PRE-FEASIBILITY STUDY FOR CLOSURE OF PIERINA MINE

PRE-FEASIBILITY STUDY FOR CLOSURE OF PIERINA MINE

CONTRACT N° PR-014-0-17

DOCUMENT N° PR014017-121.0000-11-35-0-RPT-0001

REPORT

(CHAPTER 16 - HERITAGE SECURITY)

For:

Pre-Feasibility Study for the Project Portfolio for the Closing of UM Pierina

Prepared by:

Knight Piésold Consultores S.A.

1. PATRIMONIAL SECURITY

The management of asset security aims to protect assets, assets and people during the final closure and post-closure stages, defining actions that neutralize or minimize the adverse effects of the identified risks, and that safeguard the continuity of activities.

1. FULFILLMENT OF VOLUNTARY PRINCIPLES ON PROTECTION AND HUMAN RIGHTS

In 2005, MBM signed the United Nations Global Compact (UNGC), an initiative that promotes corporate citizenship through the direct integration of business activity when facing the greatest social and environmental challenges that arise from the growing globalization . In 2010, it adhered to the Voluntary Principles (VP) and announced new corporate social responsibility initiatives.

To comply with the voluntary principles on protection and human rights, MBM's property security area is currently based on the Human Rights and Voluntary Principles Policy, within which are the following procedures:

• Procedure for the use of force.

• Procedure for investigating human rights complaints;

In order to ensure an effective implementation of the policy and procedures, training in human rights, voluntary principles, code of conduct and use of force is made to all the personnel that provide security in the UM Pierina.

An important part is also the communication of MBM's voluntary principles topic to the communities of the areas of influence, to which information brochures are delivered.

The principles, policies, procedures and other management elements associated with voluntary principles and human rights will continue to be applied during the final closure and post-closure, considering the pertinent improvements and updates that are applicable.

1. ASSESSMENT OF HERITAGE SECURITY

The security devices, as well as the plans and procedures implemented, allow for a safe and crime-free environment within the mining unit, as well as during travel between the city of Huaraz and UM Pierina. In this way the objective of protecting personnel, facilities, materials, equipment and transport systems is fulfilled.

For the assessment of asset security, the following areas have been taken into account:

• People and employees;
• transport;
• position and location;
• protection issues and threats.

Below is a description of each of them.

1. People and staff

Personnel control starts from the evaluation and selection process when verifying personal data of each one of the applicants.

The access controls, security measures and procedures implemented, provide the general framework of protection, whose scope is all MBM personnel, contractors, suppliers and visitors.

Policies, rules of confidentiality, ethics and code of conduct, applicable to all personnel, complement the security scheme implemented.

1. Transportation

There are three processes related to transportation that require a security system.

1. Transportation of personnel

It corresponds to the daily transfer of personnel from the city of Huaraz to the UM Pierina and vice versa. This service is subcontracted and performed by a local company and adopting all the necessary security measures and standards, which includes permanent monitoring of the route, GPS control and identification and registration of passengers before approaching mobility and before enter the UM.

This system will be maintained during the final closing and post closing.

1. Transport of securities

It is the transport of dore from the refinery to the city of Lima. This transport is subcontracted and carried out by a company with recognized experience and prestige in the transfer of securities. This type of transport is carried out in armored vehicles, under defined safety protocols, in addition to having insurance policies.

It has been estimated that during part of the final closure, the leach pile will continue to drain rich solution, so during this period will continue to produce gold, and the transport of values ​​will continue to be necessary, until the production of the last ounce. Later this type of transport will no longer be required.

1. Transport of dangerous and explosive goods

Transfer carried out by authorized suppliers, always under the security standards of MBM and the current national regulations. In the case of explosives, it includes police custody and specific safety standards, as well as for the transfer of controlled chemical inputs and hazardous materials.

During the final closure and while the exploitation of rock quarries, the procedure for the transfer of explosives will be maintained, once this process is completed, this item will no longer be applicable. The transfer of hazardous materials and controlled chemical inputs is estimated to be maintained until the post-closure, but on a smaller scale and frequently; only for water treatment.

1. The location and location

The UM Pierina is located in the jurisdiction of the districts of Jangas and Independencia, province of Huaraz, Ancash region. Geographically, it is located on the eastern side of the Cordillera Negra in the northern highlands of Peru, about 10 km northwest of the city of Huaraz, and at an altitude that fluctuates between 3,700 meters above sea level and 4,300 meters above sea level. Huaraz is located at a distance of approximately 400 km north of Lima and 150 km southeast of the coastal city of Chimbote. It is located mainly on two Quebradas, Pacchac and Pucaurán.

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