PORTFOLIO GROWTH THROUGH MERGERS AND ACQUISITIONS

SOUTH AMERICA

Ecuador

• Used Ecuadorian assets as currency to diversify the company into Peru over several years, culminating in 2013 with the sale of the Rio Blanco gold-silver project for $28,000,000.

Peru

• In 2002 diversified into Peru with the acquisition of Pallancata silver-gold project for $1,600,000.

• IMZ entered into a 40% – 60% JV with Hochschild in 2006 and fast-tracked Pallancata to production in 2007. By 2011, it was the sixth-largest primary silver mine in the world.

• Acquired a 70% interest in the Inmaculada gold-silver project in 2009.

• Advanced the Inmaculada project by significantly expanding resources and completing a preliminary economic assessment.

• In 2011, sold 30% of Inmaculada to form a second 40% – 60% JV with Hochschild.

• Received $125,000,000 in total cash dividends from the JV before selling both assets to Hochschild for $280,000,000, which was returned directly to shareholders, largely tax free.

NORTH AMERICA

Nevada

• After receiving $10,000,000 in royalty payments over three years, sold Ruby Hill royalty in 2012 for $38,000,000 in cash.

• Converse and Goldfield became core assets in formation of Chaparral  Gold in 2013.

• Chaparral Gold sold to Waterton for $72,000,000 in cash in 2015 despite EPA overhang and weak market for developers.

SHAREHOLDER-FIRST PHILOSOPHY

Investor confidence was built and maintained by returning all cash generated through sale of assets using means that maximized return to shareholders:    

• Capital returned via a normal course issuer bid.

• Monetization of the Peruvian assets with 100% of the proceeds returned directly to shareholders.

• Dilution prevented through the cash retirement of a convertible debenture.

CHAPARRAL GOLD: A CASE STUDY IN WEALTH CREATION

When listed at the end of December 2013, approximately one third of Chaparral Gold (CHL) was owned by arbitrage funds that held CHL stock from the Hochschild acquisition of the Peruvian assets of International Minerals (IMZ).

On February 18, 2014, Waterton launched a hostile bid, offering only $0.50 per share of CHL. On the same day, Chaparral was informed by the EPA that it was pursuing a claim against the new company for an environmental cleanup problem that dated back to the late 1800s. Although the claim was disputed (because the site had never been owned by Chaparral or any of its predecessor companies) the EPA action created an unquantifiable risk that stalled Chaparral's attempt to find a white knight to oppose the Waterton bid.

With a track record of putting shareholders first, Chaparral was able to convince its shareholders to reject the Waterton bid despite the significant holdings of the arbitrage funds and despite Waterton extending its bid nine times over the span of 12 months.

Once the EPA liability risk was better quantified, Waterton's final hostile bid served as the floor price for negotiations that led to an offer that Chaparral was able to recommend that its shareholders accept.

During the year of Waterton's hostile takeover attempts, gold price declined 8% and the average stock price of CHL's industry peers fell 33%. During this same period of time, Chaparral stock rose 22%, reaching a price 82% higher than when it was initially listed, 14 months earlier.