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.

Access to the UM Pierina can be by air through the Comandante FAP Germán Arias Graziani airport, located in the district of Anta, province of Carhuaz, with a travel time between Lima and Anta of approximately 1 hour or by land from Lima. to Huaraz with a travel time of 7 hours on average. The access to the mining site begins in the town of Jangas, which is located approximately 14 km north of the city of Huaraz, through a public road that is in good condition.

The localities that comprise the Area of ​​Social Influence of the UM Pierina are: the Jangas and Chontayoc population centers; the smaller population centers of Huanja and Mataquita; the hamlets Atupa, Antahurán, Tinyash, Mareniyoc and Chaquecyaco; and the peasant communities of San Isidro de Pacollón (San Isidro), Ramón Castilla, Miguel Grau de Shecta (Shecta) and Andrés Avelino Cáceres de Cuncashca (Cuncashca) (Golder, 2014, pp. 3-103).

More detail on location, access, climate and population, consult chapter 2 - Introduction, of this report.

The UM Pierina is physically delimited by a perimeter fence with concertina, and access points at strategic points. Within the UM are the areas of the pit, the waste deposit and the leaching heap; there are also processing plants, water treatment plants, truck workshops, offices, fuel tanks, reagent stores and controlled chemical inputs, explosives storage, heavy and light equipment, among others. It is also part of the UM, the processes that are developed internally, the employees of MBM, the personnel of contractor companies and visits, who are protected by physical, electronic and surveillance services. It is important to mention that additionally MBM has a security management system that involves plans and procedures in order to ensure the achievement of the objectives of asset security.

For the final closure and post-closure stages, it has been considered to maintain the perimeter fence as the first physical barrier of protection, complemented by other physical, electronic and human barriers. The areas considered key will have additional protection measures, in table 16.2 of section 16.3.3, these key areas are identified.

1. Protection issues and threats

There are several identified threats that come from internal and external sources and that could represent a risk in the final closing stage. This, since at this stage there is a real materialization and perception of the closure of the mine, beginning to perceive in the population the loss of an indirect source of income, and in the workers an uncertainty in the sustainability of their economic income by his imminent labor untying. This situation can in some cases motivate committing criminal acts that attempt against the construction of the closure, the personnel or the assets of MBM.

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