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SANDFIRE RESOURCES LIMITED Capital/Financing Update 2021

Sep 22, 2021

65773_rns_2021-09-22_05c90ef5-3707-4a48-bf7e-05595bf2696b.pdf

Capital/Financing Update

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ASX: SFR

23 September 2021

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Not for release to U.S. wire services or distribution in the United States

Transformational acquisition of the MATSA Mining Complex in Spain and A$1,248 million equity raising

MATSA is a world-class copper asset which immediately transforms Sandfire into a leading diversified global base metals producer, and one of Australia’s largest copper focused producers

  • Sandfire has entered into a binding sale and purchase agreement with Trafigura and Mubadala Investment Company (the “ Vendors ”) to acquire 100% of Minas De Aguas Teñidas (“ MATSA ”) for a total consideration of US$1,865 million (A$2,572 million)[1]

  • The agreed transaction delivers Sandfire the MATSA mining complex in Spain, which comprises three underground mining operations feeding a world-class 4.7Mtpa central processing facility with state-ofthe-art infrastructure producing 100-120ktpa CuEq per annum

  • Provides Sandfire exposure to a long-life and first-quartile low-cost operation, with ~12 years mine life based on Resources and significant life extension and exploration potential, and a successful track record of replacing and growing Resources and Reserves

  • Transaction immediately transforms Sandfire into one of Australia’s largest copper focussed producers with proforma FY22 production of 170-194kt CuEq at a MATSA C1 cost of US$0.4-0.5/lb and DeGrussa C1 cost of US$1.0-1.1/lb F[2]

  • Consideration of US$1,865M implies an acquisition multiple of 4.8x MATSA’s FY21 EBITDA of US$387M 2F[3] - compares favourably to the median EBITDA trading multiple of global peers[4]

  • Sandfire to fund the Transaction through a combination of a US$650M (A$897M) syndicated and underwritten debt facility secured by MATSA, an A$1,248M (US$905M) fully underwritten 4F equity raising, A$297M (US$215M) from existing cash reserves and the drawdown of A$200M (US$145M) corporate debt facility

  • AustralianSuper, Australia’s largest superannuation fund, has committed to subscribe for A$120M of the Placement, and to further sub-underwrite up to A$150M of the Retail Entitlement Offer

  • Sandfire intends to retain MATSA’s highly experienced in-country management team and supplement with Sandfire’s complementary skill set and capabilities, particularly with VMS deposits

  • The acquisition of MATSA is expected to be accretive to Sandfire’s earnings and cash flow per share in its first full year of ownership (FY23), transforming Sandfire’s growth trajectory and providing a cornerstone asset with an anticipated mine life of over 10 years

  • MATSA has significant regional upside potential across the highly-prospective Iberian Pyrite Belt, Spain (one of the world’s largest concentrations of VMS copper-zinc mineralisation) – providing a strong foundation for Sandfire’s future

  • The transaction is expected to complete in the March 2022 quarter, with key conditions precedent including Spanish Foreign Direct Investment and Anti-trust Merger approval

1 Acquisition price of A$2,572 million calculated using an AUD:USD exchange rate of 0.725.

2 Proforma assumes full year of MATSA production added to Sandfire’s guidance for FY22 for illustrative purposes. The Transaction is expected to complete in the March 2022 quarter. C1 costs are net of by-products credits. 3 Excluding hedging.

4 Based on FY21 EV/EBITDA trading multiples. Refer to page 25 of the Investor Presentation for further details on peer trading multiples.

23 September 2021

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Transaction Overview

Sandfire Resources Limited (“ Sandfire ”, the “ Company ” or the “ Group ”) (ASX: SFR) is pleased to announce that it has entered into a binding sale and purchase agreement (“ SPA ”) with Trafigura and Mubadala Investment Company to acquire 100% of MATSA for a total consideration of US$1,865M (A$2,572M)[5] (the “ Transaction ” or “ Acquisition ”).

MATSA is a large, high-quality, low-cost 6F[6] , long-life underground copper operation located in the highly regarded Iberian Pyrite Belt of Spain. With proforma FY22 Sandfire group production forecast to be 170-194kt CuEq 7F[7,] 8F[8] , the Transaction transforms Sandfire into one of Australia’s largest copper focused producers. Postacquisition, Sandfire will be a globally relevant copper producer with a diversified production base by jurisdiction and commodity, and outstanding organic growth potential.

The Transaction is expected to complete in the March 2022 quarter, with key conditions precedent including Spanish Foreign Direct Investment and Anti-trust Merger approval, both of which are customary for acquisitions in Spain. Sandfire has agreed to pay a US$300M deposit of which US$100M is paid on signing of the SPA and US$200M to be paid 10 business days thereafter.

Karl Simich, Sandfire’s Managing Director and CEO said:

“Base metal assets which offer this combination of scale, grade, mine life and exploration upside are extremely rare globally. The MATSA acquisition transforms Sandfire into a first quartile copper producer of global scale and allows us to leverage our skill set to deliver on our growth ambitions to create one of the highest quality and most compelling copper exposures on the ASX.

The high-quality debt and equity funding package we have secured ensures that we can fully-fund the acquisition of this Tier-1 asset while retaining balance sheet flexibility to deliver our Motheo Copper Mine in Botswana and maintain a global exploration program.”

5 Subject to completion adjustments.

6 First quartile, Wood Mackenzie Global Copper Cost Curve (Q3 2021, composite basis)

7 FY22 based on DeGrussa guidance and MATSA guidance assuming full year of production for illustrative purposes.

8 CuEq based on realised pricing for actuals and broker consensus forecast pricing, refer to page 7 of the Investor Presentation

23 September 2021

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MATSA Overview

MATSA is located in Andalusia, Spain and is part of the highly regarded Iberian Pyrite Belt, which has one of the world’s largest concentrations of VMS copper-zinc mineralisation’s. MATSA is an established copper operation, with first commercial production achieved in 2009 and over US$1.7 billion of capital invested into the project since 2005, including the expansion of the processing facility from 1.5Mtpa to 4.7Mtpa and development of additional underground mining areas, including the Magdalena discovery in 2013.

FY2022 proforma production guidance of 100-120kt CuEq[7,8] at a C1 cash cost of US$0.40-0.50/lb[7] .

The MATSA complex comprises the Aguas Teñidas, Magdalena and Sotiel underground mines, and a 4.7Mtpa central processing facility at Aguas Teñidas. Ore Reserves of 36Mt at 1.8% Cu (3.1% CuEq) and Mineral Resources of 122Mt at 1.5% Cu (3.3% CuEq)[9] . MATSA has a strong track record of resource to reserve conversion, plus ~2,450km[2] of highly prospective regional exploration tenure across Spain and Portugal.

MATSA’s Ore Reserves support a 6-year reserve life, with visibility on ~12 years from Resources and significant potential for extended mine life from near-term growth opportunities.

Spain is a mining friendly jurisdiction with a well-established and transparent permitting process (all permits are currently in place for MATSA’s operating mines). There is world-class infrastructure and logistics in the region, including national roads to port, with reliable access to power and water, and several listed copper producers have existing operations surrounding MATSA.

All three of the existing mines remain open along strike and at depth, with Magdalena discovered by the MATSA team in just 2013. Several potential new mining centres have been identified adjacent to existing operations, with the targets not currently included in the MATSA mine plan or Mineral Resource.

The low operating cost translates to strong margins and free cash flow generation, with the acquisition of MATSA for US$1,865M implying an acquisition multiple of 4.8x MATSA’s FY21A EBITDA (US$387M excluding hedging). The acquisition is also expected to be accretive to Sandfire’s earnings and cash flow per share in its first full year of ownership (FY23).

As part of the Transaction, Sandfire will retain the life of mine concentrate offtake agreement with Trafigura for 100% of offtake from MATSA. The terms of the offtake agreement have been revised and agreed as part of the Transaction to reflect independent go-forward operations. The offtake relationship with Trafigura provides a long-term marketing partner which builds on Sandfire’s already well-established relationship with Trafigura via DeGrussa and potentially Motheo. Trafigura is one of the world’s leading independent commodity trading and logistics houses and will facilitate global distribution and access to state-of-the-art port, blending and marketing facilities.

9 CuEq based on assumed long-term real consensus price assumptions. Refer to the Appendix for Ore Reserve and Mineral Resource disclosure information.

23 September 2021

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Acquisition funding

The US$1,865M (A$2,572M 1M[10] ) cash consideration and associated US$50M (A$69M) transaction costs, acquisition funding of US$1,915M (A$2,641M), will be funded through a combination of:

  • A$1,248 million (US$905M[10] ) fully underwritten F equity raising consisting of;

  • A$120M strategic placement to AustralianSuper (“ Strategic Placement ”);

  • A$165M institutional placement ( “ Institutional Placement ") (together with the Strategic Placement, the “ Placement ”); and

  • A$963 million 1 for 1 accelerated non-renounceable entitlement offer (“ Entitlement Offer ” and together with the Placement, the “ Offer ” or the “ Equity Raising ”).

  • US$650 million (A$897M[10] ) syndicated and underwritten debt facility secured against MATSA;

  • A$200 million (US$145M[10] ) corporate debt facility secured against DeGrussa, and

  • A$297 million (US$215M[10] ) funded through existing cash reserves of A$681M 12F[11] .

Sandfire has entered into a binding credit-approved underwritten commitment letter and term sheet with Citi, Macquarie Bank, Natixis and Société Générale to provide the US$650M syndicated and underwritten debt facility. Natixis and Société Générale are existing lenders to MATSA and drawdown is expected to occur on completion of the transaction. The syndicated debt facility fully amortises over its scheduled term (5 years from drawdown) and contains customary provisions including a cash sweep. The facility is expected to be fully repaid within 4 years of drawdown due to forecast strong cashflows from MATSA.

The syndicated debt facility will be fully supported by MATSA cashflows 13F[12] , without any required contribution from Degrussa or other Sandfire assets. Security for the facility is limited to MATSA, with no recourse to Sandfire or other Sandfire assets.

Sandfire has also entered into a binding credit-approved commitment letter and term sheet with ANZ to provide a A$200M corporate debt facility. This is a short-term facility for ~12 months, supported by DeGrussa cash flows over its remaining mine life, with recourse to Sandfire.

The syndicated and ANZ debt facilities include a number of conditions precedent to drawdown which are customary for facilities of this nature, including completion of full form documentation.

10 FX conversion assumes AUD/USD exchange rate of 0.725.

11 As at 30 June 2021, includes Sandfire’s liquid stake in Adriatic Metals, valued at A$100M at the last close price of A$2.89/sh.

12 MATSA to undertake commodity hedging to support the syndicated debt facility, with 30-40% of copper and zinc concentrates production to be hedged for the first three years.

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Equity Raising

As noted above, the Acquisition will be partially funded by the Equity Raising, being the issue of new fully paid ordinary Sandfire shares (“ New Shares” ) to certain eligible investors to raise approximately A$1,248 million at an issue price of A$5.40 per share (“ Offer Price” ). The Equity Raising is fully underwritten 14F and consists of the Placement and the Entitlement Offer.

Sandfire has received an ASX waiver of Listing Rule 7.1 to enable expanded Tranche 1 Placement capacity given both the institutional and retail components of the Entitlement Offer are fully underwritten. Up to approximately 231 million New Shares are to be issued under the Offer representing approximately 129.6% of current issued capital of Sandfire.

The Offer price of A$5.40 per share represents a:

  • 13.2% discount to Sandfire’s last traded price of A$6.22 per share on 22 September 2021; and

  • 6.2% discount to the theoretical ex-rights price ( TERP ) of A$5.76 15F[13] on 22 September 2021.

Each New Share issued under the Offer will rank equally with existing fully paid ordinary shares in Sandfire on issue. Sandfire will, upon issue of the New Shares under the Offer, seek quotation of the New Shares on the ASX.

AustralianSuper, Australia’s largest superannuation fund, has committed to subscribe for A$120M of the Placement, and to further sub-underwrite up to A$150M of the retail component of the Entitlement Offer (" Retail Entitlement Offer "). AustralianSuper has made this commitment after conducting its own due diligence on Sandfire, MATSA and the Transaction. Following completion of the Offer, AustralianSuper is expected to emerge with approximately 5.4 – 12.2% of Sandfire, subject to the level of take-up of the Retail Entitlement Offer.

The material terms of the Underwriting Agreement are included in the Annexure. If the acquisition does not proceed, the Company will need to consider alternative uses or mechanisms to return surplus funds raised under the Offer, including, but not limited to, a return of capital, balance sheet management, working capital and/ or alternative investment opportunities.

Citigroup Global Markets Australia Pty Ltd and Macquarie Capital (Australia) Limited are acting as Joint Lead Managers and Underwriters to the Placement and Entitlement Offer. The Offer is fully underwritten, subject to the terms of an underwriting agreement (“ Underwriting Agreement ”).

Entitlement Offer

Under the Entitlement Offer, eligible shareholders are invited to subscribe for one New Share for every one existing share held as at 5.00pm AWST (7.00pm AEST) on 27 September 2021 (“ Record Date ”).

The Entitlement Offer is non-renounceable and entitlements will not be tradeable or otherwise transferable.

13 TERP is the theoretical price at which Sandfire shares should trade immediately after the ex-date for the Entitlement Offer. The TERP is a theoretical calculation only and the actual price at which Sandfire’s shares trade immediately after the ex-date for the Entitlement Offer will depend on many factors and may not equal the TERP. The TERP also includes New Shares to be issued under the Placement

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Institutional Entitlement Offer

Eligible institutional shareholders will be invited to participate in the institutional component of Entitlement Offer (“ Institutional Entitlement Offer ”), which will take place today and is expected to raise approximately A$626M. Eligible institutional shareholders can choose to take up all, part or none of their entitlement. Institutional entitlements that eligible institutional shareholders do not take up by the close of the Institutional Entitlement Offer, will be offered to eligible institutional shareholders who apply for New Shares in excess of their entitlement, as well as certain other eligible institutional investors, through an institutional shortfall bookbuild (“ Institutional Bookbuild ”) to be conducted concurrently with the Institutional Entitlement Offer. The Institutional Entitlement Offer is fully underwritten.

Sandfire’s shares will not recommence trading on the ASX until the Institutional Entitlement Offer and Institutional Bookbuild are completed.

Retail Entitlement Offer

The Retail Entitlement Offer will be open from 30 September 2021 to 13 October 2021 to eligible retail shareholders with a registered address in Australia or New Zealand as at the Record Date. A Retail Offer Booklet in respect of the Offer is expected to be mailed to eligible retail shareholders on or before 30 September 2021.

Eligible retail shareholders can choose to take up all, part or none of their entitlement.

The Retail Entitlement Offer is fully underwritten, and supported by AustralianSuper who has committed to subunderwrite up to A$150M.

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Indicative Timetable 16F [14]
Event Date
Announcement of Equity Raising Thursday, 23 September 2021
Placement and Institutional Entitlement Offer Opens Thursday, 23 September 2021
Announcement of results of Placement and Institutional Entitlement Offer Monday, 27 September 2021
Trading halt lifted and shares recommence trading Monday, 27 September 2021
Entitlement Offer record date Monday, 27 September 2021
Retail Entitlement Offer opens, and Retail Offer Booklet dispatched Thursday, 30 September 2021
Settlement of New Shares issued under the Placement and Institutional Entitlement Offer Monday, 4 October 2021
Allotment and commencement of trading of New Shares under the Placement and Institutional
Entitlement Offer		 Tuesday, 5 October 2021
Retail Entitlement Offer closes Wednesday, 13 October 2021
Announcement of results of Retail Entitlement Offer Monday, 18 October 2021
Settlement of New Shares issued under the Retail Entitlement Offer Tuesday, 19 October 2021
Allotment of New Shares under the Retail Entitlement Offer Wednesday, 20 October 2021
Commencement of trading of New Shares issued under the Retail Entitlement Offer Thursday, 21 October 2021
Announcement of Equity Raising Thursday, 23 September 2021
Placement and Institutional Entitlement Offer Opens Thursday, 23 September 2021
Announcement of results of Placement and Institutional Entitlement Offer Monday, 27 September 2021
Trading halt lifted and shares recommence trading Monday, 27 September 2021
Entitlement Offer record date Monday, 27 September 2021

All dates and times are indicative and subject to change.

An Appendix 3B for the New Shares to be issued, Investor Presentation and Cleansing Statement follow this announcement. For those shareholders who have elected to receive documents from the Company via email, they will receive the Entitlement Offer documents and their personal entitlement and acceptance form directly to their nominated email address.

Advisors

Sandfire is advised by Macquarie Capital as financial advisor, Allen & Overy as legal advisor and BurnVoir Corporate Finance as debt advisor in relation to the acquisition. Natixis acted as advisor to the Board.

Gilbert + Tobin is Sandfire’s Australian legal advisor in respect of the Equity Raising.

14 These timings are indicative only and subject to variation. SFR reserves the right to alter the timetable at its absolute discretion and without notice, subject to the Listing Rules, Corporations Act and other applicable laws. All references are to Australian Standard Time (AEST) In particular, the Company reserves the right to either, generally or in particular cases, extend the closing date of the institutional or retail components of the Entitlement Offer, to accept late applications or to withdraw the Entitlement Offer prior to the issue of the relevant securities without prior notice. The commencement of quotation of New Shares is subject to confirmation from ASX.

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Further Information

Further details of the Offer and Transaction are set out in the Investor Presentation also lodged on the ASX today. The Investor Presentation contains important information including key risks and foreign selling restrictions with respect to the Offer.

Investor call and webcast

Sandfire’s Managing Director (Karl Simich), Chief Financial Officer (Matthew Fitzgerald), Chief Operating Office (Jason Grace) and Head of Investor Relations (Ben Crowley), will host a conference call and webcast today at 9:00am AWST (11:00am AEST). Dial-in details for the call and the webcast link can be found below

Meeting Title: Sandfire Conference Call Date: 23 September 2021 Conference ID: 10016879 Dial-in Numbers: Australia Toll Free: 1800 265 784 Australia Local Number: +61 7 3107 6325

To listen in live, please click on the link below and register your details:

https://s1.c-conf.com/diamondpass/10016879-u28rnj.html

Please note it is best to log on at least 5 minutes before 9:00am AWST (11:00am AEST) on 23 September 2021 to ensure you are registered in time for the commencement of the presentation.

Investors are advised that, in addition to the live webcast, a recording of the presentation will be available on the Sandfire website (www.sandfire.com.au) upon the conclusion of the webcast.

For further information, please contact:

Media Inquiries:

Sandfire Resources Ltd Ben Crowley – Head of Investor Relations Office: +61 8 6430 3800

Read Corporate Nicholas Read Mobile: +61 419 929 046

This announcement is authorised for release by the Board of Directors of Sandfire.

23 September 2021

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Summary of the Share Purchase Agreement

Overview Sandfire has entered into a Sale and Purchase Agreement (“SPA”) with MIC Global Mining ventures,
S.L.U. (“Mubadala”) and Iberian Holdings S.A (“Trafigura”)(together, the “Vendors”). Under the terms
of the SPA, the Vendors has agreed to sell 100% of Minas de Aguas Tenidas S.A. (“MATSA”) to
Sandfire.
The total purchase price payable by Sandfire on completion of the Sale and Purchase Agreement is
US$1,865 million. The purchase price is subject to net debt and working capital adjustments.
Conditions Completion of the Transaction is subject to Sandfire obtaining approval from the Foreign Investment
Precedent Authority in relation to Foreign Direct Investment in Spain, and Antitrust Merger Approval.
The latest date on which these conditions can be satisfied is 31 March 2022, after which either the
Vendors or Sandfire may terminate.
Termination events There are a limited number of termination rights under the SPA. Sandfire is entitled to terminate the
agreement in the event or circumstance which causes prolonged physical damage or destruction to
the asset (after meeting certain specified thresholds).
Escrow deposit Sandfire has agreed to pay a US$300 million deposit to an escrow agent. US$100 million will be paid
to the Vendors on signing the SPA and US$200 million will be paid within 10 business days.
In the event of Sandfire’s fails to complete the transaction (excluding due to failure to receive the
Foreign Direct Investment Approval or Antitrust Merger Approval or the accepted termination events),
Sandfire would forfeit US$100 million to the Vendors. It has also been agreed that Sandfire forfeiting
the deposit is not the sole remedy available to the Vendors in these circumstances.
Representation / Representations and warranties are given by the Seller in relation to the Target subject to customary
Warranties limitations on liability.

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Summary of Underwriting Agreement for the Equity Raising

Overview Citigroup Global Markets Australia Pty Limited (ABN 64 003 114 832) and Macquarie Capital (Australia) Limited
(ABN 79 123 199 548) (Underwriters) are appointed severally as the exclusive underwriters, bookrunners and lead		 Citigroup Global Markets Australia Pty Limited (ABN 64 003 114 832) and Macquarie Capital (Australia) Limited
(ABN 79 123 199 548) (Underwriters) are appointed severally as the exclusive underwriters, bookrunners and lead
managers to the Entitlement Offer. The Company has entered in an underwriting agreement with the Underwriters in
respect of the Entitlement Offer (Underwriting Agreement).
The Underwriting Agreement is subject to certain terms and conditions which are customary for an Underwriting
Agreement of this type, including conditions precedent, representations, warranties and indemnities (in favour of the
Underwriters), undertakings in favour of the Underwriters and termination rights. In particular, the Underwriting
Agreement contains various representations and warranties by the Company relating to the Company and its
business, including information provided to the Underwriters and disclosed to the ASX. The Underwriting Agreement
also imposes various obligations on the Company, including undertakings to do certain things, including providing
certain notices to the Underwriters and the ASX within prescribed periods. Time is of the essence in the
Underwriting Agreement. Terms capitalised in the following table that are not defined in the Glossary have the
meaning given to those terms in the Underwriting Agreement.
Termination events An Underwriter may, in certain circumstances, terminate its obligations under the Underwriting Agreement if any of
the following termination events (among others) occur by giving written notice to the Company (some of which are
subject to a market standard materiality qualifier):
(Available cash balance) the Company ceases to maintain an available cash balance that will allow it to
fund the cash consideration for the Acquisition (in addition to the proceeds of the Offer and drawdowns
under the Debt Facilities) as well as ordinary working capital);
(Acquisition) The Company decides not to proceed with the Acquisition, withdraws any offer made to the
vendors on connection with the Acquisition, the seller exclude The Company from any process in relation to
the Acquisition or inform the Company it will not be the acquirer of the asset the subject of the Acquisition;
(Information Documents) a material statement contained in the information documents released to ASX in
connection with the Offer (Information Documents) is or becomes misleading or deceptive (including by
omission) or likely to mislead or deceive (including by omission), in a material respect, or any statement
about a future matter expressed in the Information Documents becomes false is a false or misleading
statement;
(corrective statement) an obligation arises on the Company to give ASX a notice in accordance with
section 708AA(10) or 708AA(12) of the Corporations Act (as amended by ASIC Corporations (Non-
Traditional Rights Issues) Instrument 2016/84);
(delisting) The Company ceases to be admitted to the official list of ASX or the Shares are removed from
official quotation or suspended from quotation by ASX for two or more trading days on or from the date after
the Institutional Closing Date (excluding a voluntary suspension trading halt contemplated by the
Underwriting Agreement);
(quotation) approval is refused or not granted to the official quotation of all the Offer Shares on ASX, or if
granted, the approval is subsequently withdrawn, qualified;
(Acquisition Agreement or the Debt Facilities) either the Acquisition Agreement or either of the Debt
Facilities is terminated or rescinded or amended in a material respect without the consent of the
Underwriters (not to be unreasonably withheld or delayed), and such amendment would have a material
adverse effect on the Company, the Acquisition or the Offer, a material breach occurs under either the
Acquisition Agreement or either of the Debt Facilities, or a condition precedent to any party's obligations
under either the Acquisition Agreement or either of the Debt Facilities becomes incapable of being satisfied,
or a condition precedent of either the Acquisition Agreement or either of the Debt Facilities is waived without
the consent of the Underwriters (acting reasonably and in good faith);
(insolvency) any member of the Sandfire group suffers an insolvency event, or there is an act or omission
which is likely to result in any member of the Sandfire group suffering an insolvency event;
(unable to issue Offer Shares) the Company is unable to issue the Offer Shares on the relevant date as
required by the timetable, ASX Listing Rules, applicable laws, an order of a court of competent jurisdiction or
a governmental agency;
(withdrawal) the Company announces that it withdraws or does not intend to proceed with all or any
material part of the Offer;
(fraud) a director or officer of the Company is charged with an indictable offence relating to corporate or
financial matters, or fraudulent or misleading or deceptive conduct;
(change in management) a change in the Chief Executive Officer of the Company is announced or occurs;
(director) a director or officer of the Company is disqualified from managing a corporation or any regulatory

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body or governmental agency commences any public action against the director in his or her capacity as a director or officer of the Company or announces that it intends to take any such action;

( timetable ) any event specified in the timetable is delayed for 2 or more business days (or/ 1 or more business day at any time in the period up to and including the settlement date of the Institutional Entitlement Offer) without the prior written approval of the Underwriters (such approval not to be unreasonably withheld or delayed);

  • ( breach ) the Company is in breach of the Underwriting Agreement or any of its representations or warranties in the Underwriting Agreement is not true or correct when made or taken to be made;

( due diligence ) the due diligence report or any information provided by or on behalf of the Company during the due diligence program is misleading or deceptive or likely to mislead or deceive whether by omission or otherwise.( issue of proceedings ) proceedings are commenced or there is a public announcement of an intention to commence proceedings before a court or tribunal of competent jurisdiction seeking an injunction or other order in relation to the Offer;

( regulatory action ) an application is made by ASIC for an order, or ASIC gives notice of an intention to commence an investigation, proceeding or hearing, under Part 9.5 of the Corporations Act or Part 3 of the Australian Securities and Investments Commission Act 2001 (Cth), in each case in relation to the Offer or the Information Documents, and any such application, investigation or hearing becomes public or is not withdrawn within two business days after it is made or commenced (or if made within two business days before the Retail Settlement Date, by the Retail Settlement Date);

 ( hostilities ) hostilities not presently existing commence (whether war has been declared or not) or a major escalation in existing hostilities occurs (whether war has been declared or not) involving any one or more of Australia, New Zealand, Germany, Hong Kong, Japan, Spain, the United States, United Kingdom, or the People's Republic of China, or a state of emergency is declared by any of those countries (other than as already declared prior to the date of this agreement or in relation to COVID 19) or a major terrorist act is perpetrated on any of those countries or any diplomatic establishment of any of those countries;  ( market disruption ):

  • a general moratorium on commercial banking activities in Australia, Germany, Hong Kong, Sweden, Singapore, the United States or the United Kingdom is declared by the relevant central banking authority in any of those countries or there is a material disruption in commercial banking or security settlement or clearance services in any of those countries; or

  • at any time before 2.00pm on the Institutional Closing Date, there occurs any adverse effect on the financial markets in Australia, Germany, Hong Kong, Singapore, Spain, the United States or the United Kingdom, or in foreign exchange rates or any development involving a prospective change in political, financial or economic conditions in any of those countries; or

  • trading of all securities quoted on ASX, London Stock Exchange, Hong Kong Stock Exchange, Singapore Exchange or New York Stock Exchange is suspended or limited in a material respect for one day on which that exchange is open for trading, or a Level 3 "market wide circuit breaker" is implemented by the New York Stock Exchange upon a 20% decrease against the prior day's closing price of the S&P 500 Index only; or

  • ( change in law ) there is introduced into the Parliament of the Commonwealth of Australia or any State or Territory of Australia a new or materially revised law or any new regulation is made under any law, or a governmental agency adopts a policy, or there is any official public announcement on behalf of the government of the Commonwealth of Australia or any State or Territory of Australia or a governmental agency that such a law or regulation will be introduced or policy adopted (as the case may be).

If an Underwriter terminates its obligations under the Underwriting Agreement, the Underwriter will not be obliged to perform any of its obligations that remain to be performed. Termination of the Underwriting Agreement by an Underwriter could have an adverse impact on the amount of proceeds raised under the Offer. For details of fees payable to the Underwriters, see the Appendix 3B released to ASX on the date of this Presentation.

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Moratorium

The Underwriting Agreement includes a moratorium as agreed to between the parties which provides the Company must not (and must procure that its related bodies corporate do not) allot, issue or sell or agree to allot, issue or sell securities or grant or agree to grant any options in respect of securities of the Company except:

  • the offer or issue of Offer Shares;

  • as previously announced to ASX;

  • where the issue, allotment or sale is of an amount of Shares or other securities representing less than 10% of the Company's issued capital;

  • where the issue or agreement to issue Shares is under the Company's existing non-underwritten dividend reinvestment, bonus share plan or employee incentive schemes (as those terms are defined in the ASX Listing Rules) or other employment or consultant arrangements;

  • on the conversion of convertible securities currently on issue; or,

  • with the prior written consent of the Underwriters, not to be unreasonably withheld or delayed,

for a period of 60 days following Completion.

Summary of AustralianSuper sub-underwrite

AustralianSuper has agreed to sub-underwrite up to $150 million of the retail component of the Offer (approximately 19% of the Retail Entitlement Offer). AustralianSuper is not sub-underwriting any of the institutional component of the Entitlement Offer. AustralianSuper has entered into a Commitment and Sub-underwriting Letter with the Lead Managers. AustralianSuper will receive a fee of:

  • 1% of (the number of AustralianSuper’s sub-underwritten securities multiplied by the fixed price per Share); and

  • in the event that AustralianSuper has shortfall securities allocated to it, and meets all of its obligations to subscribe for the shortfall securities, subject to the meeting of certain conditions, 0.25% of (the number of shortfall securities (if any) allocated to AustralianSuper multiplied by the fixed price per Share).

There are no significant events that could lead to the Commitment and Sub-underwriting Letter being terminated, other than termination of the Underwriting Agreement between SFR and the Lead Managers. If AustralianSuper is required to take up its full sub-underwriting allocation, it and its associates would increase their voting power in SFR by 6.9% up to 11.9% on the issue date of the Retail Entitlement Offer.”

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IMPORTANT NOTICE AND DISCLAIMER

Not for release to US wire services or distribution in the United States

This announcement has been prepared for publication in Australia and may not be released or distributed to US wire services in the United States. This announcement does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States or any other jurisdiction. Any securities described in this announcement have not been, and will not be, registered under the US Securities Act of 1933, as amended ( US Securities Act ), or the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold, directly or indirectly, in the United States except in transactions exempt from, or not subject to, the registration requirements of the US Securities Act and any other applicable securities laws of any state or other jurisdiction of the United States. The Company does not intend to register any portion of the Offer under the US Securities Act or to conduct a public offering in the United States. The release, publication or distribution of this announcement (including in electronic copy) outside Australia may be restricted by law. If you come into possession of this announcement, you should observe such restrictions and should seek your own advice on such restrictions. Any non-compliance with these restrictions may contravene applicable securities laws.

Forward-Looking Statements

Certain statements made during or in connection with this release contain or comprise certain forward-looking statements regarding Sandfire’s Mineral Resources and Reserves, exploration and project development operations, production rates, life of mine, projected cash flow, capital expenditure, operating costs and other economic performance and financial condition as well as general market outlook. Although Sandfire believes that the expectations reflected in such forward-looking statements are reasonable, such expectations are only predictions and are subject to inherent risks and uncertainties which could cause actual values, results, performance or achievements to differ materially from those expressed, implied or projected in any forward-looking statements and no assurance can be given that such expectations will prove to have been correct. No representation, express or implied, is made as to the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, returns or statements in relation to future matters contained in this announcement.

There is continuing uncertainty as to the full impact of COVID-19 on Sandfire’s business, the Australian economy, share markets and the economies in which Sandfire conducts business. Given the high degree of uncertainty surrounding the extent and duration of the COVID-19 pandemic, it is not currently possible to assess the full impact of COVID-19 on Sandfire’s business or the price of Sandfire securities.

Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, delays or changes in project development, success of business and operating initiatives, changes in the regulatory environment and other government actions, fluctuations in metals prices and exchange rates and business and operational risk management.

Except for statutory liability which cannot be excluded, each of Sandfire, its officers, employees and advisors expressly disclaim any responsibility for the accuracy or completeness of the material contained in these forward-looking statements and excludes all liability whatsoever (including in negligence) for any loss or damage which may be suffered by any person as a consequence of any information in forward-looking statements or any error or omission. Sandfire undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after today's date or to reflect the occurrence of unanticipated events other than required by the Corporations Act and ASX Listing Rules. Accordingly, you should not place undue reliance on any forward-looking statement.

General

In addition, this announcement is subject to the same "Important Information and Disclaimer" that appears on slides 2 to 6 of the Investor Presentation with any necessary contextual changes.

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Mineral Resources Estimates

MATSA MINERAL RESOURCES[(1), (2)]

As at 31 December 2019

Tonnes
(Mt)		 Cu
(%)
Zn
(%)
Pb
(%)
Ag
(g/t)		 Cu(3)
(kt)
Zn(3)
(kt)
Pb(3)
(kt)
Ag(3)
(koz)
Aguas Teñidas
Measured
31.9
1.4%
2.8%
0.8%
38.5
433
900
253
39,443
Indicated
9.9
1.4%
3.2%
0.9%
41.7
139
314
91
13,258
Inferred
4.9
2.1%
6.6%
2.1%
84.5
101
325
101
13,338
Total Measured, Indicated & Inferred(4)
46.7		 1.4%
3.3%
1.0%
44.0		 673
1,539
444
66,039
Magdalena
Measured
8.9
Indicated
14.0
Inferred
5.0		 3.5%
5.6%
1.5%
75.0
2.3%
1.7%
0.5%
29.0
2.2%
1.6%
0.4%
27.8		 306
500
134
21,336
319
238
70
13,084
111
81
22
4,489
Total Measured, Indicated & Inferred (4)
27.9		 2.6%
2.9%
0.8%
43.4		 736
818
227
38,939
Sotiel
Measured
21.6
Indicated
9.6
Inferred
16.0		 1.0%
3.7%
1.6%
43.2
1.2%
2.9%
1.3%
42.6
0.8%
3.5%
1.6%
43.9		 222
792
339
29,955
117
277
121
13,109
134
557
252
26,622
Total Measured, Indicated & Inferred (4)
47.2		 1.0%
3.4%
1.5%
43.3		 472
1,626
717
65,686
MATSA Consolidated
Measured
62.3
1.5%
3.5%
1.2%
45.3
960
2,192
726
90,763
Indicated
33.5
1.7%
2.5%
0.8%
36.7
575
828
282
39,451
Inferred
25.9
1.3%
3.7%
1.4%
48.6
346
963
375
40,449
Grand Total
Measured, Indicated & Inferred (4)
121.8		 1.5%
3.3%
1.1%
43.6		 1,881
3,984
1,383
170,663

1. Mineral Resources are inclusive of Ore Reserves and are reported on a 100% consolidated basis.

2. Mineral Resources are based on long-term real prices of US$8,450/t Cu, US$3,000/t Zn, US$2,450/t Pb, US$21.3/oz Ag.

3. Original statements did not present metal content, these have been derived for consolidated table only.

4. Consolidated Resources include polymetallic, cupriferous, and stockwork.

5. Mineral Resources have an effective date of 31 December 2019

6. Mineral Resources are reported as in situ and undiluted.

7. Tonnages are reported in metric units, grades in percent (%). Parts per million (ppm) or grams per tonne (g/t), and the contained metal in metric units. Tonnages, grades, and contained metal totals are rounded appropriately.

8. Rounding, as required by reporting guidelines, may result in apparent summation differences between tonnes, grade and contained metal content. Where these occur, SRK does not consider these to be material.

MATSA ORE RESERVES[(1), (2)]

As at 31 July 2020

Tonnes (Mt) Cu
(%)
Zn
(%)
Pb
(%)
Ag
(g/t)		 Cu(3)
(kt)
Zn(3)
(kt)
Pb(3)
(kt)
Ag(3)
(koz)
Aguas Teñidas
Proved
9.7
Probable
4.8		 1.3%
2.7%
0.8%
34.7
1.3%
2.9%
0.8%
36.8		 130
261
73
10,440
64
140
39
5,500
Total(4)
14.5		 1.3%
2.8%
0.8%
35.4		 194
401
112
15,940
Magdalena
Proved
6..7
Probable
11.4		 2.4%
3.3%
0.9%
46.4
2.1%
2.0%
0.6%
30.7		 158
222
61
9,597
244
227
64
10,899
Total(4)
18.1		 2.3%
2.5%
0.7%
36.8		 402
449
125
20,496
Sotiel
Proved
2.3
Probable
1.1		 1.5%
2.2%
0.9%
38.0
1.3%
2.6%
1.1%
39.2		 34
50
21
2,663
15
29
12
1,377
Total(4)
3.4		 1.5%
2.3%
1.0%
38.4		 49
79
33
4,041
MATSA Consolidated
Proved
18.6
Probable
17.3		 1.7%
2.9%
0.8%
39.2
1.9%
2.3%
0.7%
33.0		 322
534
154
22,698
324
397
114
17,776
Grand Total(4)
35.9		 1.8%
2.6%
0.8%
36.4		 646
931
269
40,473

1. Ore Reserves are reported on a 100% consolidated basis.

2. Ore Reserves are based on long-term real prices of US$6,800/t Cu, US$2,400/t Zn, US$2,000/t Pb, US$17.0/oz Ag.

3. Original statements did not present metal content, these have been derived for consolidated table only.

4. Consolidated Ore Reserves include polymetallic and cupriferous.

5. Ore Reserves are reported above their relevant NSR breakeven prices.

6. Mining, processing, and administrative costs were estimated based on actual costs.

7. The NSR cut-off values applied for the Reserve estimate included Aguas Teñidas (USD 40.90/t), Magdalena (USD 40.49/t) and Sotiel (USD 49.09/t).

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APPENDIX 1 - MINERAL RESOURCE AND ORE RESERVES

BACKGROUND

SRK Consulting (UK) Limited (“SRK”) was requested by Minas de Aguas Teñidas S.A. (“MATSA”, hereinafter also referred to as the “Vendor”) to consent to the disclosure of historical Mineral Resource and Ore Reserve statements with effective dates of 31 December 2019 and 31 July 2020, respectively (the “2020 Statements”) for the “Mineral Assets” of MATSA comprising three underground mines (Magdalena Mine, Aguas Teñidas Mine and Sotiel Mine), processing facilities and associated infrastructure located in southern Spain and to re-report the 2020 Statements in accordance with the terms and definitions of the JORC Code defined below.

Furthermore, SRK has been informed that the consent from SRK is required in connection with the proposed acquisition (the “Acquisition”) of the Mineral Assets from MATSA by Sandfire Resources Limited (“Sandfire” and the “Acquirer”) a mining and exploration public company listed on the Australian Securities Exchange (“ASX”) and trading under symbol SFR. The details of the Acquisition, associated considerations and conditions precedent are incorporated into a Sales and Purchase Agreement between the Vendor the Acquirer and related parties. The salient aspects of which are summarised in this ASX Announcement date 23 September 2021. Furthermore, SRK has been also requested to author Appendix 1 of this Press Release and to incorporate additional technical disclosure in accordance with the suggested headings referenced in Table 1 of Appendix 5A (JORC Code)

SRK has been informed that this Press Release and restating of the is required in accordance with Sandfire’s obligation in respect of the “ASX Listing Rules” specifically LR 5.9 relating to “Requirements applicable to reports of Ore Reserves for material mining projects” and as appropriate LR 5.6.

In providing this consent to reference the historical 2020 Statements, SRK further notes that this is done for information purposes only and on a no reliance basis. Accordingly, any and all related parties in respect of the Acquisition cannot place any reliance on SRK save for the validity of reporting the Mineral Resources and Ore Reserves in accordance with the terms and definitions of the JORC Code as of the Effective Dates of the 2020 Statements being 31 December 2019 and 31 July 2020 for the Mineral Resources and Ore Reserves respectively. For the avoidance of doubt, SRK has neither been commissioned nor mandated by Sandfire to update its opinion in respect of the 2020 Statements, the Mineral Assets or to support or advise on the Acquisition process or the technical basis underpinning the financial consideration as outlined in the Sale and Purchase Agreements.

For the avoidance of doubt, the Mineral Resources and Ore Reserve statements (the “2020 Statements”) are reported with effective dates (the “Effective Dates”) of 31 December 2019 for Mineral Resources and 31 July 2020 respectively for Ore Reserves. As such the 2020 Statements in being historical estimates are not current within the meaning of the ASX Listing Rules and the JORC Code. To this extent, SRK clarifies that it has not undertaken any further technical work, due diligence or other analysis subsequent to the Effective Dates herein. Accordingly, SRK cannot confirm nor validate whether any material changes relating to depletion or additional technical, legal or financial assumptions have occurred during the interim period and if reassessed as of the Effective Date of this Press Release would either negatively or positively impact the 2020 Statements as reported herein. Given this context the 2020 Statements are only valid as of the Effective Dates and are not deemed to be current or confirmed as valid as of the Effective Date of this Press Release. Notwithstanding the aforementioned, please note that SRK has recently been commissioned by MATSA to prepare updated Mineral Resources and preliminary updates as at 31 December 2020 are available. Save for depletion, these however are not materially different. Furthermore, at the date of publication of the Press Release no update for further depletion or accompanying life of mine planning processes have been undertaken to inform or amend the historical 2020 Statements as reproduced herein.

The 2020 Statements reported at the Effective Dates of 31 December 2019 for Mineral Resources and 31 July 2020 for Ore Reserves are reproduced from an unpublished “Technical Report” authored by SRK during H2 2020 (the “H2 2020 Technical Report”) which supports the reporting of Mineral Resources and Mineral Reserves in accordance with the guidelines and terminology provided in the 2014 “CIM Definition Standards on Mineral Resources and Reserves” produced by the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM Definition Standards”). The CIM Definition Standards is an internationally recognised reporting code as defined by the Combined Reserves International Reporting Standards Committee (“CRIRSCO”).

The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the “JORC Code”), 2012 edition, as produced by the Australasian Joint Ore Reserves Committee (“the JORC Committee”) is,

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like the CIM Definition Standards, an internationally recognised reporting code as defined by CRIRSCO. Whilst some terminology used differs between the two codes, there are no material differences which would result in a different Mineral Resource and Mineral Reserve statement overall. Mineral Resources under the CIM Definition Standards would translate to the same categories under the JORC Code, and Proven Mineral Reserves under the CIM Definition Standards would translate directly to Proved Ore or Mineral Reserves under the JORC Code, with Probable Mineral Reserves translating to Probable Ore or Mineral Reserves.

In re-reporting the historical estimates in accordance with the terms and definitions of the JORC Code, SRK confirms that the 2020 Statements remain valid only as of the Effective Dates and not at the effective date of this Press Release. For information, please note that SRK has recently been commissioned by MATSA to prepare updated Mineral Resources which is presently underway but not at the date of publication of the Press Release sufficiently advanced to inform or amend the historical 2020 Statements as reproduced herein.

The Competent Person who has reviewed the historical Mineral Resources as reported in the 2020 Statements is Mr Guy Dishaw, P.Geo, who is a full-time employee of and Principal Consultant (Resource Geology) at SRK. Mr Dishaw is a Professional Geoscientist (P. Geo.) registered with the Association of Professional Engineers and Geologists of Saskatchewan, a ‘Recognised Overseas Professional Organisation’ (“ROPO”) included in a list promulgated by the Australian Stock Exchange (“ASX”) from time to time. Mr Dishaw has over 20 years’ experience in the mining and metals industry and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the JORC Code.

The Competent Person who has reviewed the historical Ore Reserves as reported in the 2020 Statements and the Life of Mine Plan (“LoMP”) is Mr Chris Bray, BEng, MAusIMM (CP), who is a full-time employee of and Principal Consultant (Mining) at SRK. He is a Member of and Chartered Professional in the Australasian Institute of Mining and Metallurgy, a ROPO. Mr Bray is a Mining Engineer with over 20 years’ experience in the mining and metals industry, including operational experience in underground base metal and polymetallic mines, and as such qualifies as a Competent Person as defined in the JORC Code. He has also been involved in the reporting of Ore Reserves on various properties internationally for over 10 years.

MINERAL RESOURCES

The Mineral Resource statements as presented in the 2020 NI 43-101 were stated as at 31 December 2019, and were presented on a deposit level per operating mine. The various statements as presented are:

Aguas Teñidas Mine:

  • Aguas Teñidas (Table 2),

  • Western Extension (Table 3),

  • Calanesa (Table 4),

  • Castillejito (Table 5);

Magdalena Mine:

  • Masa 1 (Table 6),

  • Masa 2 (including Masa 2 Gold) (Table 7); and

Sotiel Mine:

  • Sotiel (Table 8),

  • Sotiel East (Table 9),

  • Migollas (Table 10),

  • Calabazar (Table 11),

  • Elvira (Table 12).

The overall total Mineral Resource Statement for MATSA, in accordance with the JORC Code, as at 31 December 2019 is summarised in Table 1.

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Table 1: Total MATSA Mineral Resources (Aguas Teñidas Mine, Magdalena Mine, Sotiel Mine) as of 31 December 2019

Material Type
Classification
Tonnes
(Mt)		 Material Type
Classification
Tonnes
(Mt)		 Cu
(%)
Zn
(%)
Pb
(%)
Ag
(g/t)
All
Measured
62.3
All
Indicated
33.5		 1.5
3.5
1.2
45.3
1.7
2.5
0.8
36.7
All
Measured + Indicated
95.8		 1.6
3.2
1.1
42.3
All
Inferred
25.9		 1.3
3.7
1.5
48.6
Table 2: Aguas Teñidas deposit, Aguas Teñidas Mine Mineral Resources as of 31 December
Tonnes
(Mt)
Cu
(%)
Zn
(%)
Pb
(%)
Ag
(g/t)
Polymetallic
Measured
7.7
1.0
6.0
1.6
63.0
Indicated
0.7
0.8
6.9
1.7
55.3
Measured + Indicated
8.4
1.0
6.1
1.6
62.4
Inferred
-
-
-
-
-
Cupriferous
Measured
5.5
1.9
0.7
0.2
29.5
Indicated
0.2
2.2
0.9
0.2
28.0
Measured + Indicated
5.6
1.9
0.7
0.2
29.5
Inferred
0.1
2.7
0.1
0.1
26.0
Stockwork
Measured
6.6
1.2
0.1
0.0
4.0
Indicated
1.3
0.9
0.1
0.0
5.2
Measured + Indicated
7.9
1.1
0.1
0.0
4.2
Inferred
0.1
1.1
0.2
0.0
9.2
Total
Measured
19.8
1.3
2.6
0.7
34.0
Indicated
2.2
1.0
2.4
0.6
23.6
Measured + Indicated
22.0
1.3
2.6
0.7
32.9
Inferred
0.2
1.9
0.1
0.1
17.6
Tonnes
(Mt)		 Cu
(%)
Zn
(%)
Pb
(%)
Ag
(g/t)
Polymetallic
Measured
7.7
1.0
6.0
1.6
63.0
Indicated
0.7
0.8
6.9
1.7
55.3
Measured + Indicated
8.4		 1.0
6.1
1.6
62.4
Inferred
-
Cupriferous
Measured
5.5
Indicated
0.2		 -
-
-
-
1.9
0.7
0.2
29.5
2.2
0.9
0.2
28.0
Measured + Indicated
5.6		 1.9
0.7
0.2
29.5
Inferred
0.1
Stockwork
Measured
6.6
Indicated
1.3		 2.7
0.1
0.1
26.0
1.2
0.1
0.0
4.0
0.9
0.1
0.0
5.2
Measured + Indicated
7.9		 1.1
0.1
0.0
4.2
Inferred
0.1
1.1
0.2
0.0
9.2
Total
Measured
19.8
1.3
2.6
0.7
34.0
Indicated
2.2
1.0
2.4
0.6
23.6
Measured + Indicated
22.0		 1.3
2.6
0.7
32.9
Inferred
0.2		 1.9
0.1
0.1
17.6

Table 2: Aguas Teñidas deposit, Aguas Teñidas Mine Mineral Resources as of 31 December 2019

Table 3: Western Extension deposit, Aguas Teñidas Mine Mineral Resources as of 31 December 2019

Tonnes
(Mt)		 Cu
(%)
Zn
(%)
Pb
(%)
Ag
(g/t)
Polymetallic
Measured
3.1
1.8
6.1
1.7
65.0
Indicated
2.2
1.7
6.7
2.0
76.6
Measured + Indicated
5.3		 1.8
6.3
1.8
69.9
Inferred
2.7
Cupriferous
Measured
3.0
Indicated
1.1		 1.5
9.5
3.4
118.4
2.1
0.9
0.3
38.8
2.4
1.1
0.3
36.9
Measured + Indicated
4.1		 2.2
1.0
0.3
38.3
Inferred
0.2
Stockwork
Measured
0.6
Indicated
1.3		 2.9
1.1
0.3
31.6
1.0
0.2
0.1
7.1
1.8
0.1
0.0
4.7
Measured + Indicated
1.9		 1.5
0.1
0.0
5.4
Inferred
0.0
1.0
1.3
0.5
26.9
Total
Measured
6.7
1.8
3.2
0.9
47.9
Indicated
4.7
1.9
3.4
1.0
46.8
Measured + Indicated
11.3		 1.9
3.3
1.0
47.4
Inferred
2.9		 1.6
8.9
3.2
112.5

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Table 4: Calanesa deposit, Aguas Teñidas Mine Mineral Resources as of 31 December 2019

Tonnes
(Mt)		 Cu
(%)
Zn
(%)
Pb
(%)
Ag
(g/t)
Polymetallic
Measured
0.6
1.3
8.0
1.5
75.2
Indicated
0.7
1.4
5.4
0.8
50.2
Measured + Indicated
1.3		 1.3
6.6
1.1
61.8
Inferred
1.3
Cupriferous
Measured
0.0
Indicated
0.2		 3.3
4.7
0.6
55.7
1.4
2.2
0.4
31.0
1.3
2.1
0.4
33.3
Measured + Indicated
0.2		 1.3
2.1
0.4
32.9
Inferred
0.4
1.8
1.8
0.4
29.8
Total
Measured
0.6
1.3
7.8
1.4
73.1
Indicated
0.8
1.4
4.8
0.7
47.2
Measured + Indicated
1.5		 1.3
6.1
1.0
58.2
Inferred
1.6		 3.0
4.0
0.5
49.8

Table 5: Castillejito deposit, Aguas Teñidas Mine Mineral Resources as of 31 December 2019

Tonnes
(Mt)		 Cu
(%)
Zn
(%)
Pb
(%)
Ag
(g/t)
Polymetallic
Measured
2.9
0.8
3.3
1.2
45.9
Indicated
1.5
0.7
3.2
1.3
51.4
Measured + Indicated
4.4		 0.7
3.3
1.2
47.7
Inferred
0.1
Cupriferous
Measured
1.9
Indicated
0.7		 0.9
2.8
1.1
42.4
1.2
1.8
0.6
29.3
1.0
1.9
0.8
38.6
Measured + Indicated
2.6		 1.1
1.8
0.6
31.8
Inferred
0.1
1.1
1.4
0.7
40.5
Total
Measured
4.8
0.9
2.7
0.9
39.2
Indicated
2.2
0.8
2.8
1.1
47.3
Measured + Indicated
7.0		 0.9
2.7
1.0
41.7
Inferred
0.2		 1.0
1.8
0.8
41.0

Table 6: Magdalena Masa 1 deposit, Magdalena Mine Mineral Resources as of 31 December 2019

Tonnes
(Mt)		 Cu
(%)
Zn
(%)
Pb
(%)
Ag
(g/t)
Polymetallic
Measured
1.0
2.9
8.2
1.8
94.4
Indicated
0.0
1.3
10.2
2.8
143.4
Measured + Indicated
1.0		 2.8
8.3
1.8
96.6
Inferred
-
Cupriferous
Measured
0.7
Indicated
0.1		 -
-
-
-
3.7
0.8
0.2
26.7
2.5
0.1
0.1
9.5
Measured + Indicated
0.8		 3.6
0.8
0.2
25.3
Inferred
-
-
-
-
-
Total
Measured
1.7
3.2
5.0
1.1
64.7
Indicated
0.1
2.0
4.3
1.2
65.4
Measured + Indicated
1.8		 3.1
5.0
1.1
64.8
Inferred
-		 -
-
-
-

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Table 7: Magdalena Masa 2 deposit, Magdalena Mine Mineral Resources as of 31 December 2019

Tonnes
(Mt)		 Cu
(%)
Zn
(%)
Pb
(%)
Ag
(g/t)
Polymetallic
Measured
4.3
3.9
9.2
2.5
114.1
Indicated
3.7
2.6
5.0
1.4
64.4
Measured + Indicated
7.9		 3.3
7.2
2.0
91.2
Inferred
1.0
Cupriferous
Measured
2.5
Indicated
10.0		 2.3
7.5
1.9
79.9
3.3
0.8
0.2
23.6
2.2
0.5
0.2
16.0
Measured + Indicated
12.5		 2.4
0.6
0.2
17.5
Inferred
4.0
Stockwork
Measured
0.4
Indicated
0.3		 2.2
0.2
0.1
15.1
1.2
1.4
0.5
25.3
1.2
0.8
0.3
20.4
Measured +Indicated
0.7		 1.2
1.1
0.5
23.3
Inferred
0.1
1.0
0.3
0.2
7.8
Total
Measured
7.2
3.5
5.8
1.6
77.4
Indicated
13.9
2.3
1.7
0.5
28.8
Measured + Indicated
21.1		 2.7
3.1
0.9
45.3
Inferred
5.0		 2.2
1.6
0.5
27.7

Table 8: Sotiel deposit, Sotiel Mine Mineral Resources as of 31 December 2019

Tonnes
(Mt)		 Cu
(%)
Zn
(%)
Pb
(%)
Ag
(g/t)
Polymetallic
Measured
4.7
0.5
5.1
2.1
43.1
Indicated
0.8
0.6
4.8
2.0
42.8
Measured + Indicated
5.6		 0.5
5.0
2.1
43.1
Inferred
-
Cupriferous
Measured
0.6
Indicated
0.2		 -
-
-
-
1.6
1.6
0.5
21.4
1.7
1.7
0.5
20.4
Measured + Indicated
0.7		 1.7
1.6
0.5
21.2
Inferred
-
-
-
-
-
Total
Measured
5.3
0.6
4.7
1.9
40.8
Indicated
1.0
0.7
4.3
1.8
39.4
Measured + Indicated
6.3		 0.7
4.6
1.9
40.6
Inferred
-		 -
-
-
-

Table 9: Sotiel East deposit, Sotiel Mine Mineral Resources as of 31 December 2019

Tonnes
(Mt)		 Cu
(%)
Zn
(%)
Pb
(%)
Ag
(g/t)
Polymetallic
Measured
7.8
0.6
4.7
2.1
46.4
Indicated
1.4
0.6
5.0
2.2
43.7
Measured + Indicated
9.2		 0.6
4.8
2.1
46.0
Inferred
0.1
Cupriferous
Measured
0.9
Indicated
0.5		 1.0
5.1
2.1
45.4
1.7
1.3
0.5
30.1
2.0
1.2
0.5
34.3
Measured + Indicated
1.4		 1.8
1.3
0.5
31.6
Inferred
0.1
1.6
1.6
0.9
28.1
Total
Measured
8.7
0.8
4.4
1.9
44.8
Indicated
1.9
1.0
4.0
1.7
41.3
Measured + Indicated
10.6		 0.8
4.3
1.9
44.1
Inferred
0.2		 1.3
3.0
1.4
35.3

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Table 10: Migollas deposit, Sotiel Mine Mineral Resources as of 31 December 2019

Tonnes
(Mt)		 Cu
(%)
Zn
(%)
Pb
(%)
Ag
(g/t)
Polymetallic
Measured
1.2
1.0
3.6
1.6
54.0
Indicated
1.8
0.9
4.4
1.8
53.3
Measured + Indicated
3.0		 1.0
4.0
1.7
53.6
Inferred
13.8
Cupriferous
Measured
2.7
Indicated
2.7		 0.7
3.7
1.7
45.1
2.0
1.0
0.5
39.3
1.9
0.8
0.4
37.9
Measured + Indicated
5.4		 1.9
0.9
0.5
38.6
Inferred
2.1
1.4
1.8
1.0
36.9
Total
Measured
3.9
1.7
1.8
0.8
43.8
Indicated
4.5
1.5
2.2
1.0
44.1
Measured + Indicated
8.4		 1.6
2.0
0.9
43.9
Inferred
15.8		 0.8
3.5
1.6
44.0

Table 11: Calabazar deposit, Sotiel Mine Mineral Resources as of 31 December 2019

Tonnes
(Mt)		 Cu
(%)
Zn
(%)
Pb
(%)
Ag
(g/t)
Polymetallic
Measured
0.8
0.6
4.9
2.3
56.1
Indicated
1.1
0.7
4.4
2.2
56.3
Measured + Indicated
1.9		 0.6
4.6
2.2
56.2
Inferred
-
Cupriferous
Measured
1.1
Indicated
0.8		 -
-
-
-
1.8
1.3
0.7
41.3
1.4
0.8
0.4
30.1
Measured + Indicated
1.9		 1.6
1.1
0.6
36.3
Inferred
-
-
-
-
-
Total
Measured
1.9
1.3
2.9
1.4
47.8
Indicated
1.9
1.0
2.8
1.4
44.6
Measured + Indicated
3.8		 1.1
2.8
1.4
46.2
Inferred
-		 -
-
-
-

Table 12: Elvira deposit, Sotiel Mine Mineral Resources as of 31 December 2019

Tonnes
(Mt)		 Cu
(%)
Zn
(%)
Pb
(%)
Ag
(g/t)
Polymetallic
Measured
0.8
0.5
4.4
1.5
46.5
Indicated
0.1
0.5
4.0
1.4
41.0
Measured + Indicated
1.0		 0.5
4.3
1.5
45.7
Inferred
-
Cupriferous
Measured
1.0
Indicated
0.2		 -
-
-
-
2.8
0.6
0.2
27.6
2.8
0.2
0.1
25.3
Measured + Indicated
1.2		 2.8
0.5
0.2
27.2
Inferred
-
-
-
-
-
Total
Measured
1.8
1.8
2.3
0.8
36.1
Indicated
0.4
1.9
1.7
0.6
31.3
Measured + Indicated
2.2		 1.8
2.2
0.8
35.3
Inferred
-		 -
-
-
-

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Geology and Geological Interpretation

The MATSA deposits are located in the Iberian Pyrite Belt (“IPB”). which is arguably the largest and most important VMS metallogenic province in the world. The IPB comprises Upper Devonian to Upper Carboniferous volcanosedimentary sequences and occurs in the provinces of Huelva and Seville in Spain as well as south Portugal, forming an arch that is approximately 240 km in strike length and 35 km wide.

The IPB is affected by numerous deformation events, including the San Telmo anticline on which the Aguas Teñidas and Magdalena mines occur on the northern limb and Sotiel mine occurs on the southern limb. The mineralisation consists of massive to semi-massive sulphide bodies, primarily composed of pyrite, with lower quantities (generally less than 10%) of Cu, Pb, and Zn bearing sulphides. The deposits at Aguas Teñidas and Magdalena mines also have stockwork sulphide zones in the footwall that can be quite extensive and are characterised by primarily pyrite and chalcopyrite mineralisation.

The MATSA geologists maintain a detailed series of interpreted geological sections that are used to construct 3D models (wireframes) to support the mineral resource estimates and mine planning. MATSA geology staff also maintain underground geological maps that are used to locally adjust the models. The interpreted geological sections are based primarily on the occurrence of logged massive or semi-massive (SM) sulphides in diamond drillholes and underground exposures, or stockwork (SW) for the cupriferous stockwork zones, where applicable. Some of the interpreted mineralisation wireframes have been subsequently updated by SRK Consulting (“SRK”) to better represent the continuity of the mineralisation by including additional intersections.

Estimation domain analysis was completed by SRK to identify the potential presence of multiple populations of Zn, Cu, and Au within the SM wireframes for each deposit. In cases where multiple populations of Zn, Cu, and Au grades were identified, SRK applied thresholds to define high Zn, high Cu, and high Au subdomains, when considered appropriate. The sub-domains were only modelled if they were continuous over multiple drill sections in 3D space.

Drilling Techniques

All drilling conducted at the three mines and the surrounding areas to date has been diamond drilling (from both surface and underground collar locations). The drilling has been carried out by external third-party contractors both for surface and underground programs. The drilling has been conducted using various drilling machines and is usually undertaken using wireline double tube tools. Coring sizes vary with surface drillholes progressing from PQ to HQ, and then NQ, depending on the target depth of the drillhole. Underground exploration drillholes start in HQ and can be reduced to NQ size depending on the target depth of the drillhole. The underground infill drillholes are all NQ in diameter and are not typically reduced in size. Drilling is undertaken using 3 m core runs and core recovery in the mineralised horizons is rarely less than 95%.

The drilling undertaken by MATSA conforms to industry best practices and the resultant sampling pattern is sufficiently dense to interpret the geometry, boundaries, and different styles of the sulphide mineralisation at the three mines with a high level of confidence within well drilled areas. Historical holes are generally surrounded by a majority of more recent MATSA drillholes (post 2004) which largely confirm the location of mineralisation which indirectly suggests that the location accuracy of the historical holes is reasonable. Historical drillholes comprise less than 20% of all drillholes at the Project and where these exist, the mineralisation location is confirmed by surrounding MATSA drillholes.

Sampling and Sub-sampling Techniques

Drill core intersections, with logged presence of sulphides and adjacent waste zones, are marked for sampling and cut into two equal halves. One half of the core is selected for sample preparation and assay analysis, whilst the other is retained as a reference sample.

In general, samples are taken in 2 m lengths. Samples are stored and dried and then crushed using a jaw crusher. The samples are then run through a cone crusher which reduces 90% of the particles to less than 2 mm in size. Finally, samples are homogenised and spilt using an automatic riffle splitter resulting in a 500 g sample (the sample must be at least 400 g in weight and no more than 800 g).

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Sample Analysis Method

Samples are assayed using ICP-OES, with aqua regia digest at the Internal MATSA laboratory. Samples are also fire-assayed for Au.

QAQC samples including blanks, certified reference material (“CRM”), and duplicates are inserted by MATSA staff into the sample stream prior to these being sent to the laboratory for assay analysis. Coarse blanks and twin duplicates are inserted at the laboratory at the start of the sample preparation process. External duplicate samples are collected at the final stage of sample preparation and sent to the umpire laboratory (ALS Laboratories, Ireland ISO/IEC 17025). The results for the MATSA QAQC samples and external duplicates show a high degree of repeatability and a high degree of correlation between the original and duplicate samples.

Estimation Methodology

SRK has completed the Mineral Resource estimates for the Aguas Teñidas, Magdalena, and Sotiel mines and has validated these estimates using various techniques, including visual and statistical methods.

Grade continuity was assessed for all elements using experimental variograms. Downhole variograms were used to model the nugget variance, which represents variability at very close distances. Directional variograms, were used to model grade continuities for larger distances. A 4 m composite length was chosen. SRK chose to treat short composites of less than 2 m in length by merging them with the previous composite, where these shorter intervals are typically created at domain boundaries. Grade capping was applied to composites rather than to original samples. SRK chose grade capping levels based on population breaks indicated in both the log histograms and log probability plots.

All grades and density values were interpolated into the model using Ordinary Kriging (“OK”) in the mineralised domains other than certain zones at Sotiel which were interpolated using Inverse Distance Weighting (“IDW”), due to the low sample support (<90 samples) and their relative spacing. The IDW estimated grades and densities were estimated using a single search pass, whilst the OK grades and density values were estimated using three successive search passes. Hard boundary conditions have been employed during interpolation of grades into the block model for all metals in all domains.

Mineral Resource Classification Criteria

Block model tonnage and grade estimates for the deposits have been largely classified according to drillhole spacing given that the modelled areas are generally well informed.

MATSA has been employing these distances to drillhole criteria for several years and find that these reconcile appropriately (based on Resource classification) to observations and results from mining. SRK has reviewed these distances, with respect to geological and Cu and Zn continuity, and consider these appropriate.

Cut-off Grade

MATSA has used reasonable mining and processing assumptions to develop reporting cut-off net-smelter return (‘NSR’) values for each mine in order evaluate the proportions of the block model that could “reasonably be expected” to be mined.

The Mineral Resource Reporting Cut-off for in-situ mineralization is mine specific:

  • Aguas Teñidas =40.9 USD/tonne

  • Magdalena =40.5 USD/tonne

  • Sotiel =49.1 USD/tonne

Mining and Metallurgical Assumptions

Surveys of the current mined areas of development and stopes, with an effective date of 31 December 2019, were used to code the block model and these areas were assigned a ‘depleted’ status (not reported). A 5 m buffer zone has been applied to designate non-recoverable material around depleted areas.

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.At the MATSA sites, two separate process streams are used to produce copper and zinc concentrates. The polymetallic mineralisation stream processes polymetallic massive sulphide material, whereas the copper mineralisation stream processes material stemming from cupriferous massive sulphides as well as copper stockworks and each of specific metal recovery profiles.

MATSA has characterized run of mine material based on metal grade zonation (indicative of mineralogy), so that the appropriate process is applied to optimize value. Mineralisation is characterized as follows:

  • Polymetallic: Zn >= 2.5%;

  • Cupriferous: Cu >= 0.5% and Zn < 2.5%; and

  • • Stockwork: Cu >= 0.4%

ORE RESERVES

The H2 2020 Technical Report reported the Ore Reserves for the MATSA mines as at 31 July 2020, as presented in Table 2-13.

Table 13: Statement of Ore Reserves for the MATSA mines 31 July 2020

Mine
Ore Type
Classification
Tonnes (Mt)		 Cu
(%)
Zn
(%)
Pb
(%)
Ag
(g/t)
Aguas Teñidas
Copper Ore
Proven
3.1
1.5
0.3
0.1
13.4
Probable
1.2
1.6
0.3
0.1
14.6
Total
P+P
4.3		 1.5
0.3
0.1
13.7
Polymetallic
Proven
6.6
Probable
3.6		 1.3
3.8
1.1
44.5
1.3
3.8
1.1
44.5
Total
P+P
10.2		 1.3
3.8
1.1
44.5
Total
Proven
9.7
Probable
4.8		 1.3
2.7
0.8
34.7
1.3
2.9
0.8
36.8
Total
P+P
14.5		 1.3
2.8
0.8
35.4
Magdalena
Copper Ore
Proven
1.5
Probable
6.5		 2.0
0.4
0.1
12.6
1.9
0.4
0.1
12.2
Total
P+P
8.0		 2.0
0.4
0.1
12.6
Polymetallic
Proven
5.2
Probable
4.9		 2.5
4.2
1.1
56.1
2.5
4.1
1.1
55.4
Total
P+P
10.1		 2.5
4.2
1.1
56.1
Total
Proven
6.7
Probable
11.4		 2.4
3.3
0.9
46.4
2.1
2.0
0.6
30.7
Total
P+P
18.1		 2.3
2.5
0.7
36.8
Sotiel
Copper Ore
Proven
1.0
Probable
0.4		 2.2
0.6
0.2
28.9
2.3
0.6
0.2
28.2
Total
P+P
1.4		 2.2
0.6
0.2
28.7
Polymetallic
Proven
1.2
Probable
0.8		 0.9
3.6
1.5
45.7
0.8
3.6
1.5
44.6
Total
P+P
2.0		 0.9
3.6
1.5
45.3
Total
Proven
2.3
Probable
1.1		 1.5
2.2
0.9
38.0
1.3
2.6
1.1
39.2
Total
P+P
3.4		 1.5
2.3
1.0
38.4
MATSA Consolidated
Copper Ore
Proven
5.6
Probable
8.1		 1.8
0.4
0.1
16.0
1.9
0.4
0.1
13.3
Total
P+P
13.7		 1.9
0.4
0.1
14.6
Polymetallic
Proven
13.0
Probable
9.2		 1.7
3.9
1.1
49.2
1.9
4.0
1.1
50.3
Total
P+P
22.2		 1.8
4.0
1.1
49.8
Total
Proven
18.6
Probable
17.3		 1.7
2.9
0.8
39.2
1.9
2.3
0.7
33.0
Grand Total
P+P
35.9		 1.8
2.6
0.8
36.4

Notes: Estimates have been rounded to the nearest: 100kt; 0.1% Cu, Zn, Pb grade; and 0.1g/t Ag grade. Differences may occur due to rounding

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The reported Ore Reserves for the Aguas Teñidas, Magdalena and Sotiel operations are based on the 11 block models which formed the basis of the Mineral Resource estimates. Whilst various Mineral Resource statements are presented per deposit for each operation, the Ore Reserve statements are presented at an operational level, not further split per deposit.

The effective date of the Mineral Resource statement is 31 December 2019, with the effective date of the Ore Reserve being 31 July 2020. Ore Reserves incorporated depletion by MATSA up to 31 July 2020, as compared to the 31 December 2019 Mineral Resource estimate. The Mineral Resources are presented on an inclusive basis, meaning including any Measured or Indicated classified material that has been considered for conversion to Ore Reserves.

The mines have been operation for some years now, and the mine plan has been developed to a level sufficient for the statement of Ore Reserves, using appropriate modifying factors and proving that they are economically viable.

An NSR cut-off value approach is applied for each stope or development block, with each value calculated according to the ore type, metal grades, metallurgical recoveries, realisation costs, forecast metal prices and the payability of each metal according to the agreed smelter terms. For the Ore Reserve estimate, SRK used the incremental cut-off, as most of the mining areas of the mines had most of the development already in place and it was assumed that the development cost had been already paid for by the mined out stopes.

The primary underground mining method approach at the three mines is sub-level long-hole open stoping (“LHOS”) with transverse and longitudinal orientation depending on the orebody thickness. The mined stopes at Aguas Teñidas and Magdalena are backfilled with paste fill. The Sotiel mine currently uses unconsolidated development waste as backfill with plans to trial cemented rock fill (“CRF”). MATSA has plans to use a Drift and Fill (“D&F) mining method in a small zone of Aguas Teñidas around and above previously mined out stopes.

The Ore Reserve for MATSA has been estimated using accepted industry practices for underground mines including stope optimisation analysis (Deswik), mine design, mine scheduling and the development of a cash flow model incorporating the Company’s technical and economic projections for the mine for the duration of the Life of Mine Plan (“LoMP”).

The MATSA ores are complex, fine grained ores with extremely high levels of gangue pyrite present. Numerous metallurgical testwork programmes have been undertaken to understand the metallurgical complexity of the orebodies and to develop optimal processing scenarios. These programmes have been undertaken both before the project’s commencement, and since, with the on-site laboratory being very active in testing and optimising the plant’s operating parameters in response to changing ore feed characteristics.

Ore is processed at a central facility. The facility consists of two crushing lines and three processing lines, which are contained within two plants (operational since 2008 and 2011 respectively). Ore is classified either as Copper or Polymetallic.

At the effective date of the Ore Reserve statement, 31 July 2020, MATSA has the necessary mining rights and surface ownership for the three mining sites and plant operations.

Required environmental and water permits appear to be in place at the effective date of the Ore Reserve statement, although the Cortagena City Council disputes the presence of municipal permits for works being carried out close to Valdelamusa. MATSA appears to be in broad compliance with permit conditions.

Management of the three operations from an environmental and social perspective appears reasonably good, and there is a clear focus on maximising resource efficiencies particularly across water, waste, GHG emissions and energy.

The MATSA operations are located in a west European country, Spain, which has well-established, well-regulated civil engineering and construction industry standards. The operations themselves have been active for a number of years and as such the infrastructure required to facilitate mining and processing operations are in place and fit for current purposes. No expansion or production rate increases are proposed.

The current practice of holding large volumes of water on the TSF to supply the plant is not in accordance with best practice and could create the circumstances where there is an elevated phreatic surface in the external embankments of the TSF (which can increase likelihood of embankment failure). However, it is noted that the

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volumes of excess water stored on the pond have been reduced markedly since 2018, which has significantly reduced this risk. This situation needs to be closely monitored and maintained going forward.

Operating costs have been derived by MATSA in three mining and a processing cost model, based on the physical activities taking place. No royalties are understood to be payable.

Long term commodity prices used in the economic viability test are as follows, which are deemed acceptable by SRK when comparing to consensus market forecasts as available to SRK at the effective date of the Ore Reserve statement: copper US$6,800/t, lead US$2,000/t, zinc US$2,400/t and silver US$17.0/oz.

Copper is the main contributor to overall NSR making up for approximately 66% over the Mineral Reserve life of mine, followed by a zinc contribution of approximately 25%. silver (7%) and lead (2%) make up the remainder of the total NSR. NSR per tonne of material processed is approximately USD110/t over the Mineral Reserve life.

No market study has been supplied for review, which is deemed acceptable considering the operation is currently in production and contracts are in place for the sale of copper (standard and polymetallic), lead and zinc concentrates.

SRK undertook an assessment of the economic viability of the Ore Reserves to support the statement of Ore Reserves. SRK notes that the economic model as prepared by MATSA is driven by a mine plan which includes Measured, Indicated and Inferred Mineral Resources (plus other), and no life of mine plan exists solely based on Ore Reserves. As taking out Inferred and other material as deemed appropriate by SRK, on an annual basis would hugely distort the economic viability of the remaining production and present an unrealistic plan, SRK has applied a simplified approach, in simply keeping throughput at the consistent rate as per the MATSA plan, but limiting the life to the tonnage as incorporated in the Ore Reserve. As the economic analysis results a positive annual cashflow, and has been tested with a range of sensitivities, SRK is comfortable to state the Ore Reserves as being economically viable.

MATSA uses numerous channels to communicate with stakeholders such as local communities, employees, contractors, suppliers, investors and the media. These channels include information sessions, newsletters, website, email and social media platforms. The company also reportedly holds regular meetings with stakeholders to maintain a continuous dialogue and open days are held monthly for members of the local community, as well as residents of Huelva and Seville provinces, to promote transparency between the company and its neighbours.

Ore Reserves derived from material in the Measured Mineral Resource category have been classed as Proved, whilst Ore Reserves derived from material in the Indicated Mineral Resource category are classed as Probable Ore Reserves. No Measured Mineral Resources have been converted to the Probable Ore Reserve category.

The Ore Reserve for MATSA has been estimated using accepted industry practices for underground mines, including stope optimisation analysis (Deswik), mine design, mine scheduling and the development of a cash flow model incorporating the Company’s technical and economic projections for the mine for the duration of the Life of Mine Plan. The Ore Reserve includes appropriate unplanned dilution and mining recovery factors.

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APPENDIX 2; JORC 2012 CODE – TABLE 1

SECTION 1 SAMPLING TECHNIQUES AND DATA

Criteria JORC Code explanation JORC Code explanation Commentary Commentary
Sampling • Nature and quality of sampling (e.g. cut channels, random chips, or specific • The drilling undertaken by MATSA conforms to industry best practices
Techniques specialised industry standard measurement tools appropriate to the and the resultant sampling pattern is sufficiently dense to interpret the
minerals under investigation, such as down hole gamma sondes, or geometry, boundaries, and different styles of the sulphide
handheld XRF instruments, etc.). These examples should not be taken as mineralisation at the three mines with a high level of confidence within
limiting the broad meaning of sampling. well drilled areas.
• Include reference to measures taken to ensure sample representivity and • The procedure used to acquire drilling information in historic programs
the appropriate calibration of any measurement tools or systems used. (prior to 2004) is not documented or recorded.
• Aspects of the determination of mineralisation that are Material to the Public • Historical holes are generally surrounded by a majority of more recent
Report. MATSA drillholes (post 2004) which largely confirm the location of
• In cases where ‘industry standard’ work has been done this would be mineralisation which indirectly suggests that the location accuracy of
relatively simple (e.g. ‘reverse circulation drilling was used to obtain 1 m the historical holes is reasonable.
samples from which 3 kg was pulverised to produce a 30 g charge for fire • Historical drillholes comprise less than 20% of all drillholes at the
assay’). In other cases more explanation may be required, such as where Project and where these exist, the mineralisation location is confirmed
there is coarse gold that has inherent sampling problems. Unusual by surrounding MATSA drillholes. SRK did not verify this information
commodities or mineralisation types (e.g. submarine nodules) may warrant as the records and cores are not available.
disclosure of detailed information.
Drilling • Drill type (e.g. core, reverse circulation, open-hole hammer, rotary air blast, • All drilling conducted at the three mines and the surrounding areas to
techniques auger, Bangka, sonic, etc.) and details (e.g. core diameter, triple or standard date has been diamond drilling (“DDH”) – from both surface and
tube, depth of diamond tails, face-sampling bit or other type, whether core is underground collar locations.
oriented and if so, by what method, etc.). • Total surface DDH = 1,121 (529,127 m)
• Total underground DDH = 4,619 (500,564 m)
• MATSA does not currently drill orientated core.
• The drilling has been carried out by external third-party contractors both
for surface and underground programs.
• The diamond drilling has been conducted using various drilling machines
and is usually undertaken using wireline double tube tools.
• Coring sizes vary with surface drillholes progressing from PQ, to HQ,
and then NQ, depending on the target depth of the drillhole.
• The underground exploration drillholes start in HQ and can be reduced to
NQ size depending on the target depth of the drillhole.
• The underground infill drillholes are all NQ in diameter and are not
typically reduced in size, as these are typically short in length. If any
possible issues associated with faults and geological structures are
encountered, these can be reduced.

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  • Criteria JORC Code explanation Commentary • Almost all massive sulphide mineralisation is drilled using HQ or NQ diameters.

  • Since MATSA acquired the Aguas Teñidas Mine (post 2004), it has drilled 264 surface, and 2,540 underground diamond drillholes totaling 105,228 and 300,528 m, respectively.

  • MATSA has drilled 379 surface and 781 underground diamond drillholes at Magdalena, totaling 221,675 and 92,595 m, respectively, since the discovery of mineralisation in 2013.

  • Since acquiring Sotiel, MATSA has drilled 206 surface and 351 underground diamond drillholes totaling 95,569 and 35,034 m, respectively.

Drill sample • Method of recording and assessing core and chip sample recoveries and
recovery results assessed.
• Measures taken to maximise sample recovery and ensure representative
nature of the samples.

  • Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material.

  • Drilling is undertaken using 3 m core runs, it is then placed by hand into an open V-rail, before transferring it into numbered core boxes.

  • • Core and core blocks are placed in core boxes by the drilling crews. A geologist inspects all surface and underground production drill cores.

•
•		 Drilling is undertaken using 3 m core runs, it is then placed by hand int
an open V-rail, before transferring it into numbered core boxes.
Core and core blocks are placed in core boxes by the drilling crews.
A geologist inspects all surface and underground production drill
cores.
• Most drill cores from the three mines are stored in the core processing
area, adjacent to the core shed at the Aguas Teñidas mine.
• The core boxes are secured during transit to reduce any potential
movement and loss.

  • The cored intervals are measured against the drillers recorded measurements and then the core recovery is determined by MATSA geologists.

  • The core recovery in the mineralised horizons is rarely less than 95% for all drilling contractors.

  • Historical drillholes (drilled prior to 2004) do not have core recovery records. These holes are generally surrounded by the majority of MATSA drilling and are not expected to have encountered different core recovery conditions.

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Criteria JORC Code explanation Commentary
Logging • Whether core and chip samples have been geologically and geotechnically • All drill core is sent to the drill shed for photography, core
logged to a level of detail to support appropriate Mineral Resource estimation, recovery calculations, geological and geotechnical logging, and
mining studies and metallurgical studies. sampling.
• Whether logging is qualitative or quantitative in nature. Core (or costean, • The core logging is qualitative in nature whereas the sampling and
channel, etc.) photography. results this gives is quantitative in nature.
• The total length and percentage of the relevant intersections logged. • The MATSA logging includes lithological coding as well as assigning
an overall geological unit.
• The lithological coding system used at the three mines records 68
individual rocks types.
• These individual rock types are grouped into an overall geological unit
code, or main rocktype.
Sub-sampling • If core, whether cut or sawn and whether quarter, half or all core taken. • For all intersections with logged presence of sulphides and adjacent
techniques and • If non-core, whether riffled, tube sampled, rotary split, etc. and whether waste zones, cores are marked for sampling and cut into two equal
sample sampled wet or dry. halves.
preparation • For all sample types, the nature, quality and appropriateness of the sample • The core is placed in a v-rail prior to being placed in the core cutting
preparation technique. machine, the core is then cut.
• Quality control procedures adopted for all sub-sampling stages to maximise • One half of the core is selected for sample preparation and assay
representivity of samples. analysis, whilst the other is retained as a reference sample.
• Measures taken to ensure that the sampling is representative of the in situ • In general, samples are taken in 2 m lengths, though this varied
material collected, including for instance results for field duplicate/second-half depending on the logged lithology and mineralisation in the surrounding
sampling. core.
• Whether sample sizes are appropriate to the grain size of the material being • Each sample is stored in a metal tray on a rack and dried at 105°C for at
sampled least two hours. Depending on the type of samples and their degree of
humidity, the drying time may vary, at least until the appearance of the
sample is dry.
• The entire dried sample is first crushed using a jaw crusher. The jaw
crusher has a retaining guard to prevent the loss of chips.
• The jaw crusher is opened (including retaining guard) between samples
and cleaned with wire brush and compressed air.
• The sample is then run through a cone crusher which reduces 90% of
the particles to less than 2 mm in size.
• The cone crusher is cleaned between samples using a wire brush
and compressed air.
• Following this, each sample is then placed on a large plastic sheet and
rolled (mixed) 20 times to homogenise the sample.
• The plastic sheet is suitably large to retain all the sample without
being spilled.
• After the sample is homogenised it is spilt using an automatic riffle splitter
resulting in a 500 g sample, the sample must be at least 400 g in weight
and no more than 800g,this minimum weight restriction is determined by

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Criteria JORC Code explanation Commentary
the grinding capacity of the mill.
• The other half of the spilt is kept for reference purposes.
• A coarse duplicate split is taken prior to amalgamation of the reject samples
if designated by the MATSA geologists.
• The riffle splitter is cleaned with compressed air between each sample.
• The 500 g sample is milled using a ring mill for seven minutes resulting in
the sample particles passing through a 75 µm sieve.
• For low SG samples, it may be necessary to grind the sample in two
parts and then re-combine and homogenise the pulps.
• If a build-up of sample occurs in the ring mill it is cleaned by grinding
coarse sand for a 2 to 4-minute duration, otherwise the ring mill is cleansed
using compressed air, paper, and a paint brush.
• The pulverised sample is then placed on a large plastic sheet and it is
mixed (rolled) 20 times to homogenise the sample.
• The pulp sampel is then dip sampled to obtain a 150 g sub sample
• Any external check samples, which require pulp material are also taken
during this process (external umpire and MATSA reference samples).
• This 150 g sample is then placed in a small plastic or paper bag with the
sample number printed on it.
• The remainder of pulp is transferred back into the sample bag
from which the 500 g was originally stored along with the various
stages of materialproduced during the sample preparationstage
Quality of assay
•		 The nature, quality and appropriateness of the assaying and laboratory • Samples are assayed using ICP-OES, with aqua regia digest at the Internal
data and procedures used and whether the technique is considered partial or total. MATSA laboratory.
laboratory tests • For geophysical tools, spectrometers, handheld XRF instruments, etc., the • Samples are also fire-assayed for Au.
parameters used in determining the analysis including instrument make and • The QAQC samples (blanks, certified reference material (“CRM”), and
model, reading times, calibrations factors applied and their derivation, etc. duplicates) are inserted by MATSA staff into the sample stream prior to
• Nature of quality control procedures adopted (e.g. standards, blanks, these being sent to the laboratory for assay analysis. Coarse blanks and
duplicates, external laboratory checks) and whether acceptable levels of twin duplicates are inserted at the laboratory at the start of the sample
accuracy (i.e. lack of bias) and precision have been established. • preparation process.
Blank samples used by MATSA comprise silica material and have been
included in the sample stream for Aguas Teñidas since 2009. In reviewing
the blanks analysis data, SRK has applied a 5X detection limit threshold,
specific for each element. Samples which plot above this threshold are
determined as failed samples which according to MATSA is typically due to
contamination or a mix up of samples (incorrect labelling). The results of the
blank analysis demonstrate that the sample preparation process employed at
MATSA limit contamination to a reasonable level.
• Fine blank samples used by MATSA comprise pulped (homogenised) silica
material,these have been included in the sample stream for Magdalena and

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Criteria JORC Code explanation Commentary
Aguas Teñidas since 2016, and for the other deposits since 2017. The
results of the fine blank analysis are within reasonable limits, with little
evidence for sample contamination between the ICP samples.
• Twin duplicate samples used by MATSA are quarter core field duplicate
samples which have been included in the sample stream at Aguas Teñidas
and Magdalena since 2016, and at the other deposits since 2017. As
expected, these duplicate results show a wider range of variation than the
other duplicate types inserted into the sample stream by MATSA but still
show reasonably good repeatability as well as good correlation between
the original and duplicate sample. The twin duplicates report correlation
coefficients typically more than 0.85 (most above 0.9).
• Coarse duplicate samples used by MATSA are collected after the
second split following crushing. The results for the coarse duplicates
show a high degree of repeatability and a very high degree correlation
between the original and duplicate sample, with a correlation coefficient
typically more than 0.97.
• Internal pulp duplicates sample used by MATSA are collected at the final
stage of sample preparation. The results for the pulp duplicates show a
high degree of repeatability and a high degree of correlation between the
original and duplicate sample, with a correlation coefficient typically more
than 0.98.
• External duplicate samples are collected at the final stage of sample
preparation and sent to the umpire laboratory (ALS Laboratories, Ireland
ISO/IEC 17025). The results for the external duplicates show a high
degree of repeatability and a high degree of correlation between the
original and duplicate samples, with a correlation coefficient typically more
than 0.97.
• MATSA has used 34 different CRM across all the deposits since production
at the Aguas Teñidas mine recommenced in 2008. The CRM are used to
monitor Cu, Zn, Pb, Ag, and Au grades. All CRM used have been created
in- house by MATSA and were sent for round robin laboratory analysis, at
ALS Vancouver, ALS Loughrea, SGS Peru, SGS Canada, ALS Perth, and
ALS Brisbane. Overall, the grade ranges of the CRM are representative of
the different mineralisation types (cupriferous and polymetallic) and grades
as demonstrated in the drillhole statistics, although SRK recommends the
Au CRM is changed to 0.2 ppm/5 ppm/10 ppm to better reflect the
mineralisation. From the CRM analysis, occasional outliers can be seen;
however, most of the data is within 2 standard deviations for all elements.
• SRK considers that the QAQC results for each of the deposits to
demonstrate acceptable levels of accuracyandprecision at the

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Criteria JORC Code explanation Commentary
laboratories. SRK therefore has confidence that the associated assays
are of sufficient quality to be used in the subsequent Mineral Resource
estimate.
Verification of • The verification of significant intersections by either independent or • MATSA employs ALS (previously OMAC Laboratories Ltd) and ALS
sampling and alternative company personnel. Chemex (Global) as its external reference laboratories used to undertake
assaying • The use of twinned holes. check (umpire) assay analysis.
• Documentation of primary data, data entry procedures, data verification, • It should be noted that for the Sotiel Mine almost no historical laboratory
data storage (physical and electronic) protocols. verification information is available
• Discuss any adjustment to assay data. • The historical Aguas Teñidas core was assayed for the current MATSA
suite of element in most cases (when the mine was active), typically by
ICP and XRF (NB: SRK has not been supplied with any documentation in
relationto this).
Location of data
•		 Accuracy and quality of surveys used to locate drill holes (collar and down- • The surface collar locations are surveyed using GPS total station which has
points hole surveys), trenches, mine workings and other locations used in Mineral a reported accuracy of less than 10 cm in the X, Y, and Z.
Resource estimation. • The underground collars are surveyed using a total station method which
• Specification of the grid system used. has an accuracy of less than 10 cm in the X, Y, and Z.
• Quality and adequacy of topographic control • The procedure used to survey historic drillhole collars (drilled prior to 2004)
is not documented or recorded.
• SRK verified select Elvira and Calanesa surface diamond drillhole collars
using a handheld GPS and found no major discrepancies when these were
compared against the database. Prior to the estimation processes, SRK
also verified the underground drillhole collars against the underground
development and found no major issues. Therefore, the drill collar location
data can be accepted with confidence for the purposes of resource
estimation.
• MATSA typically uses a REFLEX Flexi-It multi-shot tool for all its
downhole surveys, with the measurements taken every 25 m. The
REFLEX tool is a magnetic tool and the survey azimuth is aligned to mine
grid north.
• Prior to MATSA acquiring the Sotiel and Aguas Teñidas mines, the
downhole surveys were typically taken at 50 m intervals using a single or
multishot camera. SRK notes that the instruments used for these surveys

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Criteria JORC Code explanation Commentary
were not recorded in the master database.
• Historical holes are generally surrounded by a majority of MATSA drillholes
which largely confirm the location of mineralisation which indirectly
suggests that the location accuracy of the historical holes is reasonable.
• A local mining grid is used at the three mines. Aguas Teñidas and Magdalena
mine use the same local grid. Conversion to this grid is undertaken from
WGS84 co-ordinates and is achieved by adding 1,002.968 m to the elevation
(z) values (to avoid negative numbers in the underground development) and
then a translation is applied to the X and Y coordinates by adding 0.006 m to
the X and 0.196 m to Y coordinate respectively.
• Sotiel mine grid is calculated by applying a translation (from the Pozo
Isidro co-ordinate system) of 689,597.452 to the X and 4,164,133.734 to
the Y co- ordinates, after which a translation is then applied to all three
coordinates, with 2,000 m added to X, 5,000 m added to the Y, and 1,000
m added to the Z coordinates. Finally, a rotation of 24.7° is applied to align
the strike ofthe orebodies to aneast-west direction.
Data spacing • Data spacing for reporting of Exploration Results. • Drilling undertaken by MATSA conforms to industry best practices and the
and distribution • Whether the data spacing and distribution is sufficient to establish the degree resultant sampling pattern is sufficiently dense to interpret the geometry,
of geological and grade continuity appropriate for the Mineral Resource and boundaries, and different styles of the sulphide mineralisation at the three
Ore Reserve estimation procedure(s) and classifications applied. mines with a high level of confidence within well drilled areas. Confidence in
• Whether sample compositing has been applied. the geological interpretation decreases in areas of reduced sample coverage
and is reflected in the classification of mineral resources.
Orientation of • Whether the orientation of sampling achieves unbiased sampling of possible • Drill holes are generally orientated in a manner to achieve
data in relation structures and the extent to which this is known, considering the deposit type. reasonable intersection angles with the mineralisation, while
to geological • If the relationship between the drilling orientation and the orientation of key optimising collar locations/drilling stations.
structure mineralised structures is considered to have introduced a sampling bias, this • It is SRK’s view that the drilling orientations are appropriate to model the
should be assessed and reported if material. geology andmineralisationbased onthe current geological interpretation.
Sample security • The measures taken to ensure sample security. • The core shed, sample preparation facilities and laboratory are all
confined within secure boundaries, with controlled access points,
where onlyauthorised minepersonal are allowed entry.
Audits or • The results of any audits or reviews of sampling techniques and data. • SRK has completed several visits to the Project, including:
reviews •
Guy Dishaw (QP for the Mineral Resource) site visit between 4 and
8 March 2018. Included visits to mineralisation exposures and
stoping areas in the Aguas Teñidas and Magdalena mines.
•
Guy Dishaw (QP for the Mineral Resource) and James Williams site
visit between 8 and 9 May 2019. Included Mineral Resource data
technical review and visit to mineralisation exposures and stoping
areas in the Sotiel mine.

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Criteria JORC Code explanation Commentary
• The site visits allowed SRK to review exploration procedures, define
geological modelling procedures, examine drill core, inspect the site,
interview project personnel, and collect relevant information across
all three mines.

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SECTION 2 REPORTING OF EXPLORATION RESULTS

Criteria JORC Code explanation Commentary
Mineral • Type, reference name/number, location and ownership including agreements • The MATSA mining permits cover 53.3 km2across all three mines.
tenement and or material issues with third parties such as joint ventures, partnerships, • MATSA currently holds 55 mining permits which cover all three mines and
land tenure overriding royalties, native title interests, historical sites, wilderness or has the rights to exploit the Aguas Teñidas and Magdalena mines in the
status national park and environmental settings. municipality of Almonaster la Real and the Sotiel mine in the municipality of
• The security of the tenure held at the time of reporting along with any known Calañas, both of which are in the province of Huelva.
impediments to obtaining a licence to operate in the area. • MATSA is also in the process of registering an additional mining permit
related to a fourth project called Mina Concepcion located to the east of
Magdalena, although this does not form part of this study.
• The Company also has exploitation and exploration permits which cover
more than 1,100 km2in the IPB and 160 km2 in the Spanish region of
Extremadura.
• The Aguas Teñidas, Magdalena, and Sotiel mines are covered by 33, 21, and
a single (which encompasses two smaller mining permits) mining permits,
respectively. The Aguas Teñidas mining permits were renewed in 2012 for a
30-year period and are due to expire on 31 August 2042. The Magdalena
mining permits were issued in 2013 and are due to expire on 15 January
2043, except for the Magdalena Masa 2 permit which is due to expire on 07
July 2046. The Sotiel mining permit was renewed in 2015 and is due to expire
on 19 January 2045.

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Criteria JORC Code explanation Commentary
Exploration • Acknowledgment and appraisal of exploration by other parties. • The Aguas Teñidas deposit was initially discovered via a joint venture
done by other agreement between Billiton Espanola SA (“Billiton”) and Promotora de
parties Recursos Naturales (“PRN”) companies. Billiton owned the Aguas Teñidas
deposit licenses until 1991 when they were acquired by Placer Dome Inc
(“Placer Dome”).
• The Aguas Teñidas licenses were then acquired by Navan Resources PLC
(Navan) in 1995. Navan acquired the first mining permit in 1995 and began
the mining the deposit in 1997. It should be noted that in 1999 the area
surrounding the Castillejito mine was being explored by RioMin.
• In 2005, the Aguas Teñidas Mine was acquired by Iberian Minerals Corp
(parent Company of MATSA) with commercial production restarting in 2009.
• The Magdalena deposit was discovered in 2013 by MATSA and in July 2015
commercial production commenced.
• The Sotiel group of mines and the associated licenses were previously
owned by Minas de Almagrera SA, who undertook a feasibility study in 1977
with regards to reopening the historic mine (previous ownership is not
known). Exploitation began in 1983 but the mine subsequently closed in
2001. The Iberian Minerals Corp (parent of MATSA) acquired 100% of the
mining rights in 2005.
Geology • Deposit type, geological setting and style of mineralisation. • The Project is in the IPB which is arguably the largest and most important
VMS metallogenic province in the world. The IPB comprises Upper Devonian
to Upper Carboniferous volcano-sedimentary sequences and occurs in the
provinces of Huelva and Seville in Spain as well as south Portugal, forming
an arch that is approximately 240 km in strike length and 35 km wide.
• The IPB is affected by numerous deformation events, including the San
Telmo anticline on which the Aguas Teñidas and Magdalena mines occur on
the northern limb and Sotiel mine occurs on the southern limb.
• The mineralisation consists of massive to semi-massive sulphide bodies,
primarily composed of pyrite, with lower quantities (generally less than 10%)
of Cu, Pb, and Zn bearing sulphides.
• The deposits at Aguas Teñidas and Magdalena mines also have stockwork
sulphide zones in the footwall that can be quite extensive and are
characterised by primarily pyrite and chalcopyrite mineralisation.
• The deposits which comprise the Project have been categorised as Kuroko
type VMS deposits based on their mineralogy, geological setting, and
geometry/size.

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Criteria JORC Code explanation JORC Code explanation Commentary Commentary
Drill hole • A summary of all information material to the understanding of the • No exploration results have been reported.
information exploration results including a tabulation of the following information for all
Material drill holes:
•
easting and northing of the drill hole collar
•
elevation or RL (Reduced Level – elevation above sea level in
metres) of the drill hole collar
•
dip and azimuth of the hole
•
down hole length and interception depth
•
hole length.
• If the exclusion of this information is justified on the basis that the
information is not Material and this exclusion does not detract from the
understanding of the report, the Competent Person should clearly explain
_why this is the case. _
Data • In reporting Exploration Results, weighting averaging techniques, maximum • No exploration results have been reported.
aggregation and/or minimum grade truncations (e.g. cutting of high grades) and cut-off
methods grades are usually Material and should be stated
• Where aggregate intercepts incorporate short lengths of high grade results
and longer lengths of low grade results, the procedure used for such
aggregation should be stated and some typical examples of such
aggregations should be shown in detail.
• The assumptions used for any reporting of metal equivalent values should
_be clearly stated. _
Relationship • These relationships are particularly important in the reporting of Exploration • No exploration results have been reported.
between Results.
mineralisation • If the geometry of the mineralisation with respect to the drill hole angle is
widths and known, its nature should be reported.
intercept • If it is not known and only the down hole lengths are reported, there should
lengths be a clear statement to this effect (e.g. ‘down hole length, true width not
_known’). _
Diagrams • Appropriate maps and sections (with scales) and tabulations of intercepts • No exploration results have been reported.
should be included for any significant discovery being reported. These
should include, but not be limited to a plan view of drill hole collar locations
and appropriate sectional views
Balanced • Where comprehensive reporting of all Exploration Results is not practicable, • No exploration results have been reported.
reporting representative reporting of both low and high grades and/or widths should
be practiced to avoid misleading reporting of Exploration Results

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Criteria JORC Code explanation JORC Code explanation Commentary Commentary
Other • Other exploration data, if meaningful and material, should be reported • No exploration results have been reported.
substantive including (but not limited to): geological observations; geophysical survey
exploration results; geochemical survey results; bulk samples – size and method of data
data treatment; metallurgical test results; bulk density, groundwater, geotechnical
_and rock characteristics; potential deleterious or contaminating substances. _
Further work • The nature and scale of planned further work (e.g. tests for lateral • No exploration results have been reported.
extensions or depth extensions or large-scale step-out drilling).
• Diagrams clearly highlighting the areas of possible extensions, including the
main geological interpretations and future drilling areas, provided this
_information is not commercially sensitive. _

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SECTION 3 ESTIMATION AND REPORTING OF MINERAL RESOURCES

Criteria JORC Code explanation JORC Code explanation Commentary Commentary
Database • Measures taken to ensure that data has not been corrupted by, for example, • SRK completed a phase of data validation on the digital sample data
integrity transcription or keying errors, between its initial collection and its use for supplied by the Company, and previous owners of the mines, from their
Mineral Resource estimation purposes. Geobank (Micromine) database which included the following:
• Data validation procedures used. •
search for sample overlaps, duplicate or absent samples;
•
checks for anomalous assay results;
•
checks for incorrect or irregular survey results; and
•
search for non-sampled drillholeintervalswithinthemineralisedzones.
Site visits • Comment on any site visits undertaken by the Competent Person and the • SRK has completed several visits to the Project, including:
outcome of those visits. •
Guy Dishaw (QP for the Mineral Resource) site visit between 4
• If no site visits have been undertaken indicate why this is the case. and 8 March 2018. Included visits to mineralisation exposures and
stoping areas in the Aguas Teñidas and Magdalena mines.
•
Guy Dishaw (QP for the Mineral Resource) site to conduct
Leapfrog training between 09 and 13 July 2018.
•
Guy Dishaw (QP for the Mineral Resource) and James Williams site
visit between 8 and 9 May 2019. Included Mineral Resource data
technical review and visit to mineralisation exposures and stoping
areas in the Sotiel mine.
• SRK notes that the 2020 QP site visit was unable to be undertaken due to
the Covid-19 pandemic; however, this is not deemed material to the report
as there has been no major changes in the geological interpretation or
methods that MATSA employs to capture its data.
Geological • Confidence in (or conversely, the uncertainty of) the geological interpretation • The MATSA geologists maintain a detailed series of interpreted geological
interpretation of the mineral deposit. sections in Datamine software that are used to construct 3D models to
• Nature of the data used and of any assumptions made. support the mineral resource estimates and mine planning. MATSA geology
• The effect, if any, of alternative interpretations on Mineral Resource staff also maintain underground geological maps that are used to locally
estimation. adjust the models.
• The use of geology in guiding and controlling Mineral Resource estimation. • The Magdalena, Masa 1, and Masa 2 (including Masa 2 Gold Masa 2
• The factors affecting continuity both of grade and geology. Gold Norte), Aguas Teñidas, Western Extension, Calanesa, and
Castillejito deposits have been interpreted by MATSA geologists on cross-
sections, spaced between 10 and 20 m apart, based primarily on the
occurrence of logged massive or semi-massive (SM) sulphides in
diamond drillholes and underground exposures, or stockwork (SW) for the
cupriferous stockwork zones. In addition to lithological differences, a
broad threshold of 0.1% Cu was used to define the stockwork.
• Estimationdomainanalysis completed by SRK identified thatwithinthe SM

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Criteria JORC Code explanation Commentary Commentary
wireframes (‘Sulfuro Massivo’ or Massive Sulphide) for Aguas Teñidas,
Western Extension, and Calanesa deposits, there exist multiple populations
of Zn grades. SRK applied a 7% Zn and a 0.7% Zn cut-off to define a high
Zn and moderate Zn sub-domain respectively for the Aguas Teñidas and
Western Extension deposits. A 6.5% Zn cut-off was used to define a high Zn
sub-domain at Calanesa. The remaining volume of the SM model was coded
as low Zn (above 0.7%).
• The SW (‘Stockwork’) at Western Extension for Cu displays two
populations, SRK applied a 0.2% Cu cut-off to define a high Cu and low Cu
sub-domain, respectively.
• SRK has not delineated a high- or low-grade SW for the Aguas Teñidas
deposit as there is no evidence for separate populations of Cu. No sub-
domaining of the Castillejito models was necessary, and the model is
split simply into north (202 and 203) and south (201 and 204) lenses
based on orientation of the fold limbs.
• Estimation domain analysis completed by SRK has identified that within the
SM wireframes for the Masa 1, Masa 2 and Masa 2 Gold deposits, there
exist multiple populations of Zn grades, while this is not the case for Cu, not
including Masa 2 Gold Norte. SRK consequently applied a 5% Zn and a
0.2% Zn cut-off to define a high Zn and moderate Zn sub-domains,
respectively. The remaining volume of the SM model was coded as a low-
grade Zn sub- domain (below 0.2%).
• Sub-domaining of the SW and Masa 2 Gold Norte domains was not
deemed necessary based on the statistical analysis and low sample
support and therefore no separate Zn sub populations were identified by
SRK. The sub- domains have good spatial continuity between drillholes in
3D space.
• The Sotiel, Sotiel East, Migollas, Calabazar, and Elvira deposits have
been interpreted by MATSA geologists on cross-sections, based primarily
on the occurrence of logged massive or semi-massive sulphides in
diamond drillholes and underground exposures, where applicable. The
cross-section interpretations are triangulated in Datamine software to
produce volumes denoted as SM by the MATSA geologists. As part of this
study, SRK has adjusted the Elvira and Calabazar SM wireframes in
Leapfrog Geo to better represent the continuity of the mineralisation by
including additional intersections.
• Estimation domain analysis completed by SRK has identified multiple
populations (Zn, Cu, and Au) within the SM wireframes for each deposit,
apart from Sotiel East. At the Migollas deposit, there exist multiple
populations of Zn,Cu,and Augrades. SRK consequentlyapplied a 2%

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Criteria JORC Code explanation JORC Code explanation Commentary Commentary
Zn, a 2% Cu, and a 1 g/t Au threshold to define high Zn, high Cu, and high
Au sub- domains, respectively. It should be noted that SRK has only sub-
domained three of the SM lenses at Sotiel, and four SM lenses at Sotiel
East. The Elvira deposit has been sub-domained using a 2% Zn and 1%
Cu cut-off threshold to define a high and low Zn domain and a high Cu
domain respectively. SRK has also defined a small zone of internal waste
logged as massive sulphide at Calabazar. The sub-domains are only
modelled where continuous over multiple drill sections in 3D space. The
Migollas deposit is the only deposit within the Sotiel mine where Au
grades were incorporated in the sub domaining.
• The sub-domains are defined using indicator interpolants at the cut-offs
described in the above section. The trend of the massive sulphide model
is used to guide the trend of the sub-domain interpolants. The sub-
domains are continuous over multiple drill sections in 3D space, where
sub-domain volumes are not traceable between multiple drillholes, these
volumes are excluded from the sub-domain.
• SRK conducted contact analyses between the mineralised domains to
assess the boundary conditions. These observations support hard and, in
some cases, soft boundary conditions, depending on the individual metal
or domain considered, for estimation; hard boundary conditions have been
employed during interpolation of grades into the block model for all metals
in all domains. In cases where soft boundary conditions were implied the
domains have sufficient sample support and SRK does not consider this
would introduce anybias.
Dimensions • The extent and variability of the Mineral Resource expressed as length • The Aguas Teñidas mine comprises the Aguas Teñidas, Western
(along strike or otherwise), plan width, and depth below surface to the upper Extension, Calanesa, and Castillejito deposits. The Western Extension
and lower limits of the Mineral Resource deposit is an extension of the Aguas Teñidas deposit. Combined, they
have been defined by drilling over a 2,700 m along strike and 500 m down-
dip. The Aguas Teñidas and Western Extension massive sulphide deposits
thickness pinches to the south and thickens to the north (up to 110 m
wide), resulting in a wedge-like geometry between a footwall rhyodacitic
unit and a hanging wall volcano-sedimentary unit. The Calanesa
mineralisation shares the same footwall stratigraphy as the Aguas Teñidas
and Western Extension deposits and is interpreted to be an up-dip
extension of the Western Extension mineralisation. The deposit has been
defined by drilling for approximately 900 m along strike and 450 m down-
dip. The Castillejito deposit is located 750 m north-east of the Aguas
Teñidas deposit. The mineralisation is deformed by an antiform recumbent
fold and has been defined by drilling over an 800 m strike length
• The Magdalena mine comprises the Masa 1 and Masa 2(includingMasa

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Criteria JORC Code explanation Commentary Commentary
2 Gold and Masa 2 Gold Norte) deposits which occur within and generally
parallel to, a volcano-sedimentary complex where the hanging wall is
typically composed of rhyolite and the footwall composed of dacite. The
immediate contacts between the massive sulphides and the volcano-
sedimentary units are generally sheared, and the geometry of the
mineralisation has been affected by these shears. The Masa 1 deposit has
been defined by drilling over a 460 m strike and 130 m dip extent. The
Masa 1 deposit is located at the base of the hanging wall units, whilst the
Masa 2 deposit is at a low angle to the stratigraphy within the footwall
units. The Masa 2 deposit has defined by drilling over a strike extent of
1,630 m and a down dip extent of 620 m. The Masa 2 gold deposit (a
faulted extension of the Masa 2 deposit) is the most easterly known
mineralisation with the Magdalena mine and has been defined by drilling
over 530 m in strike length and a down dip extent of approximately 270 m,
whilst the Masa 2 Gold Norte has a 135 m strike extent and 175 m down
dip extent.
• The Sotiel mine comprises (from west to east) the Calabazar, Sotiel, Sotiel
East, Migollas, and Elvira deposits, each of which are separated by
northeast-southwest trending faults. The local mine geology is comprised
primarily of mixed volcano-sedimentary sequences and alternating beds of
shales, slates, tuffs and phyllites, as well as interbedded sandstones and
quartzites. The Calabazar deposit comprised multiple massive sulphide
layers within volcanic tuff and shales and has been defined by drilling over
a strike length of approximately 290 m and dip length of 700 m. The Sotiel
deposit is comprised of three sulphide lenses which are separated by
shales, and have been defined over a strike length of 450 m and down-dip
extent of 460 m. The Sotiel East deposit comprises six sulphide lenses,
separated by horizontal to sub-horizontal shales, and have been defined by
drilling over a strike length of around 400 m and dip extent of approximately
400 m. The Migollas deposit is divided into two zones, based on the
sulphide mineralogy, where the west of the deposit is characterised by
generally higher copper content whereas the east of the deposit is
characterised by relatively higher zinc and lead content. The deposit has
been defined by drilling over a strike length of around 1,100 m and dip
length of 520 m. The Elvira deposit occurs closest to surface, of the Sotiel
mine deposits, due to thrust faulting. It has been defined by drilling for more
than 400m instrikelengthandhas amaximumdowndip extent of500m

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Criteria JORC Code explanation JORC Code explanation Commentary Commentary
Estimation • The nature and appropriateness of the estimation technique(s) applied and • Leapfrog Geo was used to review and define the relevant estimation
and modelling key assumptions, including treatment of extreme grade values, domaining, domains, prepare assay data for geostatistical analysis, Datamine Studio
techniques interpolation parameters and maximum distance of extrapolation from data RM was used to construct the block model, and estimate metal grades.
points. If a computer assisted estimation method was chosen include a Supervisor software was used to analyse grade continuity and validate the
description of computer software and parameters used. estimates where applicable. Maptek Vulcan was used to tabulate Mineral
• The availability of check estimates, previous estimates and/or mine Resources for reporting the Mineral Resource Statement.
production records and whether the Mineral Resource estimate takes • Statistical analysis and estimation of the following elements (both main
appropriate account of such data. mineralisation, by-product mineralisation and deleterious elements) was
• The assumptions made regarding recovery of by-products. completed; Cu, Zn, Pb, Ag, As, Au, Bi, Fe, Hg, S and Sb.
• Estimation of deleterious elements or other non-grade variables of economic • A 4 m composite length was chosen. SRK chose to treat short composites
significance (e.g., sulphur for acid mine drainage characterisation). of less than 2 m in length by merging them with the previous composite,
• In the case of block model interpolation, the block size in relation to the where these shorter intervals are typically created at domain boundaries.
average sample spacing and the search employed. • Capping was applied to composites rather than to original samples. SRK
• Any assumptions behind modelling of selective mining units. chose grade capping levels based on population breaks indicated in both
•
•		 Any assumptions about correlation between variables.
Description of how the geological interpretation was used to control the
resource estimates.		 the log histograms and log probability plots. In some cases, there are no
high-grade outliers in a domain, and in these cases no capping is
implemented.
•
•		 Discussion of basis for using or not using grade cutting or capping.
The process of validation, the checking process used, the comparison of
model data to drill hole data, and use of reconciliation data if available.		 •
•		 Sub-domains are defined using indicator interpolants at the cut-offs
described in the ‘Geological Interpretation’ section of this table.
Grade continuity was assessed for all elements using experimental
variograms. Downhole variograms were used to model the nugget
variance, which represents variability at very close distances. Directional
variograms, were used to model grade continuities for larger distances.
The experimental variograms generally suggest strong anisotropy between
the directional variograms, in the order of 2:1, up to 5:1.
• Due to some domains having a relatively low number of samples, the
modelling of a robust variogram can be difficult, therefore SRK has
combined domains that have a similar orientation to one another and
occupy a similar spatial location, such as domain 301 and 302 in the
western extension. SRK has also combined domains for the variography
analysis where similar grade distributions are observed. For Magdalena
and Sotiel mines, SRK has modelled the variograms for SG where
sufficient sample support occurs (typically more than 80-90 samples). For
the Aguas Teñidas mine (and all associated deposits), SRK has applied
the Fe variogram for the estimation of the SG due to the strong correlation
observed between the two components and direct relationship between
pyrite content and SG.
• Sensitivity of the estimates to the block dimensions within the modelled
domains were tested using kriging neighborhood analysis (“KNA”). The
block sizes selected weregenerallybased on drill spacingbut also to

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Criteria JORC Code explanation Commentary Commentary
provide a good representation of the mineralised geometry, as well as an
acceptable level of smoothing of the estimates. 10 m x 5 m x 5 m (2 m x 1
m x 0.5 m sub) for all deposits aside from Magdalena at 15 m x 10 m x 10
m (2.5 m x 1 m x 0.5 m sub) and Castillejito at 20 m x 10 m x 10 m (2.0 m x
1 m x 0.5 m sub)
• Hard (wireframed) boundary conditions were employed in the estimation.
• Only composites from within individual mineralisation model domains were
used to estimate blocks within those domains.
• Sub-block grades were assigned the grade of the parent block.
• A discretization level of 5 m x 5 m x 2 m was set for all estimates within the
parent blocks within the estimation domains.
• All grades and density values were interpolated into the model using
Ordinary Kriging (“OK”) in the mineralised domains other than certain
zones at Sotiel which were interpolate using Inverse Distance Weighting
(“IDW”), due to the low sample support (<90 samples) and their relative
spacing. The IDW estimated grades and densities were estimated using a
single search pass, whilst the OK grades and density values were
estimated using three successive search passes. At Sotiel, there are a
higher proportion of historic drillholes which are not analysed for the entire
suite of elements. In these domains, grades were estimated based on
correlation with other elements.
• Any unestimated blocks (grades) at Sotiel from the single pass IDW
estimate were calculated using a regression formula. Regarding the Hg
and Bi grades, which were estimated using the regression formula, any
grades calculated below the 5 and 50 ppm minimum detection limits were
fixed to these values. Blocks with no estimated densities or Au values
(single search pass) were assigned the average values for each specific
domain. Where the sample support was noted as being below 10, these
were assigned the average values of adjacent domains which have similar
grade profiles.
• The selection of the search radii and rotations of search ellipsoids was
guided by the grade continuity analysis and the general geometry of the
mineralised domains. Due to the variable orientation of the mineralised
lenses, SRK applied dynamic anisotropy to those domains where
appropriate.
• The block grades were estimated using three successive search passes.
The first pass considered a relatively small search ellipsoid designed for
areas defined by infill grade control drilling. The second pass considered a
larger ellipsoid, increasing the first pass by a factor of 2, which was
designed to estimate areas defined byunderground exploration drillingand

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Criteria JORC Code explanation JORC Code explanation Commentary Commentary
areas between mining horizons. The final pass (if required) was designed
to estimate all remaining blocks, typically at the extents of the model
defined only by exploration drillholes from surface, the ellipsoid increasing
the first pass by a factor of up to 10.
• The block models were validated by completing the following checks:
•
local validation using visual inspections on sections and plans, viewing
composites versus block grades;
•
global validation by comparison of composite grade statistics
versus block grade statistics; and
•
local validation by comparison of average composite grades with
average block grades along different directions (swath plots).
• SRK has produced waterfall charts for all three mines (inclusive of all
deposits and material types) denoting changes in the tonnages between 31
December 2018 and 31 December 2019 for Measured and Indicated
material. The charts denote how this 31 December 2019 Mineral Resource
has been modified by mining, changes in classification, changes to how the
‘non-recoverable’ resources (affected) have been determined and changes
to reportingcut-offs applied.
Moisture • Whether the tonnages are estimated on a dry basis or with natural moisture, • Tonnages are estimated on a dry basis.
and the method of determination of the moisture content.
Cut-off • The basis of the adopted cut-off grade(s) or quality parameters applied. • MATSA has used reasonable mining and processing assumptions to
parameters develop reporting cut-off net-smelter return (‘NSR’) values for each mine in
order evaluate the proportions of the block model that could “reasonably be
expected” to be mined.
• Processing Recovery Assumptions
•
Recovery is specific to the ore feed type and varies depending on
the feed grade
•
Polymetallic Feed: Cu=65-85%, Zn=66-87%, Pb=25-50%
•
Cupriferous Feed: Cu=50-93%
•
Stockwork Fee: Cu=66-80%
• Operating Cost Assumptions (Mining Cost)
•
Mining cost is specific to the particular mine
•
Aguas Teñidas =25.3 USD/t rock
•
Magdalena =24.8 USD/t rock
•
Sotiel =31.8 USD/t rock
• Operating Cost Assumptions (Payable Metal)
•
Cu Payable=96.5%
•
Zn Payable=85%
•
Pb Payable=95%
• The Mineral Resource ReportingCut-off for in-situ mineralization is mine

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Criteria JORC Code explanation JORC Code explanation Commentary Commentary
specific:
•
Aguas Teñidas =40.9 USD/tonne
•
Magdalena =40.5 USD/tonne
•
Sotiel =49.1 USD/tonne
• The Metal prices for Mineral Resource reporting for the 31 December 2019
statements are based on MATSA’s consensus market forecast report (long
term) which SRK reviewed and consider appropriate:
•
Cu = 8,450 USD/tonne
•
Zn = 3,000 USD/tonne
•
Pb = 2,450 USD/tonne
•
Ag = 21.25 USD/oz
•
Au = 1,750 USD/oz
• For Mineral Resources, SRK has considered historical depletion but has
not considered future losses or applied an extraction or dilution factor.
• Based on certain mining constraints at each mine MATSA has defined
areas as being sterilised and in such cases the material is termed as ‘non-
recoverable’(and is not reported in the statements).
Mining factors • Assumptions made regarding possible mining methods, minimum mining • Surveys of the current mined areas (“asbuilts”) of development and stopes
or assumptions dimensions and internal (or, if applicable, external) mining dilution. It is always have been provided by MATSA, with an effective date of 31 December
necessary as part of the process of determining reasonable prospects for 2019. The block model has been coded by wireframes of these surveys
eventual economic extraction to consider potential mining methods, but the and assigned to ‘depleted’ (not reported).
assumptions made regarding mining methods and parameters when • At Aguas Teñidas a 5 m buffer zone around the asbuilt stopes was
estimating Mineral Resources may not always be rigorous. Where this is the assigned as ’non-recoverable’, as MATSA does not anticipate being able
case, this should be reported with an explanation of the basis of the mining to recover this material due to either blasting or survey issues in particular
assumptions made. stopes. In addition to this, volumes between or around stopes, or the
edges of the deposit where the wireframes become less than 5 m wide
(considered too thin to mine using current methods) were also excluded
from the Mineral Resource assessment.
• 5 m buffer zones also applied at Magdalena and Sotiel to designate non-
recoverablematerial.

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Criteria JORC Code explanation JORC Code explanation Commentary Commentary
Metallurgical • The basis for assumptions or predictions regarding metallurgical amenability. • At the MATSA sites, two separate process streams are used to produce
factors or It is always necessary as part of the process of determining reasonable copper and zinc concentrates. The polymetallic mineralisation stream
assumptions prospects for eventual economic extraction to consider potential metallurgical processes polymetallic massive sulphide material, whereas the copper
methods, but the assumptions regarding metallurgical treatment processes mineralisation stream processes material stemming from cupriferous
and parameters made when reporting Mineral Resources may not always be massive sulphides as well as copper stockworks and each of specific metal
rigorous. Where this is the case, this should be reported with an explanation of recovery profiles.
the basis of the metallurgical assumptions made • MATSA has characterized run of mine material based on metal grade
zonation (indicative of mineralogy), so that the appropriate process is
applied to optimize value. Mineralisation is characterized as follows:
•
Polymetallic: Zn >= 2.5%;
•
Cupriferous: Cu >= 0.5% and Zn < 2.5%; and
•
Stockwork:Cu>=0.4%.
Environmental • Assumptions made regarding possible waste and process residue disposal • With the reopening of the mine in 2013, the Company has undertaken the
factors or options. It is always necessary as part of the process of determining recovery of old waste dumps (environmental rehabilitation) in areas
assumptions reasonable prospects for eventual economic extraction to consider the degraded by historical mining activity. These dumps may be used to fill the
potential environmental impacts of the mining and processing operation. While Sotiel mine stopes in the future
at this stage the determination of potential environmental impacts, particularly
for a greenfields project, may not always be well advanced, the status of early
consideration of these potential environmental impacts should be reported.
Where these aspects have not been considered this should be reported with
an explanation of the environmental assumptions made
Bulk density • Whether assumed or determined. If assumed, the basis for the assumptions. • Density measurements have been taken for all main rock types intersected
If determined, the method used, whether wet or dry, the frequency of the in each drillhole.
measurements, the nature, size and representativeness of the samples. • This was completed by weighing a piece of core in air and then determining
• The bulk density for bulk material must have been measured by methods that the core volume by displacement of water.
adequately account for void spaces (vugs, porosity, etc.), moisture and • MATSA geologists typically select intact drill core which are between 5 or
differences between rock and alteration zones within the deposit. 10 cm in length for density analysis.
• Discuss assumptions for bulk density estimates used in the evaluation • The weight of the dry sample is initially determined using bench mounted
process of the different materials. electronic scales, before being submerged in water to determine the
submerged weight.
• The following equation has then been applied by MATSA to determine the
dry density: Density = weight (in air) / [weight (in air) – weight (in water)]
• MATSA does not coat drill core with wax as pore space (vugs/fractures) are
not typically an issue according to MATSA. SRK’s review of core at site, as
well as select core photos, support this assumption.
• There is a strong correlation between specific gravity and S and Fe, as
would be expected with massive sulphide mineralisation.

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Criteria JORC Code explanation JORC Code explanation Commentary Commentary
Classification • The basis for the classification of the Mineral Resources into varying • Block model tonnage and grade estimates for the deposits have been
confidence categories. largely classified according to drillhole spacing given that the modelled
• Whether appropriate account has been taken of all relevant factors (i.e. areas are generally well informed.
relative confidence in tonnage/grade estimations, reliability of input data, • MATSA has been employing these distances to drillhole criteria for several
confidence in continuity of geology and metal values, quality, quantity and years and find that these reconcile appropriately (based on Resource
distribution of the data). classification) to observations and results from mining. SRK has reviewed
• Whether the result appropriately reflects the Competent Person’s view of the these distances, with respect to geological and Cu and Zn continuity, and
deposit. consider these appropriate.
• SRK does note, however, that new zones with potentially differing
character, should be considered individually before applying the same
criteria.
• SRK used these guidelines, along with consideration of data quality,
geological continuity and complexity, and estimation quality to define
wireframes to outline contiguous zones of blocks with similar levels of
confidence.
Audits or • The results of any audits or reviews of Mineral Resource estimates. • No audits or reviews have been completed.
reviews
Discussion of • Where appropriate a statement of the relative accuracy and confidence level • SRK has completed the Mineral Resource estimates for the Aguas
relative in the Mineral Resource estimate using an approach or procedure deemed Teñidas, Magdalena, and Sotiel mines and has validated these estimates
accuracy/ appropriate by the Competent Person. For example, the application of using various techniques, including visual and statistical methods.
confidence statistical or geostatistical procedures to quantify the relative accuracy of the • MATSA keeps detailed stope reconciliation data which demonstrate that
resource within stated confidence limits, or, if such an approach is not deemed although there may be significant stope by stope variations from the
appropriate, a qualitative discussion of the factors that could affect the relative Mineral Resource estimates, when considered over yearly periods, grade
accuracy and confidence of the estimate. control records indicate that actual tonnages and grade (Cu, Zn, and Pb)
• The statement should specify whether it relates to global or local estimates, are within 10% or less from those predicted.
and, if local, state the relevant tonnages, which should be relevant to technical
and economic evaluation. Documentation should include assumptions made
and the procedures used.
• These statements of relative accuracy and confidence of the estimate should
_be compared with production data, where available. _

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SECTION 4 ESTIMATION AND REPORTING OF ORE RESERVES

Criteria JORC Code explanation JORC Code explanation Commentary Commentary
Mineral • Description of the Mineral Resource estimate used as a basis for the • The reported Ore Reserves for the Aguas Teñidas, Magdalena and Sotiel
Resource conversion to an Ore Reserve. operations are based on the 11 block models which formed the basis of the
estimate for • Clear statement as to whether the Mineral Resources are reported additional Mineral Resource estimates. Whilst various Mineral Resource statements are
conversion to to, or inclusive of, the Ore Reserves. presented per deposit for each operation, the Ore Reserve statements are
Mineral presented at an operational level, not further split per deposit.
Reserves • SRK notes that the effective date of the Mineral Resource statement is 31
December 2019, with the effective date of the Ore Reserve being 31 July
2020. Ore Reserves incorporated depletion by MATSA up to 31 July 2020,
as compared to the 31 December 2019 Mineral Resource estimate. The
Mineral Resources are presented on an inclusive basis, meaning including
any Measured or Indicated classified material that has been considered for
conversionto OreReserves.
Site visits • Comment on any site visits undertaken by the Competent Person and the • The Competent Person for Ore Reserves is Mr Chris Bray, who was not
outcome of those visits. able to visit the sites due to the COVID-19 pandemic.
• If no site visits have been undertaken indicate why this is the case. • A regionally based SRK mining engineer (Nuno Castanho) visited site as part
ofthemining plan review.
Study status • The type and level of study undertaken to enable Mineral Resources to be • The mines have been operation for some years now, and the mine plan has
converted to Ore Reserves. been developed to a level sufficient for the statement of Ore Reserves,
• The Code requires that a study to at least Pre-Feasibility Study level has using appropriate modifying factors and proving that they are economically
been undertaken to convert Mineral Resources to Ore Reserves. Such viable.
studies will have been carried out and will have determined a mine plan that
is technically achievable and economically viable, and that material Modifying
Factors have been considered.
Cut-off • The basis of the cut-off grade(s) or quality parameters applied • An NSR cut-off value approach is applied for each stope or development
parameters block, with each value calculated according to the ore type, metal grades,
metallurgical recoveries, realisation costs, forecast metal prices and the
payability of each metal according to the agreed smelter terms. MATSA
has estimated the NSR values for individual blocks into the resource block
models for each mine. Parameters applied are as follows:

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Criteria JORC Code explanation

Commentary

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  • SRK conducted a review of MATSA’s NSR methodology and block model macros, and concluded that it is adequate for the geological setting and the type of mining operation. SRK ran a comparison between the block model coded with its own coefficients and the block model coded with MATSA‘s macro, and observed that the differences were acceptable for the assessment of Ore Reserves and justifiable with the slight differences between the two approaches.

  • For the Ore Reserve estimate, SRK used the incremental cut-off, as most of the mining areas of the mines had most of the development already in place and it was assumed that the development cost had been already paid for by the mined out stopes. For the areas which had not been accessed by development works yet, the full cut-off was considered. The incremental cut- off NSR values are calculated to be as follows: Aguas Teñidas USD40.90/t, Magdalena USD40.49/t and Sotiel USD49.09/t. Details are as follows:

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Criteria JORC Code explanation JORC Code explanation Commentary Commentary
Mining Factors • The method and assumptions used as reported in the Pre-Feasibility or • The primary underground mining method approach at the three mines is
or
assumptions		 Feasibility Study to convert the Mineral Resource to an Ore Reserve (i.e.
either by application of appropriate factors by optimisation or by		 sub-level long-hole open stoping (“LHOS”) with transverse and
longitudinal orientation depending on the orebody thickness. The mined
preliminary or detailed design). stopes at Aguas Teñidas and Magdalena are backfilled with paste fill.
• The choice, nature and appropriateness of the selected mining method(s) The Sotiel mine currently uses unconsolidated development waste as
and other mining parameters including associated design issues such as backfill with plans to trial cemented rock fill (“CRF”). MATSA has plans to
pre-strip, access, etc. use a Drift and Fill (“D&F) mining method in a small zone of Aguas
• The assumptions made regarding geotechnical parameters (e.g. pit Teñidas around and above previously mined out stopes.
slopes, stope sizes, etc.), grade control and pre-production drilling. • The Ore Reserve for MATSA has been estimated using accepted
• The major assumptions made and Mineral Resource model used for pit industry practices for underground mines including stope optimisation
and stope optimisation (if appropriate). analysis (Deswik), mine design, mine scheduling and the development of
• The mining dilution factors used. a cash flow model incorporating the Company’s technical and economic
• The mining recovery factors used. projections for the mine for the duration of the Life of Mine Plan (“LoMP”).
• Any minimum mining widths used. • The Ore Reserve includes unplanned dilution factors which are applied
• The manner in which Inferred Mineral Resources are utilised in mining as constant values for the individual mines, with two zone exceptions in
studies and the sensitivity of the outcome to their inclusion. Magdalena(Masa 2 West and Masa Gold)and incorporates mining

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Criteria JORC Code explanation JORC Code explanation Commentary Commentary
• The infrastructure requirements of the selected mining methods. recovery factors which are applied as constant values for the individual
mines as follows:
• Any mineralisation which occurs below the designated Net Smelter
Return (“NSR”) cut off value or is classified as an Inferred Mineral
Resource within the individual underground designs is not considered as
Ore Reserves.
• The Ore Reserve estimate was based on the 2020 LoMP as provided by
MATSA. SRK conducted a site visit to MATSA’s mining operations from
28 to 30 of July 2020 and reviewed the mine plan and related
assumptions for the three mines. From this review, a series of
adjustments were made to allow the reporting of Ore Reserves. These
adjustments focused mainly on the removal of Inferred material from the
LoMP, removal of sub-economical stopes or areas and some material
reductions to reflect minor design issues observed in each mine plan.
SRK has only reviewed the LoMP and not undertaken mine planning or
re-estimated the Reserve from first principles.
• In addition to this, SRK discussed with MATSA the proposed approach
for the minor D&F mining at the Aguas Teñidas mine with agreement that
further work needs to be completed in order to increase the confidence in
the mining sequence and backfill strategy. To better reflect this in the
reserves, it was agreed to apply a reduction factor of 50% to the recovery
of these tonnes and which can be seen as provisional pillars being
assumed to be left until further work is completed and greater confidence
intherecoveryis achieved.
Metallurgical
factors or
assumptions		 •
•		 The metallurgical process proposed and the appropriateness of that
process to the style of mineralization.
Whether the metallurgical process is well-tested technology or novel in		 • The MATSA ores are complex, fine grained ores with extremely high
levels of gangue pyrite present. Numerous metallurgical testwork
programmes have been undertaken to understand the metallurgical
nature. complexity of the orebodies and to develop optimal processing scenarios.
• The nature, amount and representativeness of metallurgical test work These programmes have been undertaken both before the project’s
undertaken, the nature of the metallurgical domaining applied and the commencement, and since, with the on-site laboratory being very active
corresponding metallurgical recovery factors applied. in testing and optimising the plant’s operating parameters in response to
• Any assumptions or allowances made for deleterious elements. changingore feed characteristics.

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  • Criteria JORC Code explanation Commentary • The existence of any bulk sample or pilot scale test work and the degree • Based on the testwork conducted, the following concentrate qualities are to which such samples are considered representative of the orebody as a indicated: whole. • Copper ore:

  • • For minerals that are defined by a specification, has the Ore Reserve • Copper concentrate grade in the low 20s%, recoveries in estimation been based on the appropriate mineralogy to meet the the order of 90%; and

  • specifications?

• whole.
For minerals that are defined by a specification, has the Ore Reserve
estimation been based on the appropriate mineralogy to meet the
specifications?		 •
Copper ore:
•
Copper concentrate grade in the low 20s%, recoveries in
the order of 90%; and
•
Polymetallic ore:
•
Copper concentrate grade in the low 20s%, recoveries in
the order of 80%,
•
Lead concentrate grade in the mid-30s%, recoveries in the
order of 60%,
•
Zinc concentrate grade of the order of 50%, recoveries in
the order of 80%.
• Ore is processed at a central facility. The facility consists of two crushing
lines and three processing lines, which are contained within two plants
(operational since 2008 and 2011 respectively). Ore is classified either as
Copper or Polymetallic.
• The current ore classification criteria was developed in 2017 as an
update from the previous criteria established in 2011. The criteria was
based on a review of the preceding 2 years’ worth of operating data, and
determined that ore could be delineated as Copper ore according to the
following parameters: %Cu/%Zn >1.7; and %Zn <2.5.
• The analysis indicated that these parameters would produce a Copper
concentrate at acceptable recoveries and with Zn and Pb contents below
the specifiedmaximumallowable penaltylimits of3.7%Znand 3.5%Pb.
Environmental • The status of studies of potential environmental impacts of the mining and • MATSA has the necessary mining rights and surface ownership for the
processing operation. Details of waste rock characterisation and the three mining sites and plant operations.
consideration of potential sites, status of design options considered and, • Required environmental and water permits appear to be in place,
where applicable, the status of approvals for process residue storage and although the Cortagena City Council disputes the presence of municipal
waste dumps should be reported. permits for works being carried out close to Valdelamusa. MATSA
appears to be in broad compliance with permit conditions.
• The Company appears to have completed the necessary studies to
identify environmental and social factors relevant to the operation, with
the potential exception of geochemical characterisation of mining waste.
• Management of the three operations from an environmental and social
perspective appears reasonably good, and there is a clear focus on
maximising resource efficiencies particularly across water, waste, GHG
emissions and energy.
• The operation does not appear to adverselyaffect sensitive areas.

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Criteria JORC Code explanation JORC Code explanation Commentary Commentary
• Limited environmental and social impact monitoring, and analysis of
trends in monitoring data, is a weakness that limits opportunities for
continuousimprovement (though is compliantwithpermitrequirements).
Infrastructure • The existence of appropriate infrastructure: availability of land for plant • The MATSA operations are located in a west European country, Spain,
development, power, water, transportation (particularly for bulk which has well-established, well-regulated civil engineering and
commodities), labour, accommodation; or the ease with which the construction industry standards. The operations themselves have been
infrastructure can be provided, or accessed. active for a number of years and as such the infrastructure required to
facilitate mining and processing operations are in place and fit for current
purposes. No expansion or production rate increases are proposed.
• The power generation mix in Spain is such that current cost of power
should be maintained. In terms of wider access to markets, the mines are
located very close to Huelva, which is a busy port and has the facilities
for blending and exporting concentrates.
• The TSF has undertaken a major transition since 2016 to increase
capacity, which involved switching to the upstream raise method. This
method inherently involves more risk, as the stability of future raises
relies inherently on the undrained strength of the stored tailings as
opposed to the embankment fill materials. Whilst the stability analysis
which underpins the current upstream raise design appears to be robust,
it is noted that additional data has been obtained on the in-situ properties
of the tailings through a number of Cone Penetration Testing (“CPTu”)
campaigns since the design was originally executed. In addition to 5
CPTu probes which were completed to support the design change in
2017, an additional 12 CPTu have been completed (during 2018- 2019)
to confirm tailings consolidation properties, porewater pressure regime,
phreatic surface and tailings strength parameters. Whilst the original
stability analysis completely by Golder is adequate, it should be further
verified by additional undrained strength analysis which use the data
obtained from subsequent CPTu investigations. This data can be used to
confirm the minimum Factor of Safety (“FOS”) is obtained around as built
embankments. The design of future raises can also be verified and
adapted (if it is deemed necessary).
• The current practice of holding large volumes of water on the TSF to
supply the plant is not in accordance with best practice and could create
the circumstances where there is an elevated phreatic surface in the
external embankments of the TSF (which can increase likelihood of
embankment failure). However, it is noted that the volumes of excess
water stored on the pond have been reduced markedly since 2018, which
has significantly reduced this risk. This situation needs to be closely
monitored and maintainedgoingforward.

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Criteria JORC Code explanation

  • Costs • The derivation of, or assumptions made, regarding projected capital costs in the study.

  • • The methodology used to estimate operating costs. • Allowances made for the content of deleterious elements.

  • The source of exchange rates used in the study.

  • Derivation of transportation charges.

  • The basis for forecasting or source of treatment and refining charges, penalties for failure to meet specification, etc.

  • The allowances made for royalties payable, both Government and private.

Commentary

  • There appears to be a robust system of monitoring and controls in place to mitigate the potential risks associated with a facility of this Class.

  • • Operating costs and capital expenditures presented relate to the 2020 mining plan with effective date of 31 July 2020.

  • Operating costs have been derived by MATSA in three mining and a processing cost model, based on the physical activities taking place. A summary of the derived unit costs (historical vs plan up to 2024 inclusive) is presented below. SRK notes some drops in unit costs during the last 5 months of 2020 (“5M 2020”), and an apparent redistribution of costs between treatment and maintenance costs from actuals to forecasts, but overall the numbers look reasonable. No royalties are understood to be payable.

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  • SRK notes that the total mine development and mine equipment capital expenditure in the economic model exceed the mine by mine breakdown as provided in the underlying mine cost models. For 2020 capital for Sotiel and Magdalena is presented separately, but thereafter only on a consolidated basis.

  • • Closure costs have been consolidated over a shorter time frame, due to the shorter life of the Ore Reserves case compared to MATSA’s full life of mine plan (which includes additional material).

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Criteria JORC Code explanation JORC Code explanation Commentary Commentary
Revenue • The derivation of, or assumptions made regarding revenue factors • The smelter terms as supplied by MATSA in the economic assessment of
Factors including head grade, metal or commodity price(s) exchange rates, the LoMP are as follows:
transportation and treatment charges, penalties, net smelter returns, etc.
• The derivation of assumptions made of metal or commodity price(s), for
_the principal metals, minerals and co-products. _

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Criteria JORC Code explanation Commentary Commentary
• Commodity prices used in the economic viability test are as follows (with
the long term price the basis for the Ore Reserve), which are deemed
acceptable bySRK when comparingto consensus market forecasts as

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Criteria JORC Code explanation JORC Code explanation Commentary Commentary
available to SRK:
• Copper is the main contributor to overall NSR making up for
approximately 66% over the Ore Reserve life of mine, followed by a zinc
contribution of approximately 25%. Silver (7%) and lead (2%) make up the
remainder of the total NSR. NSR per tonne of material processed is
approximately USD110/t overthe OreReservelife.
Market • The demand, supply and stock situation for the particular commodity, • No market study has been supplied for review, which is deemed
assessment consumption trends and factors likely to affect supply and demand into the acceptable considering the operation is currently in production and
future. contracts are in place for the sale of copper (standard and polymetallic),
• A customer and competitor analysis along with the identification of likely lead and zinc concentrates. However, assumptions made in the economic
market windows for the product. assessment differ somewhat.
• Price and volume forecasts and the basis for these forecasts.
• For industrial minerals the customer specification, testing and acceptance
_requirements prior to a supply contract. _
Economic • The inputs to the economic analysis to produce the net present value • SRK has undertaken an assessment of the economic viability of the Ore
(NPV) in the study, the source and confidence of these economic inputs Reserves in order to support the statement of Ore Reserves. SRK notes
including estimated inflation, discount rate, etc. that the economic model as prepared by MATSA is driven by a mine plan
• NPV ranges and sensitivity to variations in the significant assumptions and which includes Measured, Indicated and Inferred Mineral Resources
inputs. (plus other), and no life of mine plan exists solely based on Ore
Reserves. As taking out Inferred and other material as deemed
appropriate by SRK, on an annual basis would hugely distort the
economic viability of the remaining production and present an unrealistic
plan, SRK has applied a simplified approach, in simply keeping
throughput at the consistent rate as per the MATSA plan, but limiting the
life to the tonnage as incorporated in the Ore Reserve. There is a
disconnect in the economic model between tonnages mined and when
processed, which further complicates a more sophisticated approach.
SRK acknowledges this is an over-simplification, but accepts doing so for
the purpose of this exercise. SRK notes that there is a small discrepancy
in grades by doing so, but as the below does not serve as a technical
valuation of the property, but is solely completed for purposes of Ore
Reserve reporting, this is deemed acceptable.
• As the economic analysis results apositive annual cashflow,and has

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Criteria JORC Code explanation JORC Code explanation Commentary Commentary
been tested with a range of sensitivities, SRK is comfortable to state the
Ore Reserves as being economically viable. Results of the cashflow
analysis are as follows:
• SRK recommends that MATSA runs a second scenario in their economic
model, based on a production schedule which is solely driven by material
classed as Ore Reserves. This will provide further comfort in the viability
of the Ore Reserves on a standalone basis and enable proper reporting of
economicsforthe OreReserve.
Social • The status of agreements with key stakeholders and matters leading to • MATSA uses numerous channels to communicate with stakeholders such
social licence to operate. as local communities, employees, contractors, suppliers, investors and
the media. These channels include information sessions,newsletters,

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Criteria JORC Code explanation JORC Code explanation Commentary Commentary
website, email and social media platforms. The company also reportedly
holds regular meetings with stakeholders to maintain a continuous
dialogue and open days are held monthly for members of the local
community, as well as residents of Huelva and Seville provinces, to
promote transparency between the company and its neighbors.
• MATSA did not provide SRK with a stakeholder engagement plan or
stakeholder meeting records as part of this review. SRK recommends
that, if not already prepared, MATSA:
•
formalises its stakeholder engagement plan, documenting a
stakeholder identification and analysis process and the strategy for
communicating and sharing information with different stakeholder
groups; and
•
implements a system for systematically recording stakeholder
interactions. This is important to demonstrate appropriate
engagement is being undertaken and the company is recording and
responding to stakeholder comments or grievances.
• From the information reviewed, SRK notes that MATSA does not disclose
site-specific environmental or social data on a regular basis, other than
through annual corporate reports such as the Corporate Dossier (2018
version available on the website) and the Non-Financial Information
Report (2019 version shared with SRK). The sharing of site-specific data,
such as environmental monitoring data, would further strengthen
transparency and trust with surrounding community stakeholders.
• A documented grievance mechanism was also not shared with SRK,
although there is an email address for complaints and suggestions
available to stakeholders. Three complaints from 2018 were recorded in
the non-conformance register. It is not clear how these, and other,
complaints are captured, tracked, investigated, responded to and
reported.
Other • To the extent relevant, the impact of the following on the project and/or on • No other factors that would impact on the statements of Ore Reserves
the estimation and classification of the Ore Reserves: have been identified.
• Any identified material naturally occurring risks.
• The status of material legal agreements and marketing arrangements.
• The status of governmental agreements and approvals critical to the
viability of the project, such as mineral tenement status, and government
and statutory approvals. There must be reasonable grounds to expect that
all necessary Government approvals will be received within the
timeframes anticipated in the Pre-Feasibility or Feasibility study. Highlight
and discuss the materiality of any unresolved matter that is dependent on
a thirdparty on which extraction of the reserve is contingent.

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Criteria JORC Code explanation JORC Code explanation Commentary Commentary
Classification • The basis for the classification of the Ore Reserves into varying • Ore Reserves derived from material in the Measured Mineral Resource
confidence categories. category have been classed as Proved, whilst Ore Reserves derived from
• Whether the result appropriately reflects the Competent Person’s view of material in the Indicated Mineral Resource category are classed as
the deposit. Probable Ore Reserves.
• The proportion of Probable Ore Reserves that have been derived from • The Ore Reserve classification appropriately reflects the CP’s
Measured Mineral Resources (if any). understanding of the deposit.
• No Measured Mineral Resources have been converted to the Probable
OreReserve category.
Audits or • The results of any audits or reviews of Ore Reserve estimates. • SRK understands that no Ore Reserves estimates have been declared by
reviews independent parties historically.
• SRK reviewed MATSA’s mining plans and used those as the basis for the
Ore Reserve estimate
Discussion of • Where appropriate a statement of the relative accuracy and confidence • The Ore Reserve for MATSA has been estimated using accepted industry
relative level in the Ore Reserve estimate using an approach or procedure practices for underground mines, including stope optimisation analysis
accuracy/ deemed appropriate by the Competent Person. For example, the (Deswik), mine design, mine scheduling and the development of a cash
confidence application of statistical or geostatistical procedures to quantify the relative flow model incorporating the Company’s technical and economic
accuracy of the reserve within stated confidence limits, or, if such an projections for the mine for the duration of the Life of Mine Plan.
approach is not deemed appropriate, a qualitative discussion of the • SRK recognises that the LoMPs from the individual mines of Aguas
factors which could affect the relative accuracy and confidence of the Teñidas, Magdalena and Sotiel include material classified as Inferred
estimate. Resources, which was removed from the assessment of Reserves. SRK
• The statement should specify whether it relates to global or local has identified a number of minor design corrections and communicated
estimates, and, if local, state the relevant tonnages, which should be these to MATSA to address in future updates to the mine plan and
relevant to technical and economic evaluation. Documentation should Reserve estimate.
include assumptions made and the procedures used. • The Ore Reserve includes appropriate unplanned dilution and mining
• Accuracy and confidence discussions should extend to specific recovery factors.
discussions of any applied Modifying Factors that may have a material • The metal price assumptions used in the economic test are subject to
impact on Ore Reserve viability, or for which there are remaining areas of market forces and inherently present an area of uncertainty out of the
uncertainty at the current study stage. Company’s control.
• It is recognised that this may not be possible or appropriate in all
circumstances. These statements of relative accuracy and confidence of
the estimate should be compared withproduction data, where available.

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