibit or materially limit the ownership by Capstone of Far West or any material portion of its business; or

(iii) impose limitations on the ability of: (A) Capstone to acquire or hold, or exercise full rights of ownership of, any Far West Shares, including the right to vote the Far West Shares to be acquired by it on all matters properly presented to the Far West Shareholders; or (B) Far West Shareholders to acquire or hold, or exercise full rights of ownership of, any Capstone Shares, including the right to vote the Capstone Shares to be acquired by it on all matters properly presented to Capstone Shareholders; and

(h) the KORES Condition shall have been satisfied.

6.2 Additional Conditions Precedent to the Obligations of Capstone

The obligation of Capstone to complete the Arrangement is subject to the fulfillment of each of the following conditions precedent on or before the Effective Time (each of which is for the exclusive benefit of Capstone and may be waived by Capstone):

(a) all covenants of Far West under this Agreement to be performed on or before the Effective Time which have not been waived by Capstone shall have been duly performed by Far West in all material respects and Capstone shall have received a certificate of Far West addressed to Capstone and dated the Effective Date, signed on behalf of Far West by two senior executive officers of Far West (on Far West’s behalf and without Personal liability), confirming the same as at the Effective Time;

(b) the representations and warranties of Far West set forth in (i) Subsections 3.1(a), 3.1(b), 3.1(c), 3.1(g) and 3.1(bb) shall be true and correct in all respects (other than de minimis inaccuracies in respect of the representations and warranties set forth in Section 3.1(g)) as of the Effective Time as if made at and as of such time (except that any such representation and warranty that by its terms speaks specifically as of the date of this Agreement or another date shall be true and correct as of such date), and (ii) Article 3, other than those to which clause (i) applies, (A) that are qualified by a reference to a Far West Material Adverse Effect or materiality shall be true and correct in all respects, and (B) that are not qualified by a reference to a Far West Material Adverse Effect or materiality shall be true and correct in all material respects, in each case as of the Effective Time as if made at and as of such time (except that any such representation and warranty that by its terms speaks specifically as of the date of this Agreement or another date shall be true and correct as of such date), and Capstone shall have received a certificate of Far West addressed to Capstone and dated the Effective Date, signed on behalf of Far West by two senior executive officers of Far West (on Far West’s behalf and without personal liability), confirming the same as at the Effective Time;

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(c) there shall not have occurred a Far West Material Adverse Effect that has not been publicly disclosed by Far West prior to the date hereof and since the date of this Arrangement Agreement, there shall not have occurred a Far West Material Adverse Effect, and Capstone shall have received a certificate signed on behalf of Far West by the chief executive officer and the chief financial officer of Far West to such effect;

(d) the Far West Key Third Party Consents shall have been obtained;

(e) arrangements satisfactory to Capstone, acting reasonably, shall have been made to release Far West from all obligations of Far West and rights of QuadraFNX arising pursuant to Section 13(a), (b), (c), (h), (i), (j) and (k) of the QuadraFNX Subscription Agreement;

(f) holders of no more than 5% of the Far West Shares shall have exercised Dissent Rights;

(g) the Board of Far West shall have passed a resolution pursuant to Section 5.1(e) of the Far West Shareholder Rights Plan waiving the application of the Far West Shareholder Rights Plan to the Arrangement; and

(h) Far West shall have delivered to Capstone opinions in customary form regarding title to the Santo Domingo Project.

The foregoing conditions will be for the sole benefit of Capstone and may be waived by it in whole or in part at any time.

6.3 Additional Conditions Precedent to the Obligations of Far West

The obligation of Far West to complete the Arrangement is subject to the fulfillment of each of the following conditions precedent on or before the Effective Time (each of which is for the exclusive benefit of Far West and may be waived by Far West):

(a) all covenants of Capstone under this Agreement to be performed on or before the Effective Time which have not been waived by Far West shall have been duly performed by Capstone in all material respects and Far West shall have received a certificate of Capstone, addressed to Far West and dated the Effective Date, signed on behalf of Capstone by two of its senior executive officers (on Capstone’s behalf and without Personal liability), confirming the same as of the Effective Date;

(b) the representations and warranties of Capstone set forth in: (i) Subsections 4.1(a), 4.1(b), 4.1(c) and 4.1(g) shall be true and correct in all respects (other than de minimis inaccuracies in respect of the representations and warranties set forth in Section 4.1(g)) as of the Effective Time as if made at and as of such time (except that any such representation and warranty that by its terms speaks specifically as of the date of the Agreement or another date shall be true and correct as of such date); and (ii) Article 4, other than those to which clause (i) applies, (A) that are

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qualified by a reference to a Capstone Material Adverse Effect or materiality shall be true and correct in all respects, and (B) that are not qualified by a reference to a Capstone Material Adverse Effect or materiality shall be true and correct in all material respects, in each case as of the Effective Time as if made at and as of such time (except that any such representation and warranty that by its terms speaks specifically as of the date of this Agreement or another date shall be true and correct as of such date), and Far West shall have received a certificate signed on behalf of Capstone by two senior executive officers of Capstone (on Far West’s behalf and without personal liability) to this effect;

(c) Capstone shall have complied with its obligations under Section 2.9;

(d) there shall not have occurred a Capstone Material Adverse Effect that has not been publicly disclosed by Capstone prior to the date hereof or disclosed to Far West in writing prior to the date hereof, and since the date of this Arrangement Agreement, there shall not have occurred a Capstone Material Adverse Effect and Far West shall have received a certificate signed on behalf of Capstone by the chief executive officer and the chief financial officer of Capstone to such effect;

(e) the Capstone Key Third Party Consents shall have been obtained;

(f) Capstone shall have delivered evidence satisfactory to Far West, acting reasonably, of the approval of the listing and posting for trading on the TSX of the Consideration Shares, subject only to satisfaction of the customary listing conditions of the TSX; and

(g) Capstone shall have delivered to Far West opinions in customary form regarding title to (i) the Cozamin Polymetalic Mine, Mexico, (ii) the Minto Copper-Gold Mine, Yukon, and (iii) the Kutcho Copper-Zinc-Gold-Silver Project, Northwestern British Columbia.

The foregoing conditions will be for the sole benefit of Far West and may be waived by it in whole or in part at any time.

6.4 Satisfaction of Conditions

The conditions precedent set out in Section 6.1, Section 6.2 and Section 6.3 shall be conclusively deemed to have been satisfied, waived or released at the Effective Time.

ARTICLE 7 ADDITIONAL AGREEMENTS

7.1 Far West Non-Solicitation

(a) On and after the date of this Agreement, except as otherwise provided in this Agreement, Far West and its Subsidiaries shall not, directly or indirectly, through any officer, director, employee, advisor, representative, agent or otherwise:

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(i) make, solicit, assist, initiate, encourage or otherwise facilitate any inquiries, proposals or offers relating to any Acquisition Proposal involving Far West, or participate in any discussions or negotiations regarding, or furnish to any Person any information with respect to, or otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by any other Person to do or seek to do any of the foregoing;

(ii) engage in any discussions or negotiations regarding, or provide any information with respect to, or otherwise co-operate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by any other Person to make or complete any Acquisition Proposal involving Far West, provided that, for greater certainty, Far West may advise any Person making an unsolicited Acquisition Proposal that such Acquisition Proposal does not constitute a Superior Proposal when the Far West Board has so determined;

(iii) withdraw, modify or qualify, or propose publicly to withdraw, modify or qualify, in a manner adverse to Capstone, the approval or recommendation of the Far West Board or any committee thereof of this Agreement or the Arrangement;

(iv) approve, recommend or remain neutral with respect to, or propose publicly to approve, accept, endorse, recommend or remain neutral with respect to, any Acquisition Proposal for Far West (it being understood that publicly taking no position or a neutral position with respect to an Acquisition Proposal until 15 calendar days following the public announcement of such Acquisition Proposal shall not be considered a violation of this Subsection 7.1(a)(iv)); or

(v) accept or enter into, or publicly propose to accept or enter into, any letter of intent, agreement in principle, agreement, arrangement or undertaking related to any Acquisition Proposal,

provided, however, that nothing contained in this Subsection 7.1(a) or any other provision of this Agreement shall prevent the Far West Board from considering, and the Far West Board shall be permitted to engage in discussions or negotiations with, or respond to enquiries from any Person that has made a bona fide unsolicited written Acquisition Proposal that the Far West Board has determined constitutes, or could reasonably be expected to result in, a Superior Proposal, or provide information pursuant to Subsection 7.1(d) to any Person where the requirements of that Subsection are met.

(b) Far West shall immediately cease and cause to be terminated any existing discussions or negotiations with any Person (other than Capstone) with respect to any potential Acquisition Proposal and, in connection therewith, Far West will discontinue access to any of its confidential information (and not establish or

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allow access to any of its confidential information, or any data room, virtual or otherwise) and shall as soon as possible request the return or destruction of all confidential information provided in connection therewith. Far West agrees not to release any third party from any confidentiality, non-solicitation or standstill agreement to which such third party is a party, or terminate, modify, amend or waive the terms thereof and Far West undertakes to enforce, or cause its Subsidiaries to enforce, all standstill, non-disclosure, non-disturbance, non-solicitation and similar covenants that it or any of its Subsidiaries have entered into prior to the date hereof provided, however, that the foregoing shall not prevent the Far West Board from considering an Acquisition Proposal (that was not solicited after the date hereof in contravention of Subsection 7.1(a) and provided that Far West is in compliance with Subsections 7.1(b) and 7.1(a)) that the Far West Board has determined constitutes, or could reasonably be expected to result in, a Superior Proposal;

(c) From and after the date of this Agreement, Far West shall promptly provide notice to Capstone of any unsolicited bona fide Acquisition Proposal or any proposal, inquiry or offer that could lead to an Acquisition Proposal or any amendments to the foregoing or any request for non-public information relating to Far West or any of its Subsidiaries or for access to the properties, books or records of Far West or any Subsidiary by any Person that informs Far West, any member of the Far West Board or such Subsidiary that it is considering making, or has made, an Acquisition Proposal. Such notice to Capstone shall be made, from time to time, first orally and then (in any event within 24 hours) in writing and shall indicate the identity of the Person making such proposal, inquiry or contact, all material terms thereof and such other details of the proposal, inquiry or contact known to Far West as Capstone may reasonably request, and shall include copies of any such proposal, inquiry, offer or request or any amendment to any of the foregoing. Far West shall keep Capstone promptly and fully informed of the status, including any change to the material terms, of any such proposal, inquiry or request and will respond promptly to all reasonable inquiries by Capstone with respect thereto.

(d) If the Far West Board receives a request for material non-public information from a Person who proposes to Far West an unsolicited bona fide written Acquisition Proposal and (x) the Far West Board determines that such Acquisition Proposal constitutes, or could reasonably be expected to result in, a Superior Proposal; and (y) in the opinion of the Far West Board, acting in good faith and on advice from their outside legal advisors, the failure to provide such party with access to information regarding Far West and its Subsidiaries would be inconsistent with the fiduciary duties of the Far West Board, then, and only in such case, Far West may provide such Person with access to information regarding Far West and its Subsidiaries, subject to the execution of a confidentiality and standstill agreement which is customary in such situations and which, in any event and taken as a whole, is no less favourable to Far West than the Far West Confidentiality Agreement; provided that Far West sends a copy of any such confidentiality and standstill agreement to Capstone promptly upon its execution and Capstone is provided with a list of, and, at the request of Capstone, copies of, the information

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provided to such Person and immediately provided with access to similar information to which such Person was provided.

(e) Far West agrees that it will not accept, approve or enter into any agreement (a “Proposed Agreement”), other than a confidentiality agreement as contemplated by Subsection 7.1(d), with any Person providing for or to facilitate any Acquisition Proposal unless:

(i) the Far West Board determines that the Acquisition Proposal constitutes a Superior Proposal;

(ii) the Far West Meeting has not occurred;

(iii) Far West has complied with Subsections 7.1(a) through 7.1(d) inclusive;

(iv) Far West has provided Capstone with a notice in writing that there is a Superior Proposal together with all documentation related to and detailing the Superior Proposal, including a copy of any Proposed Agreement relating to such Superior Proposal, and a written notice from the Far West Board regarding the value in financial terms that the Far West Board has in consultation with its financial advisors determined should be ascribed to any non-cash consideration offered under the Superior Proposal, such documents to be so provided to Capstone not less than five business days prior to the proposed acceptance, approval, recommendation or execution of the Proposed Agreement by Far West.

(v) five business days (the “Response Period”) shall have elapsed from the date Capstone received the notice and documentation referred to in Subsection 7.1(e)(iv) from Far West and, if Capstone has proposed to amend the terms of the Arrangement in accordance with Subsection 7.1(f), the Far West Board shall have determined, in good faith, after consultation with its financial advisors and outside legal counsel, that the Acquisition Proposal is a Superior Proposal compared to the proposed amendment to the terms of the Arrangement by Capstone;

(vi) Far West concurrently terminates this Agreement pursuant to Subsection 8.2(a)(iv)(B); and

(vii) Far West has previously, or concurrently will have, paid, or caused to be paid, to Capstone the Far West Termination Fee;

and Far West further agrees that it will not withdraw, modify or qualify (or propose to withdraw, modify or qualify) in any manner adverse to Capstone the approval or recommendation of the Arrangement, nor accept, approve or recommend any Acquisition Proposal unless the requirements of this Subsection 7.1(e)(i) through 7.1(e)(v) have been satisfied.

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(f) During the Response Period, Far West acknowledges and agrees that Capstone shall have the right, but not the obligation, to offer to amend the terms of the Agreement and the Plan of Arrangement in order to provide for terms at least equivalent to those provided for in the Superior Proposal. If Capstone does so, then the Far West Board shall review any such proposal by Capstone to determine (acting in good faith and in accordance with its fiduciary duties) whether the Acquisition Proposal to which Capstone is responding would continue to be a Superior Proposal when assessed against the amended Agreement and Plan of Arrangement as proposed by Capstone. If the Far West Board determines that the Acquisition Proposal would thereby cease to be a Superior Proposal, it will cause Far West to enter into an amendment to this Agreement and the Plan of Arrangement reflecting the offer by Capstone to amend the terms of the Agreement and Plan of Arrangement and will further agree not to enter into the applicable Proposed Agreement and not to withdraw, modify or change any recommendation regarding the Plan of Arrangement save and except to reaffirm its recommendation of the amended Plan of Arrangement.

(g) If (i) Capstone does not offer to amend the terms of the Agreement and Plan of Arrangement within the Response Period or (ii) the Far West Board determines acting in good faith and in the proper discharge of its fiduciary duties (after consultation with its financial advisor and after receiving advice from its outside legal counsel) that the Acquisition Proposal would nonetheless remain a Superior Proposal with respect to Capstone’s proposal to amend the Agreement and Plan of Arrangement, and therefore rejects Capstone’s offer to amend the Plan of Arrangement and this Agreement, Far West shall be entitled to terminate this Agreement pursuant to Subsection 8.2(a)(iv)(B) following the expiry of the Response Period and enter into the Proposed Agreement upon payment to Capstone of the amount payable pursuant to Section 8.3.

(h) The Far West Board shall promptly reaffirm its recommendation of the Arrangement by press release after: (x) any Acquisition Proposal which the Far West Board determines not to be a Superior Proposal is publicly announced or made; or (y) the Far West Board determines that a proposed amendment to the terms of the Arrangement would result in the Acquisition Proposal which has been publicly announced or made not being a Superior Proposal, and Capstone has so amended the terms of the Arrangement. Capstone and its counsel shall be given a reasonable opportunity to review and comment on the form and content of any such press release, recognizing that whether or not such comments are appropriate will be determined by Far West, acting reasonably.

(i) Nothing in this Agreement shall prevent the Far West Board from responding through a directors’ circular or otherwise as required by applicable Securities Laws to an Acquisition Proposal that it determines is not a Superior Proposal, or from withdrawing, modifying or changing its recommendation as a result of Capstone having suffered a Capstone Material Adverse Effect. Further, nothing in this Agreement shall prevent the Far West Board from making any disclosure to the securityholders of Far West if the Far West Board, acting in good faith and

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upon the advice of its legal advisors, shall have first determined that the failure to make such disclosure would be inconsistent with the fiduciary duties of the Far West Board. Capstone and its counsel shall be given a reasonable opportunity to review and comment on the form and content of any such disclosure, recognizing that whether or not such comments are appropriate will be determined by Far West, acting reasonably.

(j) Far West acknowledges and agrees that each successive modification of any Acquisition Proposal shall constitute a new Acquisition Proposal for the purposes of this Section 7.1.

(k) Far West shall ensure that the officers, directors and employees of Far West and its Subsidiaries and any investment bankers or other advisors or representatives retained by Far West and/or its Subsidiaries in connection with the transactions contemplated by this Agreement are aware of the provisions of this Section, and Far West shall be responsible for any breach of this Section 7.1 by such officers, directors, employees, investment bankers, advisors or representatives.

(l) If Far West provides Capstone with the notice of an Acquisition Proposal contemplated in this Section 7.1 on a date that is less than ten calendar days prior to the Far West Meeting, Far West shall adjourn the Far West Meeting to a date that is not less than seven calendar days and not more than ten calendar days after the date of such notice, provided, however, that the Far West Meeting shall not be adjourned or postponed to a date later than the seventh (7th) business day prior to the Outside Date.

7.2 Access to Information; Confidentiality

From the date hereof until the earlier of the Effective Time and the termination of this Agreement pursuant to its terms, subject to compliance with applicable Law and the terms of any existing Contracts, each of Capstone and Far West shall, and shall cause their respective representatives to afford to the other Party and to representatives of the other Party such access as the other Party may reasonably require at all reasonable times, including for the purpose of facilitating integration business planning, to their officers, employees, agents, properties, books, records and contracts, and shall furnish the other Party with all data and information as the other Party may reasonably request. Capstone and Far West acknowledge and agree that information furnished pursuant to this Section 7.2 shall be subject to the terms and conditions of the Far West Confidentiality Agreement and the Capstone Confidentiality Agreement.

7.3 Notices of Certain Events

(a) Each Party will give prompt notice to the other of the occurrence, or failure to occur, at any time from the date hereof until the earlier to occur of the termination of this Agreement pursuant to its terms and the Effective Time of any event or state of facts which occurrence or failure would, or would be likely to:

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(i) cause any of the representations or warranties of such Party contained herein to be untrue or inaccurate in any material respect on the date hereof or at the Effective Time; or

(ii) result in the failure to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by such Party hereunder prior to the Effective Time,

provided, however, that the delivery of any notice pursuant to this Section 7.3 shall not limit or otherwise affect the remedies available hereunder to the Party receiving that notice.

(b) No Party may elect not to complete the transactions contemplated hereby pursuant to the conditions set forth herein or any termination right arising therefrom under Subsection 8.2(a)(iii)(A) or Subsection 8.2(a)(iv)(A) and no payments are payable as a result of such termination pursuant to Section 8.3 unless, prior to the Effective Date, the Party intending to rely thereon has delivered a written notice to the other Party specifying in reasonable detail all breaches of covenants, representations and warranties or other matters which the Party delivering such notice is asserting as the basis for the non-fulfilment or the applicable condition or termination right, as the case may be. If any such notice is delivered, provided that a Party is proceeding diligently to cure such matter and such matter is capable of being cured, no Party may terminate this Arrangement Agreement until the expiration of a period of ten business days from such notice.

7.4 Insurance and Indemnification

(a) Prior to the Effective Date, Far West shall purchase customary “tail” policies of directors’ and officers’ liability insurance providing protection no less favourable in the aggregate to the protection provided by the policies maintained by Far West and its Subsidiaries which are in effect immediately prior to the Effective Date and providing protection in respect of claims arising from facts or events which occurred on or prior to the Effective Date and Capstone will, or will cause Far West and its Subsidiaries to, maintain such tail policies in effect without any reduction in scope or coverage for six (6) years from the Effective Date; provided, that Capstone shall not be required to pay any amounts in respect of such coverage prior to the Effective Time and provided, further that the cost of such policy shall not exceed 300% of Far West’s current annual aggregate premium for policies currently maintained by Far West or its Subsidiaries. If a tail policy is not available at a cost less than or equal to 300% of Far West’s current annual aggregate premium for policies currently maintained by Far West or its Subsidiaries, then Capstone agrees that for the period of six years following the Effective Date, Capstone shall cause Far West or any successor to Far West or any of its Subsidiaries (including any successor resulting from any winding-up or liquidation or dissolution of any of them) to maintain Far West’s and its Subsidiaries’ current directors’ and officers’ insurance policies or substantially equivalent policies subject in either case to terms and conditions no less

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advantageous to the directors and officers of Far West and its Subsidiaries than those contained in the policies in effect on the date of this Agreement, for all present and former directors and officers of Far West and its Subsidiaries, covering claims made prior to or within such six year period.

(b) Capstone agrees that it shall directly honour all rights to indemnification or exculpation now existing in favour of present and former officers and directors of Far West and its Subsidiaries to the extent that they are disclosed in Schedule 7.4(b) of the Far West Disclosure Letter, and acknowledges that such rights, to the extent that they are disclosed in Schedule 7.4(b) of the Far West Disclosure Letter, shall survive the completion of the Plan of Arrangement and shall continue in full force and effect for a period of not less than six (6) years from the Effective Date.

(c) The provisions of this Section 7.4 are intended for the benefit of, and shall be enforceable by, each insured or indemnified Person, his or her heirs and his or her legal representatives and, for such purpose, Far West hereby confirms that it is acting as agent and trustee on their behalf. Furthermore, this Section 7.4 shall survive the termination of this Agreement as a result of the occurrence of the Effective Date for a period of six (6) years.

ARTICLE 8 TERM, TERMINATION, AMENDMENT AND WAIVER

8.1 Term

This Agreement shall be effective from the date hereof until the earlier of the Effective Time and the termination of this Agreement in accordance with its terms.

8.2 Termination

(a) This Agreement may be terminated at any time prior to the Effective Time (notwithstanding any approval of this Agreement or the Arrangement Resolution by the Far West Securityholders, the Capstone Shareholders or by the Court):

(i) by mutual written agreement of Far West and Capstone;

(ii) by either Far West or Capstone, if:

(A) the Effective Time shall not have occurred on or before the Outside Date, except that the right to terminate this Agreement under this Subsection 8.2(a)(ii)(A) shall not be available to any Party whose failure to fulfill any of its obligations or whose breach of any of its representations and warranties under this Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur by such Outside Date;

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(B) after the date hereof, there shall be enacted or made any Law that makes consummation of the Arrangement illegal or otherwise prohibited or enjoins Far West or Capstone from consummating the Arrangement and such Law or enjoinment shall have become final and non-appealable;

(C) Far West Securityholder Approval shall not have been obtained at the Far West Meeting in accordance with the Interim Order;

(D) Capstone Shareholder Approval shall not have been obtained at the Capstone Meeting; or

(E) the Effective Time shall not have occurred on or before the Outside Date due to the KORES Condition not being satisfied except that the right to terminate this Agreement under this Subsection 8.2(a)(ii)(E) shall not be available to any Party whose failure to fulfill any of its obligations or whose breach of any of its representations and warranties under this Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur by such Outside Date; or

(iii) by Capstone, if:

(A) prior to the Effective Time: (1) the Far West Board fails to recommend or withdraws, amends, modifies or qualifies, in a manner adverse to Capstone or fails to publicly reaffirm its recommendation of the Arrangement within five business days (and in any case prior to the Far West Meeting) after having been requested in writing by Capstone to do so, in a manner adverse to Capstone (it being understood that the taking of a neutral position or no position with respect to an Acquisition Proposal beyond a period of 15 calendar days shall be considered an adverse modification), (a “Far West Change in Recommendation”); (2) the Far West Board or a committee thereof shall have approved, accepted, endorsed or recommended any Acquisition Proposal; or (3) Far West shall have breached Section 7.1 in any material respect;

(B) a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Far West set forth in this Agreement shall have occurred that would cause the conditions set forth in Subsection 6.2(a) or Subsection 6.2(b) not to be satisfied, and such conditions are incapable of being satisfied by the Outside Date, as reasonably determined by Capstone; provided that Capstone’s failure to fulfil any of its obligations or breach any of its representations or warranties under this Agreement has not been

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the cause of any of the conditions set forth in Subsection 6.2(a) or 6.2(b) not to be satisfied; or

(C) Capstone has been notified in writing by Far West of a Proposed Agreement in accordance with Subsection 7.1(e), and either: (i) Capstone does not deliver an amended Arrangement proposal within five business days of delivery of the Proposed Agreement to Capstone; or (ii) Capstone delivers an amended Arrangement proposal pursuant to Subsection 7.1(f) but the Far West Board determines, acting in good faith and in the proper discharge of its fiduciary duties, that the Acquisition Proposal provided in the Proposed Agreement continues to be a Superior Proposal in comparison to the amended Arrangement terms offered by Capstone;

(iv) by Far West, if

(A) a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Capstone set forth in this Agreement shall have occurred that would cause the conditions set forth in Subsection 6.3(a) or 6.3(b) not to be satisfied, and such conditions are incapable of being satisfied by the Outside Date, as reasonably determined by Far West; provided that Far West’s failure to fulfil any of its obligations or breach any of its representations or warranties under this Agreement has not been the cause of any of the conditions set forth in Subsection 6.2(a) or 6.2(b) not to be satisfied; or

(B) it wishes to enter into a binding written agreement with respect to a Superior Proposal (other than a non-disclosure and standstill agreement permitted by Subsection 7.1(d)), subject to compliance with Section 7.1 in all material respects and provided that no termination under this Subsection 8.2(a)(iv)(B) shall be effective unless and until Far West shall have paid to Capstone the amount required to be paid pursuant to Section 8.3.

(b) The Party desiring to terminate this Agreement pursuant to this Subsection 8.2 (other than pursuant to Subsection 8.2(a)(i)) shall give notice of such termination to the other Parties, specifying in reasonable detail the basis for such Party’s exercise of its termination right.

(c) If this Agreement is terminated pursuant to this Section 8.2, this Agreement shall become void and be of no further force or effect without liability of any Party (or any shareholder, director, officer, employee, agent, consultant or representative of such Party) to any other Party hereto, except that the provisions of this Subsection 8.2(c) and Sections 8.3, 9.3, 9.4, 9.5, 9.6 and 9.7 and all related definitions set forth in Section 1.1 and the provisions of the Far West Confidentiality Agreement

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and the Capstone Confidentiality Agreement shall survive any termination hereof pursuant to Subsection 8.2(a).

8.3 Expenses and Termination Fees

(a) Except as otherwise provided herein, all fees, costs and expenses incurred in connection with this Agreement and the Plan of Arrangement shall be paid by the Party incurring such fees, costs or expenses.

(b) For the purposes of this Agreement:

(i) “Fee” means a (A) Capstone Termination Fee, or (B) Far West Termination Fee;

(ii) “Capstone Termination Fee” means $20 million; and

(iii) “Far West Termination Fee” means $20 million.

(c) For the purposes of this Agreement, “Far West Termination Fee Event” means the termination of this Agreement:

(i) by Capstone pursuant to Subsection 8.2(a)(iii)(A) (but not including a termination by Capstone pursuant to Subsection 8.2(a)(iii)(A) in circumstances where the Far West Change in Recommendation resulted from the occurrence of a Capstone Material Adverse Effect), Subsection 8.2(a)(iii)(C);

(ii) by Far West pursuant to Subsection 8.2(a)(iv)(B); or

(iii) by either Party pursuant to Subsection 8.2(a)(ii)(C) or by either Party pursuant to Subsection 8.2(a)(ii)(A), but only if, in these termination events, (x) prior to such termination, a bona fide Acquisition Proposal for Far West shall have been made or publicly announced by any Person other than Capstone and (y) within twelve months following the date of such termination, Far West or one or more of its Subsidiaries (A) enters into a definitive agreement in respect of one or more Acquisition Proposals or (B) there shall have been consummated one or more Acquisition Proposals for Far West.

If a Far West Termination Fee Event occurs, Far West shall pay the Far West Termination Fee to Capstone by wire transfer of immediately available funds, as follows:

(A) if the Far West Termination Fee is payable pursuant to Subsection 8.3(c)(i), the Far West Termination Fee shall be payable within seven (7) business days following such termination;

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(B) if the Far West Termination Fee is payable pursuant to Subsection 8.3(c)(ii), the Far West Termination Fee shall be payable prior to or simultaneously with such termination; or

(C) if the Far West Termination Fee is payable pursuant to Subsection 8.3(c)(iii), the Far West Termination Fee shall be payable concurrently upon the earlier of the entering into of the applicable agreement referred to therein or upon the consummation of the Acquisition Proposal referred to therein.

(d) For the purposes of this Agreement, “Capstone Termination Fee Event” means the termination of this Agreement:

(i) by either Party pursuant to Subsection 8.2(a)(ii)(E); or

(ii) by either Party pursuant to Subsection 8.2(a)(ii)(D) or by either Party pursuant to Subsection 8.2(a)(ii)(A) but only if, in these termination events, (x) prior to such termination, a bona fide Acquisition Proposal for Capstone shall have been made or publicly announced by any Person other than Far West and (y) within twelve months following the date of such termination, Capstone or one or more of its Subsidiaries (A) enters into a definitive agreement in respect of one or more Acquisition Proposals or (B) there shall have been consummated one or more Acquisition Proposals involving Capstone; or

(iii) by Far West pursuant to Subsection 8.2(a)(iv)(A), but only in the event of a breach of the covenants by Capstone contained in Subsection 5.7(c) (but not including a termination by Far West pursuant to Subsection 8.2(a)(iv)(A) in circumstances where such breach resulted from the occurrence of a Far West Material Adverse Effect).

If a Capstone Termination Fee Event occurs, Capstone shall pay the Capstone Termination Fee to Far West by wire transfer of immediately available funds, as follows:

(A) if the Capstone Termination Fee is payable pursuant to Subsection 8.3(d)(i), the Capstone Termination Fee shall be payable within seven (7) business days following such termination; or

(B) if the Capstone Termination Fee is payable pursuant to Subsection 8.3(d)(ii), the Capstone Termination Fee shall be payable concurrently upon the earlier of the entering into of the applicable agreement referred to therein or upon the consummation of the Acquisition Proposal referred to therein.

(e) Each of the Parties acknowledges that the agreements contained in this Section 8.3 are an integral part of the transactions contemplated in this Agreement and that, without those agreements, the Parties would not enter into this Agreement.

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Each Party acknowledges that all of the payment amounts set out in this Section 8.3 are payments of liquidated damages which are a genuine pre-estimate of the damages, which the Party entitled to such damages will suffer or incur as a result of the event giving rise to such payment and the resultant termination of this Agreement and are not penalties. Each of Far West and Capstone irrevocably waives any right it may have to raise as a defence that any such liquidated damages are excessive or punitive. For greater certainty, each Party agrees that, upon any termination of this Agreement under circumstances where Far West or Capstone is entitled to a Fee and such Fee is paid in full, Far West or Capstone, as the case may be, shall be precluded from any other remedy against the other Party at Law or in equity or otherwise (including, without limitation, an order for specific performance), and shall not seek to obtain any recovery, judgment, or damages of any kind, including consequential, indirect, or punitive damages, against the other Party or any of its Subsidiaries or any of their respective directors, officers, employees, partners, managers, members, shareholders or affiliates or their respective representatives in connection with this Agreement or the transactions contemplated hereby, provided, however that payment by a Party of a Fee shall not be in lieu of any damages or any other payment or remedy available in the event of any wilful or intentional breach by such Party of any of its obligations under this Agreement.

8.4 Amendment

Subject to the provisions of the Interim Order, the Plan of Arrangement and applicable Laws, this Agreement and the Plan of Arrangement may, at any time and from time to time before or after the holding of the Far West Meeting but not later than the Effective Time, be amended by mutual written agreement of the Parties, without further notice to or Authorization on the part of the Far West Securityholders, and any such amendment may without limitation:

(a) change the time for performance of any of the obligations or acts of any of the Parties;

(b) waive any inaccuracies or modify any representation or warranty contained herein or in any document delivered pursuant hereto;

(c) waive compliance with or modify any of the covenants herein contained and waive or modify performance of any of the obligations of any of the Parties; and

(d) waive compliance with or modify any mutual conditions precedent herein contained.

8.5 Waiver

Any Party may (a) extend the time for the performance of any of the obligations or acts of the other Party, (b) waive compliance, except as provided herein, with any of the other Party’s agreements or the fulfilment of any conditions to its own obligations contained herein, or (c) waive inaccuracies in any of the other Party’s representations or warranties contained herein or in any document delivered by the other Party; provided, however, that any such extension or

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waiver shall be valid only if set forth in an instrument in writing signed on behalf of such Party and, unless otherwise provided in the written waiver, will be limited to the specific breach or condition waived.

ARTICLE 9 GENERAL PROVISIONS

9.1 Privacy

Each Party shall comply with applicable privacy Laws in the course of collecting, using and disclosing Personal information about an identifiable individual.

9.2 Notices

All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed to have been duly given and received on the day it is delivered, provided that it is delivered on a business day prior to 5:00 p.m. local time in the place of delivery or receipt. However, if notice is delivered after 5:00 p.m. local time or if such day is not a business day then the notice shall be deemed to have been given and received on the next business day. Notice shall be sufficiently given if delivered (either in Person, by courier service or other Personal method of delivery), or if transmitted by facsimile or email to the Parties at the following addresses (or at such other addresses as shall be specified by any Party by notice to the other given in accordance with these provisions):

(a) if to Capstone:

Capstone Mining Corp. Suite 900 999 West Hastings Street Vancouver, BC V6C 2W2 Attention: Darren Pylot, President, CEO & Director Facsimile: (604) 688-2180 Email: dpylot@capstonemining.com

with a copy (which shall not constitute notice) to:

Blake, Cassels & Graydon LLP 595 Burrard Street, PO Box 49314 Suite 2600, Three Bentall Centre Vancouver, BC V7X 1L3

Attention: Bob Wooder Facsimile: (604) 631-3309 Email: bob.wooder@blakes.com

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(b) if to Far West:

Far West Mining Ltd. Suite 420 – 1090 West Georgia Street Vancouver, BC V6E 3V7

Attention: Rick Zimmer, President & CEO Facsimile: (604) 602-9155 Email: rzimmer@farwestmining.com

with a copy (which shall not constitute notice) to:

Davis LLP Suite 2800 Park Place 666 Burrard Street Vancouver, BC V6C 2Z7 Attention: David R. Reid Facsimile: (604) 687-1612 Email: drreid@davis.ca

with a copy (which shall not constitute notice) to:

Borden Ladner Gervais LLP 1200 Waterfront Centre 200 Burrard Street, P.O. Box 48600 Vancouver, BC V7X 1T2

Attention: Fred R. Pletcher Facsimile: (604) 622-5802 Email: fpletcher@blg.com

9.3 Governing Law; Waiver of Jury Trial

This Agreement shall be governed, including as to validity, interpretation and effect, by the Laws of the Province of British Columbia and the Laws of Canada applicable therein. Each of the Parties hereby irrevocably attorns to the exclusive jurisdiction of the courts of the Province of British Columbia in respect of all matters arising under and in relation to this Agreement and the Arrangement and waives any defences to the maintenance of an action in the Courts of the Province of British Columbia. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.

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9.4 Injunctive Relief

Subject to Section 8.3, the Parties agree that irreparable harm would occur for which money damages would not be an adequate remedy at Law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, the Parties agree that, in the event of any breach or threatened breach of this Agreement by a Party, the non-breaching Party will be entitled, without the requirement of posting a bond or other security, to equitable relief, including injunctive relief and specific performance, and the Parties shall not object to the granting of injunctive or other equitable relief on the basis that there exists an adequate remedy at Law. Subject to Section 8.3, such remedies will not be the exclusive remedies for any breach of this Agreement but will be in addition to all other remedies available at Law or equity to each of the Parties. Notwithstanding the foregoing or any other provision of this Agreement, the Parties acknowledge and agree that Far West shall not be entitled to enforce specifically the obligations of Capstone to consummate the transactions contemplated by this Agreement unless all of the conditions set forth in Section 6.1 and Section 6.2 shall have been satisfied or waived.

9.5 Time of Essence

Time shall be of the essence in this Agreement.

9.6 Entire Agreement, Binding Effect and Assignment

This Agreement (including the exhibits and schedules hereto and the Far West Disclosure Letter and the Capstone Disclosure Letter), the Far West Confidentiality Agreement and the Capstone Confidentiality Agreement constitute the entire agreement, and supersede all other prior agreements and understandings, both written and oral, between the Parties, or any of them, with respect to the subject matter hereof and thereof and, except as expressly provided herein, this Agreement is not intended to and shall not confer upon any Person other than the Parties any rights or remedies hereunder. Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by either of the Parties without the prior written consent of the other Parties.

9.7 No Liability

No director or officer of Capstone shall have any personal liability whatsoever to Far West under this Agreement, or any other document delivered in connection with the transactions contemplated hereby on behalf of Capstone. No director or officer of Far West shall have any Personal liability whatsoever to Capstone under this Agreement, or any other document delivered in connection with the transactions contemplated hereby on behalf of Far West. Except with respect to Section 7.4, this Agreement will not benefit or create any right or cause any action in or on behalf of any person other than the Parties hereto and no person other than the Parties hereto will be entitled to rely on the provisions hereof. For greater certainty, for purposes of this Section 9.7 and all other provisions of this Agreement, KORES is not a Party hereto.

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9.8 Severability

If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.

9.9 Counterparts, Execution

This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. The Parties shall be entitled to rely upon delivery of an executed facsimile or similar executed electronic copy of this Agreement, and such facsimile or similar executed electronic copy shall be legally effective to create a valid and binding agreement between the Parties.

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50755005.11

IN WITNESS WHEREOF Capstone and Far West have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

CAPSTONE MINING CORP.

By: (signed) “Darren M. Pylot” Darren M. Pylot President & Chief Executive Officer

FAR WEST MINING LTD.

By: (signed) “Richard N. Zimmer” Richard N. Zimmer President & Chief Executive Officer

KORES acknowledges the terms and conditions of this Agreement by the

execution thereof by its duly authorized representative.

KOREA RESOURCES CORPORATION

By: (signed) “Shin-Jong Kim” Shin-Jong Kim President & Chief Executive Officer

50755005.11

SCHEDULE A PLAN OF ARRANGEMENT

Pursuant to Part 9, Division 5 of the Business Corporations Act (British Columbia), as amended

ARTICLE 1 INTERPRETATION

1.1 In this Plan of Arrangement, any capitalized term used herein and not defined in this Section 1.1 shall have the meaning ascribed thereto in the Arrangement Agreement. Unless the context otherwise requires, the following words and phrases used in this Plan of Arrangement will have the meanings hereinafter set out:

Arrangement means the arrangement of Far West under Section 288 of the BCBCA on the terms and subject to the conditions set out in this Plan of Arrangement, subject to any amendments or variations thereto made in accordance with Section 8.4 of the Arrangement Agreement or the Plan of Arrangement or made at the direction of the Court in the Final Order;

Arrangement Agreement means the agreement made as of April 15, 2011 between Capstone and Far West, including all schedules annexed hereto, together with the Far West Disclosure Letter and the Capstone Disclosure Letter, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof;

Arrangement Resolution means the special resolution of the Far West Securityholders approving the Plan of Arrangement which is to be considered at the Far West Meeting and shall be substantially in the form of Schedule “B” to the Arrangement Agreement;

BCBCA means the Business Corporations Act (British Columbia) and the regulations made thereunder, as now in effect and as they may be promulgated or amended from time to time;

Business Day means any day, other than a Saturday, a Sunday or a statutory or civic holiday in Vancouver, British Columbia;

Capstone means Capstone Mining Corp., a corporation incorporated under the laws of the Province of British Columbia;

Capstone Options has meaning ascribed thereto in Section 3.1(e)(i);

Capstone Shares means the common shares of Capstone;

Capstone Warrants has meaning ascribed thereto in Section 3.1(d);

Cash Alternative has the meaning ascribed thereto in subsection 3.1(c)(i);

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Cash Maximum means $1.00 multiplied by the number of Far West Shares issued and outstanding immediately preceding the steps contemplated in subsection 3.1(c), excluding any Far West Shares deemed to be transferred to Capstone pursuant to subsection 3.1(b);

Conditional Exercise Notice means a notice of exercise (the form of which shall be included in the Far West Circular) that is conditional upon completion of the Arrangement and that is validly given under the Far West Option Plan with respect to the exercise of Far West Options that are currently vested or vest upon a change of control pursuant to sections 10.4 and 10.5 of the Far West Option Plan;

Court means the Supreme Court of British Columbia;

Depositary means Computershare Investor Services Inc.;

Dissent Procedures has the meaning ascribed thereto in Section 6.1;

Dissent Rights means the rights of dissent exercisable by the Far West Shareholders in respect of the Arrangement described in Article 6 hereto;

Dissenter means a Far West Shareholder who has duly exercised a Dissent Right and who is ultimately entitled to be paid the fair value of the Far West Shares held by such Far West Shareholder;

Dissenting Shares has the meaning ascribed thereto in Section 6.2;

Capstone Share Closing Price means the volume weighted average price on the Toronto Stock Exchange of a Capstone Share for the five trading days ending on the trading day which is three trading days prior to the Effective Date;

Effective Date” means the effective date of the Arrangement, being the second business day after the date upon which the Parties have confirmed that all conditions precedent (excluding conditions that, by their terms, cannot be satisfied until the Effective Date) to the completion of the Arrangement as set out in Article 6 of the Arrangement Agreement have been satisfied or waived in accordance with this Agreement, or such other date as may be agreed to by the Parties, and the Parties shall execute a certificate confirming the Effective Date;

Effective Time means 12:01 a.m. (Vancouver time) on the Effective Date;

Election Deadline means 5:00 p.m. (Vancouver time) two Business Days before the Far West Meeting;

Eligible Holder means a Far West Shareholder who is (a) a resident of Canada for the purposes of the Tax Act and any applicable income tax treaty, holds Far West Shares as capital property and who is not exempt from tax on income under the Tax Act, or (b) a non-resident of Canada for the purposes of the Tax Act and any applicable income tax treaty, whose Far West Shares constitute “taxable Canadian property” (as defined by the

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Tax Act) and who is not exempt from Canadian tax in respect of any gain realized on the disposition of Far West Shares by reason of an exemption contained in an applicable income tax treaty, or (c) a partnership if one or more members of the partnership are described in (a) or (b);

Far West means Far West Mining Ltd., a company continued under the laws of the Province of British Columbia;

Far West Meeting means the special meeting of Far West Shareholders, Far West Optionholders and Far West Warrantholders, voting as a single class, including any adjournment or postponement thereof, to be called and held in accordance with the Interim Order to consider the Arrangement Resolution;

Far West Option Plan means the stock option plan of Far West, approved by the Far West Board on March 26, 2007 and by Far West Shareholders on May 9, 2007 and on May 13, 2010;

Far West Optionholders means the holders of Far West Options;

Far West Options means the outstanding options to purchase Far West Shares granted under the Far West Option Plan;

Far West Securityholders means Far West Shareholders, Far West Optionholders and Far West Warrantholders;

Far West Shareholders means the holders from time to time of Far West Shares and Far West Shareholder means any one of them;

Far West Shares means the common shares in the authorized share capital of Far West;

Far West Warrantholders means the holders of Far West Warrants;

Far West Warrants means outstanding warrants to purchase Far West Shares;

Full Proration Alternative has the meaning ascribed thereto in subsection 3.1(c)(ii);

Final Order means the final order of the Court, after a hearing upon the fairness of the terms and conditions of the Arrangement, approving the Arrangement, in a form acceptable to Far West and Capstone, each acting reasonably, as such order may be amended by the Court at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended on appeal;

In the Money Amount means in respect of a stock option at any time, the amount, if any, by which the aggregate fair market value, at that time, of the securities subject to the option exceeds the aggregate exercise price under the option;

Interim Order means the interim order of the Court contemplated by Section 2.2 of the Arrangement Agreement and made pursuant to Section 291 of the BCBCA, in a form

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acceptable to Far West and Capstone, each acting reasonably, providing for, among other things, the calling and holding of the Far West Meeting, as the same may be amended by the Court;

Plan of Arrangement means this Plan of Arrangement and any amendments or variations thereto made in accordance with this Plan of Arrangement or upon the direction of the Court in the Final Order with the consent of Far West and Capstone, each acting reasonably;

Registrar means the Registrar of Companies appointed pursuant to Section 400 of the BCBCA;

Share Alternative has the meaning ascribed thereto in subsection 3.1(c)(i);

Subsidiary has the meaning ascribed thereto in the National Instrument 45-106 – Prospectus and Registration Exemptions;

Tax Act means the Income Tax Act (Canada) and the regulations made thereunder, as now in effect and as they may be promulgated or amended from time to time; and

Transmittal Letter has the meaning ascribed thereto in Section 4.1.

1.2 In this Plan of Arrangement, unless otherwise expressly stated or the context otherwise requires:

(a) the division of this Plan of Arrangement into Articles and Sections and the further division thereof into subsections and the insertion of headings are for convenience of reference only and will not affect the construction or interpretation of this Plan of Arrangement. Unless otherwise indicated, any reference in this Plan of Arrangement to an Article, Section or subsection refers to the specified Article, Section or subsection to this Plan of Arrangement;

(b) the terms “hereof”, “herein”, “hereunder” and similar expressions refer to this Plan of Arrangement and not to any particular section or other portion hereof and include any agreement or instrument supplementary or ancillary hereto and, unless otherwise indicated, a reference herein to a Section is to the appropriate Section of this Plan of Arrangement;

(c) words importing the singular number only will include the plural and vice versa, words importing the use of any gender will include all genders and words importing persons will include firms and corporations and vice versa;

(d) the word “including” means “including, without limiting the generality of the foregoing”;

(e) a reference to a statute is to that statute as now enacted or as the statute may from time to time be amended, re-enacted or replaced and includes any regulation, rule or policy made thereunder; and

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(f) all references to cash or currency in this Plan of Arrangement are to Canadian dollars unless otherwise indicated.

ARTICLE 2 ARRANGEMENT AGREEMENT

2.1 This Plan of Arrangement is made pursuant to and subject to the provisions of the Arrangement Agreement.

2.2 This Plan of Arrangement will become effective as at the Effective Time and will be binding without any further authorization, act or formality on the part of the Court, or the Registrar, on Capstone, Far West and the Far West Securityholders from and after the Effective Time.

ARTICLE 3 ARRANGEMENT

3.1 On the Effective Date, subject to the provisions of Article 6 hereof, the following will occur and will be deemed to occur in the order and at the times set out below without any further authorization, act or formality:

(a) Effective at the Effective Time, all Far West Shares to be issued to Far West Optionholders who have tendered Conditional Exercise Notices, together with the applicable exercise price, for any Far West Options that are vested prior to the Effective Time (including any unvested Far West Options whose vesting was accelerated pursuant to sections 10.4 and 10.5 of the Far West Option Plan), will be deemed to be issued to such Far West Optionholders, as fully paid and non-assessable common shares in the capital of Far West, such Far West Optionholders will be entered in the share register of Far West as the registered holder thereof and no share certificates in respect of such Far West Shares shall be issued;

(b) Immediately thereafter, each issued Far West Share outstanding immediately prior to the Effective time held by an Far West Shareholder in respect of which Dissent Rights have been validly exercised shall be deemed to have been transferred without any further act or formality to Capstone, free and clear of any liens, claims and encumbrances, and:

(i) such Far West Shareholder shall cease to be the registered holder of such Dissenting Shares and shall cease to have any rights as registered holders of such Far West Shares other than the right to be paid fair value for such Dissenting Shares as set out in Section 6.1 and 6.2;

(ii) such Far West Shareholder’s name shall be removed as the registered holder of such Dissenting Shares from the registers of Far West Shares maintained by or on behalf of Far West; and

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(iii) Capstone shall be deemed to be the transferee of such Dissenting Shares, free and clear of any liens, claims and encumbrances, and shall be entered in the registers of Far West Shares maintained by or on behalf of Far West.

(c) Immediately thereafter, each issued Far West Share (other than any Far West Share in respect of which the Far West Shareholder has validly exercised his, her or its Dissent Right) will be transferred to, and acquired by Capstone, without any act or formality on the part of the holder of such Far West Share or Capstone, free and clear of all liens, claims and encumbrances, in exchange for:

(i) at the election of the holder of such Far West Share:

(A) 1.825 Capstone Shares and the sum of one dollar ($1.00) in cash (the “Full Proration Alternative”);

(B) 2.047 Capstone Shares and $0.001 in cash (the “Share Alternative”);

(C) $9.19 in cash, (the “Cash Alternative”), subject to proration pursuant to subsection 3.1(c)(iv), if applicable; or

(ii) if no election has been made pursuant to subsection 4.1 hereof the holder of such Far West Share shall be deemed to have elected to receive the Full Proration Alternative per Far West Share,

and the name of each such Far West Shareholder will be removed from the register of holders of Far West Shares and added to the register of holders of Capstone Shares, if applicable, and Capstone will be recorded as the registered holder of such Far West Shares so exchanged and will be deemed to be the legal and beneficial owner thereof; provided that, for greater certainty, unless an Far West Shareholder receives only cash in consideration for Far West Shares owned by such Far West Shareholder, a pro rata portion of the total amount of cash and the total number of Capstone Shares received by such Far West Shareholder pursuant to this subsection 3.1(a), subject to proration as provided below, if applicable, will be allocated to every Far West Share held by such Far West Shareholder, so that such Far West Shareholder will receive for each Far West Share held by it the same combination of Capstone Shares and cash as is received for every other Far West Share held by it and neither Capstone Shares nor cash will be considered to have been received for any specific portion or fraction of such Far West Shares; and provided further that the cash and/or Capstone Shares which each such Far West Shareholder is entitled to receive for each such Far West Share transferred to Capstone pursuant to this subsection 3.1(a) shall be subject to adjustment and pro rated on the following basis:

(iii) the aggregate amount of cash that Capstone will pay as consideration for all Far West Shares acquired pursuant to this Plan of Arrangement, other than any Far West Share in respect of which the Far West Shareholder has

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validly exercised his, her or its Dissent Right or pursuant to subsection 3.1(c)(v), shall not exceed the Cash Maximum;

(iv) if the aggregate amount of cash consideration that would, but for the operation of subsection 3.1(c)(iii), be payable by Capstone to Far West Shareholders who elect or are deemed to receive the Full Proration Alternative or the Cash Alternative in respect of their Far West Shares, exceeds the Cash Maximum, then the amount of cash per Far West Share to be paid to each Far West Shareholder that elects to receive the Cash Alternative shall be the greater of:

(A) $1.00; and

(B) such Far West Shareholder’s pro rata share of cash equal to the difference between (x) the Cash Maximum and (y) the aggregate of the $1.00 per share of cash consideration to be paid in respect of Far West Shares to Far West Shareholders who elect or are deemed to elect to receive the Full Proration Alternative;

(v) no fractional Capstone Share will be issued in connection with the exchange in this Section 3.1, but rather holders of Far West Shares entitled to a fractional Capstone Share will receive cash in lieu thereof based on one whole Capstone Share being valued at the Capstone Share Closing Price; and

(vi) if the aggregate cash consideration payable to any holder of Far West Shares for all of such holder’s Far West Shares transferred to, and acquired by Capstone pursuant to subsection 3.1(a) is less than one cent ($0.01), then the aggregate amount of such cash consideration shall be rounded up to one cent ($0.01).

(d) Immediately thereafter, all Far West Warrants shall be deemed to be exchanged for warrants (“Capstone Warrants”) to purchase Capstone Shares and each former Far West Warrantholder shall, in respect of each such Capstone Warrant, be entitled to receive upon the exercise thereof, in lieu of one Far West Share, 1.825 Capstone Shares, on the same terms and conditions as the original Far West Warrant, provided, however, that the exercise price of each Capstone Warrant shall be reduced by $1.00 from the exercise price in the original Far West Warrant. No new certificates will be issued in respect of such Capstone Warrants, and each certificate which represented an outstanding Far West Warrant shall, as and from the Effective Time, be deemed to represent a Capstone Warrant; and

(e) Immediately thereafter:

(i) all Far West Options shall be deemed to be exchanged for options (“Capstone Options”) to purchase Capstone Shares and each former Far West Optionholder shall, in respect of each such Capstone Option, be entitled to receive upon the exercise thereof, in lieu of one Far West Share,

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2.047 Capstone Shares on the same terms and conditions, subject to (ii) below, as the original Far West Option, provided that the aforesaid exchange ratio shall be adjusted to the extent, if any, required to ensure that the In the Money Amount of the option to purchase Capstone Shares immediately after the exchange does not exceed the In the Money Amount of the original Far West Option immediately before the exchange. No new certificates will be issued in respect of such Capstone Options, and each certificate which represented an outstanding Far West Option shall, as and from the Effective Time, be deemed to represent a Capstone Option; and

(ii) the expiry date on termination for all outstanding Far West Options held by Far West’s employees, officers, directors or consultants, respectively, who cease to be employees, officers, directors or consultants on or prior to the first anniversary of the Effective Date will be extended to the earlier of (i) 365 days from the Effective Date, and (ii) the original expiry date (absent such termination) of any such Far West Option and otherwise will remain as the expiry date set by the original terms of such Far West Options.

The transactions provided for in this Section 3.1 will be deemed to occur on the Effective Date and at the time specified notwithstanding that certain of the procedures related hereto are not completed until after the Effective Date.

3.2 Notwithstanding that the transactions or events set out in Section 3.1 may occur or be deemed to occur in the order therein set out without any further act or formality, each of Far West and Capstone agree to make, do and execute or cause and procure to be made, done and executed all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may be required by it in order to further document or evidence any of the transactions or events set out in Section 3.1 including, without limitation, any resolution of directors authorizing the issue, transfer or purchase for cancellation of shares, any share transfer powers evidencing the transfer of shares, any receipt therefor and any necessary additions to or deletions from share registers.

ARTICLE 4 ELECTIONS

4.1 Each Person who, at or prior to the Election Deadline, is a holder of record of Far West Shares will be entitled to elect, by submitting to the Depositary a duly completed letter of transmittal and election (“Transmittal Letter”) in respect of such Far West Shares (the form of which shall have been sent to each such holder at the same time as the notice of the Far West Meeting and accompanying management information circular shall have been sent to holders of Far West Shares in connection with the Far West Meeting), together with the certificate(s) (if any) representing such Far West Shares, no later than the Election Deadline, the combination of Capstone Shares and cash that such person wishes to receive as the Consideration pursuant to the Share Alternative and Cash Alternative in consideration for such Person’s Far West Shares. For greater certainty, holders of Far West Options which are exercised prior to or at the Effective Time shall

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not be required to deliver share certificates to the extent that such certificates were not issued prior to the Election Deadline and provided such holders otherwise provide satisfactory documentation evidencing due exercise of each Far West Option.

4.2 The holder of each Far West Share in respect of which an effective Transmittal Letter was not submitted to the Depositary, together with the certificate (if any) representing such Far West Share, prior to the Election Deadline will be deemed to have elected to receive the Full Proration Alternative in consideration for such Far West Share.

4.3 An Eligible Holder who receives any Capstone Shares as consideration for the transfer of such holder’s Far West Shares to Capstone shall be entitled to make an income tax election pursuant to subsection 85(1) of the Tax Act or, if the holder is a partnership, subsection 85(2) of the Tax Act (and in each case, where applicable, the analogous provisions of provincial income tax law) with respect to the transfer of such holder’s Far West Shares to Capstone at an amount determined such Eligible Holder, subject to the limitations set out in subsection 85(1) of the Tax Act. In order to make an election, an Eligible Holder of Far West Shares must provide the required election form containing all necessary information on or before ninety (90) calendar days after the Effective Date in accordance with the procedures set out a tax information package to be sent to Eligible Holders that indicate an interest in making and filing an election by checking the appropriate box on the Letter of Transmittal.

ARTICLE 5 CERTIFICATES AND PAYMENTS

5.1 Capstone will, following receipt by Far West of the Final Order and prior to the Effective Time, deposit in escrow with the Depositary the Far West Shares and sufficient cash to satisfy the consideration issuable and/or payable to the Far West Shareholders pursuant to this Plan of Arrangement (other than Far West Shareholders exercising Dissent Rights and who have not withdrawn their notice of objection).

5.2 After the Effective Date, certificates formerly representing Far West Shares which are held by a Far West Shareholder will, except for Far West Shares held by Dissenters, represent only the right to receive the consideration issuable and/or payable therefor pursuant to Section 3.1 in accordance with the terms of this Plan of Arrangement.

5.3 No dividends or other distributions declared or made after the Effective Date with respect to the Capstone Shares with a record date after the Effective Date will be payable or paid to the holder of any unsurrendered certificate or certificates for Far West Shares which, immediately prior to the Effective Date, represented outstanding Far West Shares and will not be payable or paid until the surrender of certificates for Far West Shares for exchange for the consideration issuable and/or payable therefor pursuant to Section 3.1 in accordance with the terms of this Plan of Arrangement.

5.4 As soon as reasonably practicable after the Effective Date (subject to Section 7.2), the Depositary will forward to each Far West Shareholder that submitted a duly completed Transmittal Letter to the Depositary, together with the certificate (if any) representing the

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Far West Shares held by such Far West Shareholder, the certificates representing the Capstone Shares (if any) issued to such Far West Shareholder pursuant to Section 3.1(c), which shares will be registered in such name or names and either (i) delivered, together with a cheque payable to such Far West Shareholder for the cash consideration payable to such Far West Shareholder pursuant to Section 3.1, to the address or addresses as such Far West Shareholder directed in their Transmittal Letter or (ii) made available for pick up at the offices of the Depositary in accordance with the instructions of the Far West Shareholder in the Transmittal Letter. Far West Shareholders that did not submit an effective Transmittal Letter prior to the Effective Date may take delivery of the consideration issuable and/or payable to them by delivering the certificates representing Far West Shares or Far West Shares formerly held by them to the Depositary at the offices indicated in the Transmittal Letter. Such certificates must be accompanied by a duly completed Transmittal Letter, together with such other documents as the Depositary may require. Certificates representing the Capstone Shares (if any) issued to such Far West Shareholder pursuant to Section 3.1 will be registered in such name or names and either (i) delivered, together with a cheque payable to such Far West Shareholder for the cash consideration payable to such Far West Shareholder pursuant to Section 3.1, to the address or addresses as such Far West Shareholder directed in their Transmittal Letter or (ii) made available for pick up at the offices of the Depositary in accordance with the instructions of the Far West Shareholder in the Transmittal Letter, as soon as reasonably practicable after receipt by the Depositary of the required certificates and documents.

5.5 Any certificate which immediately prior to the Effective Date represented outstanding Far West Shares and which has not been surrendered, with all other instruments required by this Article 5, on or prior to the sixth anniversary of the Effective Date, will cease to represent any claim against or interest of any kind or nature in Far West, Capstone or the Depositary.

5.6 In the event any certificate, which immediately before the Effective Time represented one or more outstanding Far West Share that was exchanged pursuant to Section 3.1, is lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such certificate to be lost, stolen or destroyed, the Depositary will issue in exchange for such lost, stolen or destroyed certificate, the consideration to which such Person is entitled in respect of the Far West Shares represented by such lost, stolen, or destroyed certificate pursuant to Section 3.1 deliverable in accordance with such Person’s Transmittal Letter. When authorizing such issuances or payment in exchange for any lost, stolen or destroyed certificate, the Person to whom consideration is to be issued and/or paid will, as a condition precedent to the issuance and/or payment thereof, give a bond satisfactory to Capstone and its transfer agent in such sum as Capstone may direct or otherwise indemnify Capstone in a manner satisfactory to it, against any Claim that may be made against one or both of them with respect to the certificate alleged to have been lost, stolen or destroyed.

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ARTICLE 6 RIGHTS OF DISSENT AND APPRAISAL

6.1 Notwithstanding Section 3.1, registered holders of Far West Shares may exercise rights of dissent (the “Dissent Rights”) in connection with the Arrangement pursuant to the Interim Order and in the manner set forth in Sections 242 to 247 of the BCBCA (collectively, the “Dissent Procedures”), subject to the provisions of this Article 6; provided, however, that notwithstanding Section 242 of the BCBCA, any notices of dissent in respect of the Arrangement Resolution must be received by Far West not later than 5:00 p.m. (Vancouver time) on the day which is two business days preceding the Far West Meeting.

6.2 Far West Shareholders who duly exercise Dissent Rights with respect to their Far West Shares (“Dissenting Shares”) and who are ultimately:

(a) entitled to be paid the fair value for their Dissenting Shares will be paid by Capstone the amount to which the Dissenter is entitled to be paid for their Dissenting Shares in accordance with Section 245 of the BCBCA; or

(b) not entitled for any reason to be paid for their Dissenting Shares, will be deemed to have participated in the Arrangement on the same basis as a non-dissenting Far West Shareholder and will receive the consideration issuable and/or payable to them on the same basis as Far West Shareholders who elect the Full Proration Alternative,

but in no case will Far West, Capstone or any other Person be required to recognize such Persons as holding Far West Shares on or after the Effective Date.

ARTICLE 7 EFFECT OF THE ARRANGEMENT

7.1 As at and from the Effective Time:

(a) Far West will be a wholly-owned Subsidiary of Capstone;

(b) the rights of creditors against the property and interests of Far West will be unimpaired by the Arrangement;

(c) Far West Shareholders, other than Dissenters, will hold (i) cash or (ii) cash and Capstone Shares, as applicable in replacement for their Far West Shares, as provided by the Plan of Arrangement; and

(d) the rights and obligations of Far West Optionholders and Far West Warrantholders shall be amended as provided for in this Plan of Arrangement.

7.2 Capstone, Far West and the Depositary will be entitled to deduct and withhold from any consideration payable to any holder of Far West Shares and to any Dissenter, such amounts as Capstone, Far West or the Depositary is required or permitted to deduct and

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withhold with respect to such payment under the Tax Act, the United States Internal Revenue Code of 1986 or any provision of provincial, state, local or foreign tax laws, in each case, as amended. To the extent that amounts are so withheld, such withheld amounts will be treated for all purposes hereof as having been paid to the holder of the shares in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority. Each of Far West, Capstone and the Depositary is hereby authorized to sell or otherwise dispose of such portion of the cash or Capstone Shares payable as consideration as is necessary to provide sufficient funds to Capstone, Far West or the Depositary, as the case may be, to enable it to comply with such deduction or withholding requirement, and Capstone, Far West or the Depositary will notify the holder thereof and remit to the holder any unapplied balance of the net proceeds of such sale.

ARTICLE 8 AMENDMENTS

8.1 Capstone and Far West reserve the right to amend, modify and/or supplement this Plan of Arrangement from time to time at any time prior to the Effective Date, provided that any such amendment, modification or supplement must be contained in a written document that is approved by each of Capstone and Far West and is filed with the Court. Subject to Section 8.3, if such amendment, modification or supplement is made following the Far West Meeting, it shall be approved by the Court and, if required by the Court, communicated to the Far West Shareholders, and will become part of the Arrangement upon completion of all the conditions required in the Court approval.

8.2 Save and except as may be otherwise provided in the Interim Order, any amendment, modification or supplement to this Plan of Arrangement may be proposed by Capstone or Far West (provided that the other shall have consented thereto) at any time prior to the Far West Meeting with or without any other prior notice or communication to Far West Shareholders, and if so proposed and accepted by Far West Shareholders voting at the Far West Meeting, will become part of this Plan of Arrangement for all purposes.

8.3 Any amendment, modification or supplement to this Plan of Arrangement may be made by Capstone and Far West without approval of the Far West Shareholders provided that it concerns a matter which, in the reasonable opinion of Capstone and Far West is of an administrative or ministerial nature required to better give effect to the implementation of this Plan of Arrangement and is not materially adverse to the financial or economic interests of any of the Far West Shareholders.

ARTICLE 9 FURTHER ASSURANCES

9.1 Notwithstanding that the transactions and events set out herein shall occur and be deemed to occur in the order set out in this Plan of Arrangement without any further act or formality, each of the parties to the Arrangement Agreement shall make, do and execute, or cause to be made, done and executed, all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may reasonably be required by any of

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them in order further to document or evidence any of the transactions or events set out therein.

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SCHEDULE B ARRANGEMENT RESOLUTION

BE IT RESOLVED THAT:

1. The arrangement (the “Arrangement”) under Section 288 of the Business Corporations Act (British Columbia) (the “BCBCA”) involving Far West Mining Ltd., a corporation existing under the Laws of the Province of British Columbia (“Far West”), all as more particularly described and set forth in the Management Proxy Circular (the “Circular”) of Far West dated , 2011, accompanying the notice of this meeting (as the Arrangement may be, or may have been, modified or amended in accordance with its terms), is hereby authorized, approved and adopted.

2. The plan of arrangement (the “Plan of Arrangement”), involving Far West and implementing the Arrangement, the full text of which is set out in Appendix to the Circular (as the Plan of Arrangement may be, or may have been, modified or amended in accordance with its terms), is hereby authorized, approved and adopted.

3. The arrangement agreement (the “Arrangement Agreement”) between Far West and Capstone, dated April 15, 2011, and all the transactions contemplated therein, the actions of the directors of Far West in approving the Arrangement and the actions of the directors and officers of Far West in executing and delivering the Arrangement Agreement and any amendments thereto are hereby ratified and approved.

4. Notwithstanding that this resolution has been passed (and the Arrangement approved) by the shareholders of Far West or that the Arrangement has been approved by the British Columbia Supreme Court, the directors of Far West are hereby authorized and empowered, without further notice to, or approval of, the securityholders of Far West:

(a) to amend the Arrangement Agreement or the Plan of Arrangement to the extent permitted by the Arrangement Agreement or the Plan of Arrangement; or

(b) subject to the terms of the Arrangement Agreement, not to proceed with the Arrangement.

5. In order to permit the Arrangement to proceed, the waiver of the application of Far West’s Shareholder Rights Plan made as of March 25, 2004, as amended on March 17, 2008 (the “Rights Plan”), is hereby approved, pursuant to subsection 5.1(e) of the Rights Plan.

6. Any director or officer of Far West is hereby authorized and directed for and on behalf of Far West to execute, whether under corporate seal of Far West or otherwise, and to deliver any records, information or other documents required by the Registrar under the BCBCA in accordance with the Arrangement Agreement.

7. Any one or more directors or officers of Far West is hereby authorized, for and on behalf and in the name of Far West, to execute and deliver, whether under corporate seal of Far

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West or otherwise, all such agreements, forms waivers, notices, certificate, confirmations and other documents and instruments and to do or cause to be done all such other acts and things as in the opinion of such director or officer may be necessary, desirable or useful for the purpose of giving effect to these resolutions, the Arrangement Agreement and the completion of the Plan of Arrangement in accordance with the terms of the Arrangement Agreement, including:

(a) all actions required to be taken by or on behalf of Far West, and all necessary filings and obtaining the necessary approvals, consents and acceptances of appropriate regulatory authorities; and

(b) the signing of the certificates, consents and other documents or declarations required under the Arrangement Agreement or otherwise to be entered into by Far West,

such determination to be conclusively evidenced by the execution and delivery of such document, agreement or instrument or the doing of any such act or thing.

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SCHEDULE C FAR WEST KEY THIRD PARTY CONSENTS

Nil.

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SCHEDULE D CAPSTONE KEY THIRD PARTY CONSENTS

(1) The consent of the Bank of Nova Scotia (“BNS”) is required by Capstone to waive the requirement (for 90 days from the date BNS executes the request for waiver and consent) for AcquisitionCo, as a new subsidiary of Capstone, to deliver the various documents contemplated under Section 11.1(t) of the credit agreement dated as of January 16, 2009 by and among, inter alios, Capstone, BNS, as administrative agent, and the lenders party thereto from time to time.

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SCHEDULE E SANTO DOMINGO PROJECT

PROJECT DESCRIPTION

All of MLO’s right, title and interest in and to the property, rights and assets comprising and situated in or on the 82 exploitation concessions listed in the table below and shown in the map denominated Figure 4-3 following the table, the centre of which is at approximately 398000E and 7074000N (datum: PSAD ’56, Zone 19S), in Region III of Northern Chile.

Name Hectares Status Estrellita 1-10 50 Registered SORPRESA UNO A DIEZ 34 Registered ESPERANZA UNO 4 Registered ILUSION UNO A DOS 10 Registered MANTA 270 1/28 134 Registered MANTA 273 1/60 300 Registered MANTA 276 1/22 110 Registered MANTA 282 1/56 239 Registered IRIS 1/55 274 Registered IRIS PRIMERO 1/20 200 Registered IRIS SEGUNDO 1/17 160 Registered PICHANGA 1/100 110 Registered SANTO 1/20 92 Registered MANTO RUSO 1/6 24 Registered ESTEPHANIA 1/10 40 Registered MANTA 264 1/54 266 In progress MANTA 330 1/58 286 In process MANTA 332A 1/38 184 In process MANTA 332B 1/2 8 In process MANTA 334 1/40 200 In process MANTA 276 B 1-28 128 In process MANTA 287 1/36 161 In process MANTA 327 1/60 300 In process MANTA 328 1/60 290 In process MANTA 329 1/40 200 In process MANTA 331 1/40 200 In process MANTA 533 1/40 200 In process MANTA 569 1/60 300 In process MANTA 570 1/60 300 In process MANTA 571 1/60 300 In process MANTA 572 1/26 130 In process MANTA 573 1/60 300 In process MANTA 574 1/60 300 In process MANTA 575 1/60 300 In process MANTA 576 1/60 300 In process MANTA 577 1/60 300 In process

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Name Hectares Status MANTA 572 B 1/24 120 In process MANTA 328 B 1/2 2 In process MANTA 328 C 1/2 2 In process MANTA 504 1/60 300 In process MANTA 505 1/60 300 In process MANTA 506 1/60 300 In process MANTA 507 1/60 300 In process MANTA 508 1/60 300 In process MANTA 509 1/60 300 In process MANTA 510 1/60 300 In process MANTA 511 1/60 300 In process MANTA 512 1/60 300 In process MANTA 513 1/60 300 In process MANTA 514 1/60 300 In process MANTA 515 1/60 300 In process MANTA 516 1/60 300 In process MANTA 518 1/60 300 In process MANTA 519 1/60 300 In process MANTA 520 1/60 300 In process MANTA 521 1/60 300 In process MANTA 522 1/60 300 In process MANTA 523 1/60 300 In process MANTA 524 1/60 300 In process MANTA 525 1/60 300 In process MANTA 501 1/60 300 In process MANTA 502 1/60 300 In process MANTA 503 1/60 300 In process MANTA 517 1/60 300 In process MANTA 526 1/60 300 In process MANTA 527 1/60 300 In process MANTA 528 1/60 300 In process MANTA 529 1/60 300 In process MANTA 530 1/60 300 In process MANTA 531 1/60 300 In process MANTA 532 1/60 300 In process MANTA 578 1/39 195 In process MANTA 579 1/60 300 In process MANTA 580 1/60 300 In process MANTA 581 1/60 300 In process MANTA 582 1/60 300 In process MANTA 583 1/60 300 In process MANTA 584 1/60 300 In process MANTA 585 1/60 300 In process MANTA 586 1/60 300 In process MANTA 590 1/60 300 In process MANTA 578B 1/24 96 In process

- 3 -

50755005.11

C - 1

SCHEDULE C

UNAUDITED PRO FORMA FINANCIAL STATEMENTS

(see attached)

1

PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Expressed in US Dollars)

Capstone Mining Corp.Pro Forma Condensed Consolidated Balance SheetAt December 31, 2010(unaudited)

(expressed in thousands of US dollars)

2

Note 3 (a) Note 3 (b) Note 3 (c)

(Schedule I)

Assets

Current assets

Cash 165,945$ 10,613$ (67,883)$ 186,795$ 174,931$ 470,401$

Restricted cash 6,377 - - - - 6,377

Short-term deposits 20,039 - - - - 20,039

Receivables 16,392 223 - - - 16,615

Inventories 67,210 - - - - 67,210

Prepaids and other 1,581 68 - - - 1,649

Future income tax asset 2,766 - - - - 2,766

Derivative instrument asset 11,602 - - - - 11,602

291,912 10,904 (67,883) 186,795 174,931 596,659

Investments 2,718 - - - - 2,718

Mineral properties, plant and equipment 329,593 44,039 774,976 - - 1,148,608

Derivative instrument asset 3,635 - - - - 3,635

Future income tax asset 2,695 - - - - 2,695

Other non-current assets 1,172 - - - - 1,172

631,725$ 54,943$ 707,093$ 186,795$ 174,931$ 1,755,487$

Liabilities

Current liabilities

Accounts payable and accrued liabilities 22,277$ 399$ 11,786$ -$ -$ 34,462$

Taxes payable 8,524 - - - - 8,524

Advances on concentrate sales 33,260 - - - - 33,260

Current portion of other liabilities 51,058 14 1,820 - - 52,892

115,119 413 13,606 - - 129,138

Long-term debt 11,573 - - - - 11,573

Capital lease 10,280 - - - - 10,280

Derivative instrument liability 8,812 - - - - 8,812

Deferred revenue 60,677 - - - - 60,677

Future income taxes 34,973 1,643 155,063 - - 191,679

Asset retirement obligation 12,795 - - - - 12,795

254,229 2,056 168,669 - - 424,954

Non-controlling interest - - - 201,294 - 201,294

Shareholders’ equity

Share capital 205,536 69,834 451,731 - 174,931 902,032

Contributed surplus 18,496 28,935 40,811 - - 88,242

Convertible debentures 1,283 - - - - 1,283

Accumulated other comprehensive income 30,822 - - - - 30,822

Retained earnings (deficit) 121,359 (45,882) 45,882 (14,499) - 106,860

377,496 52,887 538,424 (14,499) 174,931 1,129,239

631,725$ 54,943$ 707,093$ 186,795$ 174,931$ 1,755,487$

Pro Forma Adjustments Capstone

Mining Corp.

Far West

Mining Ltd.

Pro Forma

Consolidated

See accompanying notes to these unaudited pro forma condensed consolidated financial statements.

Capstone Mining Corp.Pro Forma Condensed Consolidated Statement of EarningsYear Ended December 31, 2010(unaudited)

(expressed in thousands of US dollars, except share and per share amounts)

3

Capstone Mining

Corp.

Far West Mining

Ltd.

Pro Forma

Consolidated

(Schedule II)

Revenue 273,953$ -$ 273,953$

Operating costs (156,024) - (156,024)

Income from mining operations 117,929 - 117,929

General and administration expenses (10,069) (1,765) (11,834)

Stock-based compensation (5,144) (5,371) (10,515)

Earnings from operations 102,716 (7,136) 95,580

Other (expenses) income

Interest expense (3,101) 40 (3,061)

Foreign exchange gain (2,358) 8 (2,350)

Derivative instrument loss (15,459) - (15,459)

Gain on disposal of investments 26,117 - 26,117

Writedown of mineral properties - (1,378) (1,378)

Other 804 - 804

Earnings (loss) before income taxes 108,719 (8,466) 100,253

Income tax (expense) recovery (36,126) - (36,126)

Net income (loss) 72,593 (8,466) 64,127

Earnings (loss) per share - basic $ 0.36 $ (0.13) $ 0.18

Weighted average number of shares - basic 198,996,825 62,963,000 356,940,974

Earnings (loss) per share - diluted $ 0.36 $ (0.13) $ 0.17

Weighted average number of shares - diluted 202,453,289 62,963,000 372,405,500

See accompanying notes to these unaudited pro forma condensed consolidated financial statements.

Capstone Mining Corp. Notes to Pro Forma Condensed Consolidated Financial StatementsYear Ended December 31, 2010(unaudited)

(expressed in thousands of US dollars, except share and per share amounts)

4

1. Basis of presentation

These pro forma condensed consolidated financial statements have been prepared in connection with the proposed acquisition by Capstone Mining Corp. (the “Company” or “Capstone”) of Far West Mining Ltd. (“Far West”). The transaction, which is subject to security holder approval, has been accounted for as an asset acquisition and is described in more detail in Note 2. Far West is the sole owner of the Santa Domingo project (“Santa Domingo”), a large-scale copper-iron-gold development project located in Region III, Chile.

The unaudited pro forma condensed consolidated balance sheet of Capstone as at December 31, 2010 and the unaudited pro forma condensed consolidated statement of operations of Capstone for the year ended December 31, 2010 have been prepared by management, in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”), for illustrative purposes only, to give effect to the acquisition of the assets of Far West. These unaudited pro forma condensed consolidated financial statements have been compiled from and include:

(a) An unaudited pro forma condensed consolidated balance sheet combining the audited consolidated balance sheet of Capstone as at December 31, 2010 and the audited consolidated balance sheet of Far West as at December 31, 2010, converted from Canadian dollars to US dollars using the US/Canada dollar closing exchange rate at December 31, 2010 (see Schedule I).

(b) An unaudited pro forma condensed consolidated statement of earnings for the year ended December 31, 2010 combining (i) the audited consolidated statement of earnings of Capstone for the year ended December 31, 2010 with (ii) the audited consolidated statement of loss of Far West for the year ended December 31, 2010, converted from Canadian dollars to US dollars using the average US/Canada dollar closing exchange rate for the year ended December 31, 2010 (see Schedule II).

The unaudited pro forma condensed consolidated balance sheet as at December 31, 2010 has been prepared as if the transaction described in Note 2 had occurred on December 31, 2010. The unaudited pro forma condensed consolidated statement of earnings for the year ended December 31, 2010 has been prepared as if the transaction described in Note 2 had occurred on January 1, 2010.

It is management’s opinion that these pro forma condensed consolidated financial statements present in all material respects, the transaction described in Note 2, in accordance with Canadian GAAP. The accounting policies used in the preparation of these statements are consistent with Capstone’s accounting policies for the year ended December 31, 2010. In preparing the unaudited pro forma condensed consolidated financial statements a review was undertaken to identify accounting policy differences of the two companies where the impact was potentially material and could be reasonably estimated. The significant accounting policies of Far West conform in all material respects to those of Capstone. Management of Capstone has consolidated certain line items from Far West financial statements to conform to the presentation of the Company’s unaudited pro forma condensed consolidated financial statements. It is management’s opinion that these unaudited pro forma condensed consolidated financial statements include all adjustments necessary for the fair presentation of the transactions described in Note 2 in accordance with Canadian GAAP.

The unaudited pro forma condensed consolidated financial statements are not intended to reflect the results of operations or the financial position of Capstone which would have actually resulted had the transactions been effected on the dates indicated. Actual amounts recorded upon consummation of the agreements will likely differ from those recorded in the unaudited pro forma condensed consolidated financial statements. Any potential synergies that may be realized and integration costs that may be incurred upon consummation of the transaction have been excluded from the unaudited pro forma condensed financial statements. Further, the unaudited pro forma financial information is not necessarily indicative of the results of operations that may be obtained in the future.

Certain elements of the Capstone and Far West annual audited consolidated financial statements have been condensed and reclassified to provide a consistent format. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the respective historical financial statements, and notes thereto, of Capstone and Far West.

Capstone Mining Corp. Notes to Pro Forma Condensed Consolidated Financial StatementsYear Ended December 31, 2010(unaudited)

(expressed in thousands of US dollars, except share and per share amounts)

5

2. Acquisition of Far West

On April 15, 2011, Capstone and Far West entered into an agreement to combine by way of a plan of arrangement, whereby Capstone agreed to acquire all of the outstanding common shares, warrants and options of Far West (the “Transaction”). The Transaction will be accounted for as an asset acquisition. The Far West shareholders will be entitled to elect to receive, in exchange for each Far West share held either (i) 1.825 shares of Capstone and Cdn$1.00 in cash, (ii) 2.047 shares of Capstone and Cdn$0.001 in cash, or (iii) Cdn$9.19 cash, subject to proration on the basis of an aggregate maximum cash amount of approximately up to Cdn$79 million and provided that no Far West shareholder that elects option (iii) above, will receive less than Cdn$1.00 in cash per Far West share. For the purpose of these unaudited pro forma condensed consolidated financial statements, it is assumed that option (i) was selected, as management believes this to be the most likely scenario to occur.

Each Far West warrant, which gives the holder the right to acquire common shares of Far West, will be exchanged for a warrant which gives the holder the right to acquire common shares of Capstone, on the same terms and conditions as the original Far West warrant, provided, however, that the exercise price of each Capstone warrant shall be reduced by Cdn$1.00 from the exercise price in the original Far West warrant.

Each Far West option, which gives the holder the right to acquire common shares of Far West, will be exchanged for an option which gives the holder the right to acquire common shares of Capstone. All terms and conditions of the new Capstone options remain the same as the original Far West options, save for the fact that the new Capstone options, which are held by employees, officers, directors or consultants who are terminated on or prior to the first anniversary date of the Transaction, will expire at the earlier of (i) one year from the closing date of the transaction, and (ii) the natural expiry of the original Far West option.

The cost of acquisition includes the fair value of the issuance of 118.9 million Capstone common shares at Cdn$4.21 per share, plus 13.8 million warrants of Capstone exchanged for those of Far West with an average exercise price of Cdn$1.55 per share and a fair value of $38.5 million, plus 12.7 million options of Capstone exchanged for those of Far West with an average exercise price of Cdn$1.90 per share and a fair value of $31.3 million, plus cash of $C1.00 per share of Far West for total cash consideration of $67.9 million, plus estimated transaction costs of $11.8 million, providing a total preliminary purchase price of $671.0 million. For additional details, refer to Note 3.

The value of the issuance of Capstone common shares was calculated using the closing price of the Capstone shares on April 15, 2011. The following assumptions were used for the Black-Scholes option pricing model for fair valuation of the options and warrants:

Options Warrants

Risk-free interest rate 1.38% 1.38%

Expected volatility 51% 52%

Expected life 1.00 years 0.85 years

Dividend rate Nil Nil

It is assumed that all Far West option and warrant holders at December 31, 2010 will elect to exchange their options and warrants for Capstone options and warrants rather than exercise them prior to closing of the transaction.

Consistent with Capstone’s policy regarding asset purchases, acquisition costs are capitalized as incurred.

The excess of the purchase consideration over the adjusted book values of Far West’s assets and liabilities has beenallocated to “Mineral properties, plant and equipment”. The fair value of all identifiable assets and liabilities acquired will be determined by management on the closing date of the transaction. It is likely that the actual fair values of

Capstone Mining Corp. Notes to Pro Forma Condensed Consolidated Financial StatementsYear Ended December 31, 2010(unaudited)

(expressed in thousands of US dollars, except share and per share amounts)

6

assets and liabilities acquired will vary from the estimated fair values assumed in the preparation of these unaudited pro forma condensed consolidated financial statements and the differences may be material.

Based on the December 31, 2010 balance sheet of Far West, the preliminary allocation of the purchase price, summarized in the table below, is subject to change:Purchase price

118.9 million shares of Capstone 521,565$

13.8 million warrants of Capstone 38,482

12.7 million options of Capstone 31,264

Cash 67,883

Transaction costs 11,786 670,980

Net assets acquired

Cash 10,613

Other current assets 291

Mineral properties, plant and equipment 819,015

Current liabilities (2,233)

Futue income taxes (156,706) 670,980$

Concurrent with the proposed acquisition of Far West, the Company announced that it has entered into a strategic partnership with Korea Resources Corporation (“KORES”), conditional upon security holder approval of the Transaction. Under the terms of the partnership, Capstone has agreed to sell to KORES a 30% indirect interest in Far West for cash consideration of $186.8 million (based on the assumption above and subject to adjustment based on the net cash balance in Far West at the closing of the Transaction), based on the 30-day volume weighted average price of Far West shares prior to the announcement. Further, KORES (or its affiliate) will arrange for a debt financier to offer to provide financing for 65% of the financing required to fund capital costs for the purposes of advancing Santa Domingo to commencement of commercial production as well as fund 30% of the balance of capital requirements based on its equity ownership share.

Further, the Company has agreed to issue approximately 39.0 million shares (assuming no Far West options or warrants are exercised between December 31, 2010 and the closing date of the Transaction) at Cdn$4.3526 per share to a KORES subsidiary for gross cash proceeds of $176.8 million, with KORES thereby becoming Capstone’s largest shareholder. As per the agreement, the subscription price of the shares is equal to a 1% discount to the 5-day volume weighted average price of Capstone for the period ended April 15, 2011.

3. Business combination with Far West Mining Ltd.

Pro forma adjustments to the consolidated balance sheet

The unaudited pro forma condensed consolidated balance sheet reflects the following adjustments as if the business combination between Capstone and Far West had occurred on December 31, 2010:

(a) To record the acquisition of Far West at a purchase price of $671.0 million and the elimination of the shareholders’ equity of Far West. The excess purchase price over the net book value of Far West’s net assets is recorded as an increase to “Mineral properties, plant and equipment” on the pro forma balance sheet in the amount of $775.0 million, with an offsetting increase to “Future income taxes” of $155.1 million. The tax basis of Far West mineral properties is assumed to be equal to the book value of those properties for the purpose of calculating the future income tax liability and has been determined using an estimated Chilean tax rate of 20%.

The Company has determined the purchase price based on the assumption that Far West shareholders will elect to receive 1.825 shares of Capstone and Cdn$1.00 in cash in exchange for each Far West share held.

Capstone Mining Corp. Notes to Pro Forma Condensed Consolidated Financial StatementsYear Ended December 31, 2010(unaudited)

(expressed in thousands of US dollars, except share and per share amounts)

7

This assumption results in the issuance of 118.9 million common shares of Capstone at Cdn$4.21 per sharefor share consideration of $521.6 million, as well as cash consideration of $67.9 million.

Accounts payable and accrued liabilities includes an adjustment to record transaction costs of $11.8 million and Far West other current liabilities has been adjusted to record estimated severance resulting from the change of control of $1.8 million. The adjustment to contributed surplus includes the estimated fair value of $69.7 million related to new Capstone options and warrants issued in exchange for Far West options and warrants.

(b) To record the sale of a 30% indirect interest in Far West to KORES for consideration of $186.8 million resulting in a non-controlling interest of $201.3 million and an adjustment to retained earnings of $14.5 million. KORES will obtain its interest in the property by purchasing shares of a subsidiary of Capstone which holds the property. The non-controlling interest is recorded at an amount equal to 30% of the fair value of the property and related assets of Far West as estimated in Note 3 (a) to these pro forma condensed consolidated statements.

(c) To record issuance of approximately 39,000,000 shares of Capstone at Cdn$4.3526 to KORES for total consideration of $176.8 million. A finder’s fee of $1.9 million is payable in respect of the equity issuance, resulting in estimated net proceeds of $174.9 million.

4. Business combination with Far West Mining Ltd.

The weighted average shares outstanding have been adjusted to reflect the additional shares for the year ended December 31, 2010 resulting from transaction described in Note 2 effective January 1, 2010.

Basic and diluted earnings per shareYear ended

December 31, 2010

Capstone weighted average shares outstanding - basic 198,996,825

Adjustment to reflect the acquisition of Far West shares 118,944,149

Adjustment to reflect the issuance of shares to KORES 39,000,000 Weighted average shares outstanding after acquisition - basic 356,940,974

Capstone weighted average shares outstanding - diluted 202,453,289

Adjustment to reflect the acquisition of Far West shares 118,944,149

Adjustment to reflect the acquisition of Far West options 5,030,100

Adjustment to reflect the acquisition of Far West warrants 6,977,962

Adjustment to reflect the issuance of shares to KORES 39,000,000 Weighted average shares outstanding after acquisition - diluted 372,405,500

Pro forma adjusted earnings - basic 64,127$ Pro forma adjusted earnings - diluted 64,449$

Pro forma adjusted earnings per share - basic 0.18$ Pro forma adjusted earnings per share - diluted 0.17$

Capstone Mining Corp. Pro Forma Condensed Consolidated Financial StatementsSchedule I - Balance Sheet of Far West Mining Ltd.At December 31, 2010(unaudited)

(expressed in thousands of US dollars)

8

Canadian dollars Exchange rate US dollars

Assets

Current assets

Cash 10,556$ 0.9946 10,613$

Receivables 222 0.9946 223

Prepaids and other 68 0.9946 68

10,846 10,904

Mineral properties, plant and equipment 43,801 0.9946 44,039

54,647$ 54,943$

Liabilities

Current liabilities

Accounts payable and accrued liabilities 397$ 0.9946 399$

Current portion of other liabilities 14 0.9946 14

411 413

Future income taxes 1,634 0.9946 1,643

2,045 2,056

Shareholders’ equity

Share capital 69,457 0.9946 69,834

Contributed surplus 28,779 0.9946 28,935

Deficit (45,634) 0.9946 (45,882)

52,602 52,887

54,647$ 54,943$

Capstone Mining Corp. Pro Forma Condensed Consolidated Financial StatementsSchedule II - Statement of Loss of Far West Mining Ltd.Year ended December 31, 2010(unaudited)

(expressed in thousands of US dollars, except share and per share amounts)

9

Canadian dollars Exchange rate US dollars

General and administration expenses (1,818)$ 1.0303 (1,765)$

Stock-based compensation (5,534) 1.0303 (5,371)

Loss from operations (7,352) (7,136)

Other (expenses) income

Interest income 41 1.0303 40

Writedown of mineral properties (1,420) 1.0303 (1,378)

Foreign exchange gain 8 1.0303 8

Loss before income taxes (8,723) (8,466)

Income tax (expense) recovery - 1.0303 -

Net loss (8,723)$ (8,466)$

Loss per share - basic and diluted (0.14)$ (0.13)$

Weighted average number of shares - basic and diluted 62,963,000 62,963,000

D - 1

SCHEDULE D FAIRNESS OPINION OF SCOTIA CAPITAL INC.

(see attached)

April 15, 2011

The Board of Directors Capstone Mining Corp. Suite 900-999 West Hastings Street Vancouver, BC V6C 2W2 Canada

To the Members of the Board of Directors:

We understand that Capstone Mining Corp. (“Capstone” or the “Company”) is considering a transaction whereby it will acquire all of the outstanding common shares (the “Shares”) of Far West Mining Ltd. (“Far West”) by way of a court-approved plan of arrangement (the “Plan of Arrangement”) (the “Transaction”). Pursuant to the terms of the agreement to be entered into by Capstone and Far West (the “Arrangement Agreement”) and related Plan of Arrangement, Capstone will acquire Far West for a consideration, at the election of each Far West shareholder, of (i) of 1.825 Capstone shares and C$1.00 in cash per Share, (ii) 2.047 Capstone shares and C$0.001 in cash per Share, or (iii) C$9.19 in cash per Share, subject to proration on the basis of an aggregate maximum cash amount of approximately C$79 million, and provided that no Far West shareholder that elects option (iii) above will receive less than C$1.00 in cash per Share (the “Consideration”). The terms of the Arrangement Agreement relating to the proposed transaction are to be more fully described in a disclosure document, which will be mailed to the shareholders of the Company (the “Disclosure Document”).

Background and Engagement of Scotia Capital

Scotia Capital was retained by Capstone on April 1, 2011 pursuant to an engagement letter (the “Engagement Agreement”) to perform such financial advisory and investment banking services for Capstone as are customary in transactions of this type including assisting Capstone in analyzing Far West and, if requested, structuring, negotiating and effecting a Transaction (as defined in the Engagement Agreement). Capstone has requested that Scotia Capital provide its opinion (the “Opinion”) as to whether the Consideration is fair from a financial point of view to Capstone. The terms of the Engagement Agreement provide that Scotia Capital is to be paid a fee for its services as financial advisor, including fees that are contingent on the completion of such transaction(s). In addition, Scotia Capital is to be reimbursed for its reasonable out-of-pocket expenses and to be indemnified in certain circumstances.

Capstone has not instructed Scotia Capital to prepare, and Scotia Capital has not prepared, a formal valuation of Far West or any of its securities or assets, and the Opinion should not be construed as such. Scotia Capital has, however, conducted such analyses as it considered necessary in the circumstances to prepare and deliver the Opinion.

Overview of Far West

Far West Mining Ltd. is an international mineral exploration company headquartered in Vancouver, Canada. Far West is primarily engaged in the evaluation, acquisition, and exploration of mineral properties in Chile and Australia. Far West's main project is the wholly owned Santo Domingo copper-iron-gold deposit in Chile. The deposit has an indicated resources of 485 million tonnes at a copper-equivalent grade of 0.57% and inferred resources of 62 million tonnes at a copper-equivalent grade of 0.46%, (NI 43-101 compliant, news release dated July 12, 2010), and is located at low elevation (1,000m), approximately 800km north of

Page 2

Santiago. There is superior infrastructure nearby, with a paved highway (1km), power (7km), railway (7km), deep water port (60km) and smelter (60km), which all provide an ideal scenario for rapid development of the project. An independent scoping study from May 2008 indicated positive NPVs at low metal price scenarios. Since the completion of the scoping study, the resource has nearly doubled and the recovery of magnetic iron has been confirmed by detailed test work. Far West is currently working towards completing a Pre-Feasibility study on Santo Domingo.

Credentials of Scotia Capital

Scotia Capital represents the global corporate and investment banking and capital markets business of Scotiabank Group (“Scotiabank”), one of North America’s premier financial institutions. In Canada, Scotia Capital is one of the country’s largest investment banking firms with operations in all facets of corporate and government finance, mergers and acquisitions, equity and fixed income sales and trading and investment research. Scotia Capital has participated in a significant number of transactions involving private and public companies and has extensive experience in preparing fairness opinions.

The Opinion expressed herein represents the opinion of Scotia Capital as a firm. The form and content of the Opinion have been approved for release by a committee of directors and other professionals of Scotia Capital, all of whom are experienced in merger, acquisition, divestiture, fairness opinion and valuation matters.

Relationships of Scotia Capital

Neither Scotia Capital nor any of its affiliates, is an insider, associate or affiliate (as those terms are defined in the Securities Act (Ontario)) of Capstone, Far West, or any of their respective associates or affiliates. Subject to the following, there are no understandings, agreements or commitments between Scotia Capital and Capstone, Far West, or any of their respective associates or affiliates with respect to any future business dealings. Scotia Capital is currently a lender to Capstone and has in the past provided, and may in the future provide, including related to this Transaction, traditional banking, financial advisory or investment banking services to Capstone or any of its affiliates.

Scotia Capital acts as a trader and dealer, both as principal and agent, in the financial markets in Canada, the United States and elsewhere and, as such, it and Scotiabank, may have had and may have positions in the securities of Capstone, Far West, or any of their respective affiliates from time to time and may have executed or may execute transactions on behalf of such companies or clients for which it receives compensation. As an investment dealer, Scotia Capital conducts research on securities and may, in the ordinary course of business, provide research reports and investment advice to its clients on investment matters, including with respect to Capstone, Far West or any of their respective affiliates, or with respect to the Transaction.

Scope of Review

In preparing the Opinion, Scotia Capital has reviewed, considered and relied upon, without attempting to verify independently the completeness or accuracy thereof, among other things:

(a) a draft Arrangement Agreement and exhibits thereto dated April 15, 2011;

(b) a draft Indicative Proposal letter dated March 24, 2011;

(c) the form of voting agreement (the “Voting Agreement”) entered into between Capstone and each of Capstone and the directors and officers of the Company;

Page 3

(d) the form of voting agreement (the “Voting Agreement”) entered into between Far West and each of Far West and the directors and officers of the Company, Pacific Road Resources, Seaman Family Estate and QuadraFNX Mining Ltd.;

(e) annual reports of Capstone and Far West for the fiscal years ended last 3 years;

(f) the Notice of Annual Meeting of Shareholders and the Management Information Circular of Capstone and Far West for the fiscal years ended last 3 years;

(g) audited financial statements of Capstone and Far West for the fiscal years ended last 3 years;

(h) annual information forms of Capstone and Far West for the fiscal years ended last 3 years;

(i) unaudited quarterly reports of Capstone and Far West for the three-month periods ended March 31, 2011, and March 31, 2010;

(j) equity research reports on Capstone and Far West;

(k) certain mine models and other financial and operating data concerning Capstone prepared by Capstone’s management and consultants;

(l) certain mine models and other financial and operating data concerning Far West prepared by Far West’s management and consultants;

(m) various detailed internal management and consultant reports from Capstone and Far West;

(n) discussions with senior management of Capstone and Far West;

(o) discussions with Capstone’s legal counsel;

(p) discussions with BMO Capital Markets Corp. (financial advisor to Far West);

(q) public information relating to the business, operations, financial performance and stock trading history of Capstone, Far West and other selected public companies considered by us to be relevant;

(r) public information with respect to other transactions of a comparable nature considered by us to be relevant;

(s) representations contained in separate certificates addressed to Scotia Capital, as of the date hereof, from senior officers of Capstone as to the completeness, accuracy and fair presentation of the information upon which the Opinion is based; and

(t) such other corporate, industry and financial market information, investigations and analyses as Scotia Capital considered necessary or appropriate in the circumstances.

Scotia Capital has not, to the best of its knowledge, been denied access by Capstone or Far West to any information requested by Scotia Capital.

Assumptions and Limitations

The Opinion is subject to the assumptions, explanations and limitations set forth below.

Scotia Capital has, subject to the exercise of its professional judgment, relied, without independent verification, upon the completeness, accuracy and fair presentation of all of the financial and other

Page 4

information, data, advice, opinions and representations obtained by it from public sources, or that was provided to us, by Capstone or Far West, and of its associates and affiliates and advisors (collectively, the “Information”), and we have assumed that this Information did not omit to state any material fact or any fact necessary to be stated to make that information not misleading. The Opinion is conditional upon the completeness, accuracy and fair presentation of such Information. With respect to financial projections provided to Scotia Capital by management of Capstone or Far West and used in the analysis supporting the Opinion, we have assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of management of Capstone or Far West as to the matters covered thereby, and in rendering the Opinion we express no view as to the reasonableness of such forecasts or budgets or the assumptions on which they are based.

Senior management of Capstone has represented to Scotia Capital in certificates delivered as at the date hereof, among other things, that to the best of their knowledge (a) Capstone has no information or knowledge of any facts public or otherwise not specifically provided to Scotia Capital relating to Capstone or any of its subsidiaries or affiliates which would reasonably be expected to affect materially the Opinion; (b) with the exception of forecasts, projections or estimates referred to in (d), below, the written Information provided to Scotia Capital by or on behalf of Capstone in respect of Capstone and its subsidiaries or affiliates, in connection with the Transaction is or, in the case of historical information or data, was, at the date of preparation, true and accurate in all material respects, and no additional material, data or information would be required to make the data provided to Scotia Capital by Capstone not misleading in light of circumstances in which it was prepared; (c) to the extent that any of the Information identified in (b), above, is historical, there have been no changes in material facts or new material facts since the respective dates thereof which have not been disclosed to Scotia Capital or updated by more current Information that has been disclosed; and (d) any portions of the Information provided to Scotia Capital which constitute forecasts, projections or estimates were prepared using the assumptions identified therein, which, in the reasonable opinion of Capstone, are (or were at the time of preparation) reasonable in the circumstances.

The Opinion is rendered on the basis of the securities markets, economic, financial and general business conditions prevailing as at the date hereof and the conditions and prospects, financial and otherwise, of Far West and its subsidiaries and affiliates, as they were reflected in the Information. In its analyses and in preparing the Opinion, Scotia Capital made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, which Scotia Capital believes to be reasonable and appropriate in the exercise of its professional judgment, many of which are beyond the control of Scotia Capital or any party involved in the Transaction.

For the purposes of rendering the Opinion, Scotia Capital has also assumed that the representations and warranties of each party contained in the Arrangement Agreement are true and correct in all material respects and that each party will perform all of the covenants and agreements required to be performed by it under the Transaction and that Capstone will be entitled to fully enforce its rights under the Arrangement Agreement and receive the benefits therefrom in accordance with the terms thereof.

The Opinion has been provided for the sole use and benefit of Capstone in connection with, and for the purpose of, its consideration of the Transaction and may not be relied upon by any other person. The Opinion is given as of the date hereof, and Scotia Capital disclaims any undertaking or obligation to advise any person of any change in any fact or matter affecting the Opinion which may come or be brought to the attention of Scotia Capital after the date hereof. Without limiting the foregoing, in the event that there is any material change in any fact or matter affecting the Opinion after the date hereof, Scotia Capital reserves the right to change, modify or withdraw the Opinion.

Our opinion does not address the relative merits of the Transaction as compared to other business strategies or transactions that might be available with respect to Capstone or Capstone’s underlying business decision to effect the Transaction. We have not been asked to, nor do we, offer any opinion as to the material terms (other than the Consideration) of the Arrangement Agreement, the Plan of Arrangement or the form of the Transaction.

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Conclusion

Based upon and subject to the foregoing, Scotia Capital is of the opinion that, as of the date hereof, the Transaction is fair from a financial point of view to Capstone.

Yours very truly,

SCOTIA CAPITAL INC.

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