Technical Report, December 2013 [PDF]

CAPSTONE MINING CORP. Pinto Valley Property Mineral Resource Estimate NI 43-101 Technical Report

Qualified Person: Garth Kirkham, P.Geo., Kirkham Geosystems Ltd. Burnaby, BC | 604.529.1070 | [email protected]

Effective Date: February 28, 2013 Release Date: June 12, 2013 Amended Date: December 11, 2013

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TABLE OF CONTENTS 1

SUMMARY ......................................................................................................................................... 1-1

2

INTRODUCTION ................................................................................................................................ 2-1 2.1 2.2 2.3

SOURCE OF DATA ......................................................................................................................... 2-1 SCOPE OF PERSONAL INSPECTIONS .............................................................................................. 2-1 UNITS OF MEASURE ...................................................................................................................... 2-1

3

RELIANCE ON OTHER EXPERTS ................................................................................................... 3-1

4

PROPERTY DESCRIPTION AND LOCATION ................................................................................. 4-1 4.1 4.2 4.3

LOCATION .................................................................................................................................... 4-1 TENURE, OWNERSHIP AND ENCUMBRANCES .................................................................................. 4-2 PERMITS ...................................................................................................................................... 4-3

5

ACCESSIBILITY, CLIMATE, INFRASTRUCTURE AND PHYSIOGRAPHY ................................... 5-1

6

HISTORY ........................................................................................................................................... 6-1

7

GEOLOGICAL SETTING AND MINERALIZATION.......................................................................... 7-1 7.1 GEOLOGICAL SETTING .................................................................................................................. 7-1 7.1.1 Mineralization ..................................................................................................................... 7-3 7.1.2 Local Geology and Alteration ............................................................................................. 7-7 7.2 INTRUSIVE PHASES ..................................................................................................................... 7-12 7.2.1 Pre-Mineralization Intrusives ............................................................................................ 7-12 7.2.2 Intra-Mineralization Intrusive Phases ............................................................................... 7-14 7.3 REGIONAL STRUCTURAL FRAMEWORK ......................................................................................... 7-16

8

DEPOSIT TYPES ............................................................................................................................... 8-1

9

EXPLORATION ................................................................................................................................. 9-1 9.1 9.2 9.3 9.4

KOZI PROSPECT ........................................................................................................................... 9-2 BONDI PROSPECT......................................................................................................................... 9-4 MATI PROSPECT ........................................................................................................................... 9-5 OTHER COPPER OXIDE EXPLORATION ........................................................................................... 9-6

10

DRILLING .................................................................................................................................... 10-1

11

SAMPLE PREPARATION, ANALYSES AND SECURITY ......................................................... 11-1

12

DATA VERIFICATION ................................................................................................................. 12-1

13

MINERAL PROCESSING AND METALLURGICAL TESTING .................................................. 13-1

13.1 13.2 13.3 13.4 13.5 13.6 13.7 13.8

PREFACE ................................................................................................................................... 13-1 PINTO VALLEY PROCESS DESCRIPTION ....................................................................................... 13-1 RECENT METALLURGICAL TESTWORK .......................................................................................... 13-2 MINERALOGY OF THE ORE .......................................................................................................... 13-3 CRUSHABILITY ............................................................................................................................ 13-5 GRINDABILITY ............................................................................................................................. 13-6 PINTO VALLEY RECOVERY .......................................................................................................... 13-7 FLOTATION ................................................................................................................................. 13-8 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY TOC I

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MINERAL RESOURCE ESTIMATE ............................................................................................ 14-1

14.1 14.2 14.3 14.4 14.5 14.6 14.7 14.8 14.9 14.10 14.11 14.12

INTRODUCTION ........................................................................................................................... 14-1 DATA EVALUATION...................................................................................................................... 14-1 COMPUTERIZED GEOLOGIC AND DOMAIN MODELING .................................................................... 14-1 TOPOGRAPHY............................................................................................................................. 14-8 COMPOSITES............................................................................................................................ 14-10 OUTLIERS ................................................................................................................................ 14-13 TONNAGE FACTOR.................................................................................................................... 14-14 BLOCK MODEL DEFINITION ........................................................................................................ 14-14 VARIOGRAPHY .......................................................................................................................... 14-15 MINERAL RESOURCE CLASSIFICATION ................................................................................... 14-19 MINERAL RESOURCES .......................................................................................................... 14-23 MODEL VALIDATION .............................................................................................................. 14-28

15

MINERAL RESERVE ESTIMATES ............................................................................................. 15-1

16

MINING METHODS ..................................................................................................................... 16-1

16.1 MINING STRATEGY ..................................................................................................................... 16-1 16.2 MINE PLAN ................................................................................................................................. 16-1 16.3 MINE DESIGN ............................................................................................................................. 16-1 16.3.1 Pit Slope Angles ............................................................................................................... 16-2 16.4 MINING OPERATIONS .................................................................................................................. 16-3 17

RECOVERY METHODS .............................................................................................................. 17-1

17.1 PROCESSING STRATEGY ............................................................................................................. 17-1 17.1.1 Restart Existing Facilities ................................................................................................. 17-1 17.1.2 Primary Crusher ............................................................................................................... 17-1 17.1.3 Fine Crushing Plant .......................................................................................................... 17-1 17.1.4 Grinding Circuit ................................................................................................................. 17-2 17.1.5 Copper-Moly Flotation/Regrind ........................................................................................ 17-3 17.1.6 Moly Plant ......................................................................................................................... 17-3 17.1.7 Concentrate Handling ...................................................................................................... 17-3 17.1.8 Tailings Disposal / Water Reclaim ................................................................................... 17-3 17.2 FEED CHARACTERISTICS............................................................................................................. 17-4 17.2.1 Predicted Ore and Ore Blends ......................................................................................... 17-4 17.2.2 Impact of Ore Variability and Blending ............................................................................. 17-4 17.3 TEST W ORK ............................................................................................................................... 17-4 17.3.1 Extent of Test Work .......................................................................................................... 17-4 17.3.2 Overview of 2006 Test Work ............................................................................................ 17-4 17.3.3 Samples from the Pit Bottom and Core Shed .................................................................. 17-5 17.4 PROCESS PLANT DESIGN CRITERIA ............................................................................................. 17-5 18

PROJECT INFRASTRUCTURE .................................................................................................. 18-1

18.1 LOCATION .................................................................................................................................. 18-1 18.1.1 Battery Limits .................................................................................................................... 18-1 18.2 OVERVIEW OF EXISTING INFRASTRUCTURE .................................................................................. 18-1 18.2.1 Electric Power .................................................................................................................. 18-1 18.2.2 Water ................................................................................................................................ 18-2 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY TOC II

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18.2.3 Sewage ............................................................................................................................ 18-2 18.2.4 Fuels ................................................................................................................................. 18-3 18.2.5 Storm Water Control......................................................................................................... 18-3 18.2.6 Tailings Disposal .............................................................................................................. 18-3 18.2.7 Tailings Dam No. 4 ........................................................................................................... 18-3 18.2.8 Tailings Dam No. 3 ........................................................................................................... 18-4 18.2.9 Buildings and Support Facilities ....................................................................................... 18-4 18.2.10 Maintenance Support and Shop................................................................................... 18-4 18.2.11 Communications........................................................................................................... 18-4 18.2.12 Security ........................................................................................................................ 18-4 18.3 LOGISTICS AND TRANSPORT........................................................................................................ 18-5 18.4 CONSIDERATIONS FOR INFRASTRUCTURE .................................................................................... 18-5 19

MARKET STUDIES AND CONTRACTS ..................................................................................... 19-1

20

ENVIRONMENTAL STUDIES AND SOCIAL OR COMMUNITY IMPACT ................................. 20-1

21

CAPITAL AND OPERATING COSTS ......................................................................................... 21-1

22

ECONOMIC ANALYSIS .............................................................................................................. 22-3

23

ADJACENT PROPERTIES ......................................................................................................... 23-1

23.1 23.2

CARLOTA MINE........................................................................................................................... 23-1 MIAMI MINE ................................................................................................................................ 23-2

24

OTHER RELEVANT DATA AND INFORMATION ...................................................................... 24-1

25

INTERPRETATION AND CONCLUSIONS ................................................................................. 25-1

26

RECOMMENDATIONS ................................................................................................................ 26-1

27

REFERENCES ............................................................................................................................. 27-2

28

DATE AND SIGNATURES .......................................................................................................... 28-1

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LIST OF TABLES Table 1.1: Mineral Resources in Imperial Units ......................................................................................... 1-3 Table 1.2: Mineral Resources in Metric Units ............................................................................................ 1-3 Table 2.1: Units of Measure ....................................................................................................................... 2-2 Table 2.2: Frequently Used Acronyms and Abbreviations ......................................................................... 2-3 Table 4.1: Permits, Licenses and Authorizations for the Pinto Valley Project ........................................... 4-3 Table 6.1: BHP JORC Compliant Resources for Pinto Valley as at June 30, 2012 .................................. 6-2 Table 6.2: BHP JORC Compliant Proven and Probable Reserves for Pinto Valley as at June 30, 2012 . 6-2 Table 6.3: BHP JORC Compliant Resource for Pinto Valley as at June 30, 2013 .................................... 6-3 Table 6.4: BHP JORC Compliant Proven and Probable Reserves for Pinto Valley as at June 30, 2013 . 6-3 Table 9.1: Ore Type Summary for Pinto Valley Deposit ............................................................................ 9-2 Table 9.2: Chemical Assays Results for Ruin and Schultze Granite ......................................................... 9-3 Table 11.1: Analytical Results for Standard Reference Materials (2006 Pinto Valley Q/A Program)...... 11-3 Table 11.2: Analytical Results for Replicate Pulp Assays (2006 Pinto Valley Q/A Program) .................. 11-5 Table 11.3: Analytical Results for Duplicate Core Preparation and Assays (2006 Pinto Valley Q/A Program) .................................................................................................................................................. 11-5 Table 11.4: Total and Stepwise Sampling Estimates and Analytical Variances ..................................... 11-7 Table 13.1: Summary of Testwork ........................................................................................................... 13-3 Table 13.2: Summary of Pinto Valley Ore Types ..................................................................................... 13-4 Table 13.3: Modal Mineralogy of Ruin Granite/Quartz Monzonite ........................................................... 13-5 Table 13.4: SMC Test Results on Pinto Valley Ore ................................................................................. 13-6 Table 14.1: Statistics for Total Copper and Molybdenum Percentages .................................................. 14-6 Table 14.2: Composite Statistics Weighted by Length (by Zone) .......................................................... 14-11 Table 14.3: Correlogram Model Data by Zone....................................................................................... 14-16 Table 14.4: Interpolation Parameters ..................................................................................................... 14-17 Table 14.5: Mineral Resources .............................................................................................................. 14-25 Table 14.6: Mineral Resources .............................................................................................................. 14-26 Table 14.7: Measured Mineral Resources ............................................................................................. 14-27 Table 14.8: Indicated Mineral Resources .............................................................................................. 14-27 Table 14.9: Inferred Mineral Resources ................................................................................................. 14-27 Table 16.1: Mine Equipment Fleet ........................................................................................................... 16-3

LIST OF FIGURES Figure 4-1: Pinto Valley Mine Location Map (BHP 2013) .......................................................................... 4-1 Figure 5-1: Pinto Valley Mine Location Photo ............................................................................................ 5-1 Figure 7-1: Geological Map of the Western Half of the Gila-Miami District (Creasey, 1980) .................... 7-2 Figure 7-2: Diagrammatic Sketch of the Geologic Relations of the Rock Units in the Globe-Miami District (Creasey, 1980) ......................................................................................................................................... 7-3 Figure 7-3: Surface Geology Map of the Pinto Valley Mine (Peterson et al, 1951) ................................... 7-6 Figure 7-4: Orebody Cross Section 3000 W looking west (BHP, 2007) .................................................... 7-6 Figure 7-5: Pinto Valley Geology Plan (BHP 2012) ................................................................................... 7-7 Figure 7-6: Generalized Columnar Sections of Sedimentary and Volcanic Rocks, Castle Dome Area (Peterson et al, 1951) ................................................................................................................................. 7-8 Figure 7-7: Pinto Valley Alteration Plan (BHP 2012) ................................................................................. 7-9 Figure 7-8 Location and Distribution of the Main Structures of the Pinto Valley District ...................... 7-18 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY TOC IV

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Figure 8-1: Anatomy of a Telescoped Porphyry System (Sillitoe, 2010) .................................................. 8-2 Figure 8-2: Generalized Alteration-Mineralization Zoning Pattern for Telescoped Porphyry Copper Deposits (Sillitoe, 2010) ............................................................................................................................. 8-3 Figure 8-3: Pinto Valley Alteration and Mineralization Plan Map (BHP, 2012) .......................................... 8-4 Figure 9-1: Intensity Mapping of Mineralization to Define Dominant Ore-Types. ...................................... 9-1 Figure 10-1: Drill Hole Section Showing Current Topography and Preliminary Optimized Pit ................ 10-2 Figure 10-2: Drill Hole Plan ...................................................................................................................... 10-3 Figure 10-3: All Drill Hole Collars ............................................................................................................. 10-3 Figure 11-1: Analytical Results from Standard Reference Materials ...................................................... 11-3 Figure 11-2: Relative Half Differences in Replicate Pulp Analyses (compares original PVO copper assays with Skyline Laboratories repeats) ........................................................................................................... 11-4 Figure 11-3: Comparison of 15 Field Duplicate Samples (2006 Pinto Valley Q/A Program) .................. 11-6 Figure 11-4: Condensed Sample Handling and Chain of Custody Stream ............................................. 11-8 Figure 13-1: Ruin Granite / Quartz Monzonite Modified Bond Work Index (kWh/mt) .............................. 13-7 Figure 13-2: Pinto Valley Copper Recovery (1990 to 1998) .................................................................... 13-8 Figure 14-1: Plan View Showing Drill Holes Used in Resource Estimate ............................................... 14-1 Figure 14-2: Plan View Showing Mineralized Solids ............................................................................... 14-3 Figure 14-3: Plan View Showing Major Faults ......................................................................................... 14-3 Figure 14-4: Plan View Drill Holes with Domain Solids ........................................................................... 14-4 Figure 14-5: Drill Hole Database Showing Grades and Lithology Codes ................................................ 14-5 Figure 14-6: Contact Plots for Copper ..................................................................................................... 14-7 Figure 14-7: Contact Plots for Molybdenum ............................................................................................ 14-8 Figure 14-8: Plan View of Topographic Solids with Drill Holes ................................................................ 14-9 Figure 14-9: Plan View 3D Gridded Topography by Contour Range ...................................................... 14-9 Figure 14-10: Box Plot for Copper Composites by Zone ....................................................................... 14-12 Figure 14-11: Box Plot for Molybdenum Composites by Zone .............................................................. 14-12 Figure 14-12: Cumulative Frequency Plot for Copper (45-ft Composites) ............................................ 14-13 Figure 14-13: Cumulative Frequency Plot for Molybdenum (45-ft Composites).................................... 14-13 Figure 14-14: Block Model Bounds ........................................................................................................ 14-14 Figure 14-15: Location of Grid and Model Limits ................................................................................... 14-15 Figure 14-16: Plan View of Block Model Showing Copper Grade Model at 3230 Elevation > 0.1% ..... 14-18 Figure 14-17: Plan View of Block Model Showing Molybdenum Grade Model at 3230 Elevation > 0.003% ............................................................................................................................................................... 14-18 Figure 14-18: Section of Block Model with Copper Grades > 0.1% Shown with Geology, Topography, and Drill Holes ............................................................................................................................................... 14-19 Figure 14-19: Relative Confidence Limits for the 52,000 stpd Production Rate .................................... 14-21 Figure 14-20: Digitized Boundary Based on Distance to Nearest Composite (shown as dashed green polyline) .................................................................................................................................................. 14-23 Figure 14-21: Optimized Pit with Block Model ....................................................................................... 14-24 Figure 14-22: Pit Optimization for Block Model...................................................................................... 14-25

_Toc374381923 2

Figure 14-24: Comparison of Ordinary Kriging (OK), Inverse Distance (ID ) and Nearest Neighbour (NN) Models .................................................................................................................................................... 14-32 Figure 14-25: Swath Plots ...................................................................................................................... 14-33 Figure 14-26: Copper Swatch Plots ....................................................................................................... 14-34 Figure 14-27: Molybdenum Swath Plots ................................................................................................ 14-35 Figure 16-1: Safety Berm Design Change ............................................................................................... 16-3 Figure 17-1: Sulphide Process Flow sheet .............................................................................................. 17-2 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY TOC V

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Figure 23-1: Pinto Valley Mine and Adjacent Properties ......................................................................... 23-1

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1 SUMMARY This Technical Report was prepared by Garth Kirkham, P.Geo., Kirkham Geosystems Ltd. The report was commissioned by Capstone Mining Corp. (Capstone) in support of the sale by BHP Copper Inc. (BHP) and Capstone's subsequent acquisition of the Pinto Valley Mine. In addition, the resources reported herein will form the basis for ongoing advanced studies, such as a Feasibility Study which will address the mine restart. This report is based primarily on data compiled and generated by BHP and drilling programs conducted in 2011 and 2012, internal reports, and the JORC-compliant report, June 2012 Mineral Resource & Ore Reserve Competent Persons Report: Pinto Valley (Preece and Baird, 2012). Garth Kirkham, P. Geo., visited the property on May 14, 2013, and the laboratory facilities on May 15, 2013. The site visit included an inspection of the mine site infrastructure, core logging facilities, offices, pit, core storage facilities, core receiving area, core sawing stations and a tour of the major population centres and surrounding towns. The Pinto Valley Mine and Concentrator are located at the west end of the Globe-Miami district, approximately six miles west of the town of Miami in Gila County, Arizona at an elevation of approximately 4,000 ft. Access to the mine is via U.S. Highway 60, approximately 80 miles east of Phoenix to the Pinto Valley Mine Road, then approximately 1.5 miles north. On April 28, 2013, Capstone entered into a purchase agreement (Purchase Agreement) with BHP Copper Inc. (BHP Copper) pursuant to which Capstone proposed to purchase, through a whollyowned U.S. subsidiary, 100% interest in the Pinto Valley Mine and associated railroad operations for US$650 million. The Globe-Miami district is one of the oldest and most productive mining districts in the United States. The first recorded production from the district was in 1878. Since that time, over 15 billion pounds of copper have been produced. Pinto Valley Mining Division originated as Miami Copper Company in 1909. In 1960, the Tennessee Corporation took over Miami Copper Company, and, in 1969, Cities Service Company merged with the Tennessee Corporation. In late 1982, Occidental Petroleum Corporation (Occidental) acquired Cities Service Company. In February 1983, Occidental sold the Miami operations to Newmont Mining Corporation. At this time, the company's name was changed to Pinto Valley Copper Corporation (Pinto Valley Copper). In November 1986, Newmont merged the Pinto Valley Copper assets into Magma Copper Company holdings, and Pinto Valley Copper became the Pinto Valley Mining Division of Magma Copper Company. In December 1995, Broken Hill Proprietary Company Limited (BHP) purchased Magma Copper Company. With the merger of BHP and Billiton, the Pinto Valley Mining Division became the Pinto Valley Operations of BHP Copper Inc.

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The Pinto Valley Mining Division is located within the Globe-Miami mining district of central Arizona. Several mines and numerous prospects have been developed in the area. Larger mines in the district are porphyry copper deposits associated with Paleocene granodiorite to Granite Porphyry stocks. The porphyry copper deposits have been dismembered by faults and affected by later erosion and minor oxidation. Vein deposits and possible exotic copper deposits are also found within the district. The Globe-Miami district contains igneous, metamorphic, and sedimentary rocks of Precambrian, Paleozoic, Tertiary, and Quaternary age. Precambrian basement rocks largely consist of Early Proterozoic Pinal Schist intruded by granites correlative with peraluminous two-mica granite batholiths that comprise the Proterozoic basement rocks throughout southern Arizona and New Mexico. The Late Proterozoic Apache Group consists of (from oldest to youngest): the Pioneer Formation, including the basal Scanlan Conglomerate; the Dripping Spring Quartzite, including the Barnes Conglomerate; the Mescal Limestone; and, minor basalt closely associated with the Mescal. These units are intruded by Apache Diabase sills of various thicknesses. Paleozoic rocks in the district are the Cambrian Troy Quartzite, Devonian Martin Limestone, Mississippian Escabrosa Limestone, and Pennsylvanian to Permian Naco Formation. A large pluton of Schultze Granite was intruded into the Precambrian and Paleozoic wall rocks. Near the northern-most exposures at the Inspiration mineral deposit, it has various textures and compositions that have been called Granodiorite, Quartz Monzonite, and Porphyritic Quartz Monzonite. A separate, Granite Porphyry has been mapped at Pinto Valley, Copper Cities, Diamond H, and Miami East, and is seen near the vein-controlled mineralization at Old Dominion. Tertiary sedimentary and volcanic rocks cover the mineralized units. The Whitetail Conglomerate was formed as a result of regional uplift which contains weathered clasts of older rocks in a red iron oxide-rich, very fine-grained matrix. A Miocene ash-flow tuff, known as the Apache Leap Tuff, covered the area following the Whitetail Conglomerate, and further Basin and Range faulting and subsequent erosion produced the Tertiary to Quaternary Gila Conglomerate from all older rocks. On the west side of the Pinto Valley open pit, the Gila Conglomerate contains a basalt sill. The hydrothermal ore deposits in the district comprise vein deposits and typical porphyry copper deposits. On the basis of predominant metals, the vein deposits can be further divided into copper veins, zinc-lead veins, zinc-lead-vanadium-molybdenum veins, manganese-zinc-lead-silver veins, gold-silver veins, and molybdenum veins. The primary minerals of the porphyry copper deposits are chiefly pyrite and chalcopyrite with minor amounts of molybdenite; gold and silver are recovered as by-products. Sphalerite and galena occur locally in very small amounts. Silicate alteration associated with the deposits includes potassic, argillic, sericitic, and propylitic alterations. The Pinto Valley Mine has previously been in production and preliminary metallurgical and geometallurgical work has already been completed; however, a more detailed and advanced program is currently underway to augment this previous work which will eventually form the basis of a PreCAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 1-2

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feasibility Study planned for late 2013. To-date, a broad characterization of recoveries exists for copper and molybdenum at 88% and 50%, respectively. The mineral resources are shown in Table 1.1 for Cu% and Mo%. These mineral resources are listed at a base case cut-off grade of 0.25% Cu. TABLE 1.1: MINERAL RESOURCES IN IMPERIAL UNITS Total

Cut-Off

Ore

Cu%

Mo%

Cu%

(tons)

Measured

0.25

443,030,204

0.384

0.010

Indicated

0.25

623,458,863

0.331

0.008

Measured & Indicated

0.25

1,066,489,067

0.353

0.009

Inferred

0.25

49,285,298

0.326

0.009

Note: This estimate has not been adjusted for the three months of mining from date of start-up to February 28, 2013.

As Capstone is a Canadian issuer and BHP (the seller) is an Australian company, the author is also reporting the resources in metric units for tonnage and contained copper. Molybdenum, however, is reported in pounds, its most common unit. The mineral resources (in metric units) are shown in Table 1.2 for Cu% and Mo%. These mineral resources are listed at a base case cut-off grade of 0.25% Cu. The purpose of this Technical Report was to present the resource estimate for the Pinto Valley Deposit. Therefore, the primary interpretations and conclusions of this report are related to the data, analysis and methods related to the calculation of the resource estimate. TABLE 1.2: MINERAL RESOURCES IN METRIC UNITS Metric

Copper

Molybdenum

Contained

Contained

Tonnes

(%)

(%)

Copper

Molybdenum

(k Tonnes)

(M lbs)

(M) Measured

402

0.38

0.010

1,544

89

Indicated

566

0.33

0.008

1,870

99

Measured & Indicated

968

0.35

0.009

3,414

188

Inferred

45

0.33

0.009

146

9

Notes: Mineral Resource Estimate, February 28, 2013, at a 0.25% COG. Any discrepancies in the totals are related to rounding. This estimate has not been adjusted for the three months of mining from date of start-up to February 28, 2013.

Mineral resources are not mineral reserves until they have demonstrated economic viability. Mineral resource estimates do not account for a resource’s mineability, selectivity, mining loss, or dilution. These estimates include Inferred mineral resources that are normally considered too geologically CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 1-3

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speculative for the application of economic considerations; therefore, they are unable to be classified as mineral reserves. Also, there is no certainty that these Inferred mineral resources will someday be converted into Measured or Indicated resources as a result of future drilling or after applying economic considerations. The Pinto Valley Mine has no declared mineral reserve estimates as per CIM definitions. All previous mineral reserve estimates for Pinto Valley are considered to be historical in nature. The objective of the proposed mining strategy is to deliver maximum value, with acceptable risk. The restart provides immediate access to more than a 4-year’s supply of available mineralization within the bottom of the current pit. The mine configuration, infrastructure, and site logistics required to mine the exposed ore in the pit are the same as they were under previous operations and it only pertains to the available resources at the bottom of the existing open pit. Operations at Pinto Valley are established; processing facilities, shops, fuel bays, and other support functions are all operational. Ramping-up capacities while further stabilizing these operations are both critical measures for the success of the mining operation. The main risks to the mine plan are related to pit slope stability. The mining is executed as an owner/operator operation with a truck/loader fleet. The haulage fleet consists of 15 haul trucks. The waste dump design places material as close to the pit rim as possible, directly south of the leach dumps. The planned mine production rate for ore and waste is 20.4 million mtpy, and 18.5 million mtpy of ore to the concentrator. This aligns with the average concentrator production of 18.2 million mtpy before sulphide operations were suspended in 2009. The waste/ore strip ratio for the mine is 0.1:1. The mill ore cut-off is variable, nominally set at 0.25% TCu. Stockpile (leach) material-grade cut-off ranges from 0.10% to 0.20% TCu. Material between 0.20% and 0.25% will be stockpiled for future processing. The existing concentrator process equipment and instrumentation will be refurbished; therefore, no process flow sheet changes are anticipated. The flow process is conventional and consists of three crushing stages (primary, secondary, and tertiary), three copper flotation stages (rougher, cleaner, and scavenger), a molybdenum flotation circuit, and associated thickeners to control the density of concentrates and tailings. The Pinto Valley concentrator is an existing facility that will be refurbished and restarted without any substantial modifications to the design criteria. The original plant design was for 36,300 mtpd. Because of past modifications to increase throughput, the current target throughput is 50,800 mtpd (dry) post ramp-up. The target concentrate grade is 28% with a total copper recovery of 87.5%. The proposed project involves restarting the existing facility located at Pinto Valley, Arizona. All environmental permits are in place; there is adequate tailings disposal capacity, electric power, and water. CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 1-4

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Capstone will perform all marketing and sales administration. No additional environmental or social impact assessments are required, other than those already in place as a result of past operations. Capstone has invested a total of $650 million toward the purchase of the Pinto Valley Operation from BHP Copper. In addition, BHP Copper has invested approximately $192 million in capital improvements in preparation for start-up. At the closing of the acquisition by Capstone on October 11, 2013, the Pinto Valley Operations was approximately 10 months into its re-commissioning by BHP Copper after the January 20, 2009 shutdown. As part of the re-start of operations, BHP Copper had completed a refurbishment program to prepare for the restart of operations. As at December 6, 2013, Capstone has owned the operation for approximately eight weeks and has not yet completed the first full monthly close of the financial statements for the Pinto Valley Operations under its ownership. As such, Capstone does not yet have information that it can report on operating expenses. Additionally, the company does not have access to cost or operating data predating its ownership. Even if that information were available, throughout 2013, the Pinto Valley Operation has been in a start-up phase, with costs affected by transitional administrative support arrangements with the former owner, production levels and efficiencies below name-plate levels, and normal commissioning-related contractor costs. As a result, actual operating costs realized to date are either not available or are not representative of the sustainable performance of the operations. Capstone is currently in the process of compiling accurate and reliable cost estimates and sustaining capital estimates in preparation for the completion of a current pre-feasibility study.

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In order to further evaluate the resource potential of the Pinto Valley Project and advance the project by evaluating its economic viability, the following recommendations should be considered in 2013:  Incorporate remaining assay data from 2012-2013 drilling campaign.  To increase confidence and upgrade resource classification.  Continue with the QA/QC of the master database.  Continue density measurements and analysis.  Revise solids based on the most current assay data.  Documentation and project map of all drill data.  Improve documentation of procedures and protocols.  Continue with advanced metallurgical studies.  Continue environmental studies.  Continue with activities related to and completion of Pre-feasibility Study.

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2 INTRODUCTION This Technical Report was prepared by Garth Kirkham, P.Geo., Kirkham Geosystems Ltd. The report was commissioned by Capstone Mining Corp. (Capstone) in support of the sale by BHP Copper Inc. (BHP) and Capstone's subsequent acquisition of the Pinto Valley Mine. In addition, the resources reported herein will form the basis for ongoing advanced studies, such as a Pre-feasibility study which will address the mine restart. This Technical Report was written in compliance with disclosure and reporting requirements set forth in the Canadian Securities Administrators National Instrument 43-101, Companion Policy 43-101CP, and Form 43-101F1 (collectively referred to as NI 43-101).

2.1 SOURCE OF DATA This report is based primarily on data compiled and generated by BHP, drilling programs conducted in 2011 and 2012, internal reports, and the JORC-compliant report, June 2012 Mineral Resource & Ore Reserve Competent Persons Report: Pinto Valley (Preece and Baird, 2012).

2.2 SCOPE OF PERSONAL INSPECTIONS Garth Kirkham, P. Geo., visited the property on May 14, 2013, and the laboratory facilities on May 15, 2013. The site visit included an inspection of the mine site infrastructure, core logging facilities, offices, pit, outcrops, core storage facilities, core receiving area, core sawing stations and a tour of the major population centres and surrounding towns.

2.3 UNITS OF MEASURE The units of measure used in this report are shown in Table 2.1. All currency quoted in this report refers to U.S. dollars, unless otherwise noted. All distances and linear measurements are given in feet and miles, unless otherwise noted. Frequently used abbreviations and acronyms are shown in Table 2.2.

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TABLE 2.1: UNITS OF MEASURE Type

Unit

Unit Abbreviation

Si Conversion

area

acre

acre

4,046.86 m

area

hectare

ha

10,000 m

area

square kilometre

km

2

100 ha

2

1

2

2

area

square mile

mi

259.00 ha

concentration

grams per metric ton

g/t

1 part per million

concentration

troy ounces per short ton

oz/ton

34.28552 g/t

length

foot

ft

0.3048 m

length

metre

m

Si base unit

length

kilometre

km

Si base unit

length

centimetre

cm

Si base unit

length

mile

mi

1,609.34 km

length

yard

yd

0.9144 m

mass

gram

g

Si base unit

mass

kilogram

kg

Si base unit

mass

troy ounce

oz

31.10348 g

mass

metric ton

t, tonne

1,000 kg

mass

short ton

T, ton

2,000 lbs

time

million years

Ma

million years

volume

cubic yard

cu yd

0.7626 m

temperature

degrees Celsius

°C

Degrees Celsius

temperature

degrees Fahrenheit

°F

°F=°C x 9/5 +32

Note:

1 2

3 2

Si refers to International System of Units. Degrees Celsius in not an SI unit, but is the standard for temperature.

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T ABLE 2.2: FREQUENTLY USED ACRONYMS AND ABBREVIATIONS AA Ag APP As Au Ba BLM C CIM cm COG Cu DDH DWi E EA ft g/t JORC K kg km 3 kWh/m L LoM m M Ma MLP mm Mo mT or mt mtpd mtph mtpy MVA µm N Na NSR oz Pb PIMA ppm ppb PVO QA/QC QEMSCAN RC RHD RQD S

Atomic absorption spectrometry silver Aquifer Protection Permit arsenic gold barium Bureau of Land Management Celsius Canadian Institute of Mining centimetre cut-off grade copper diamond drill hole drop weight index east Environmental Assessment feet grams per tonne Joint Ore Reserves Committee potassium kilogram = 2.205 pounds kilometre = 0.6214 mile kilowatt-hour per cubic meter litre Life of Mine metre = 3.2808 feet million million years old Mined Land Reclamation Plan millimetre molybdenum metric tonne metric tonnes per day metric tonnes per hour metric tonnes per year megavolt ampere micron = one millionth of a metre north sodium Net Smelter Royalty troy ounce (12 oz to 1 pound) lead Portable Infrared Mineral Analyzer parts per million parts per billion Pinto Valley Operations Quality Assurance/Quality Control Quantitative Evaluation of Minerals by SCANning electron microscopy reverse-circulation drilling method relative half difference rock quality designation south CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 2-3

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scanning electron microscope SAG Mill Comminution Salt River Project Solvent Extraction and Electrowinning metric tonne short ton United States Universal Transverse Mercator west zinc

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3 RELIANCE ON OTHER EXPERTS This Technical Report was prepared by Garth Kirkham, P.Geo., of Kirkham Geosystems Ltd. To prepare this report, the author relied on exploration reports and data from previous exploration programs, internal reports, and consultants’ reports, including the JORC-compliant report, June 2012 Mineral Resource & Ore Reserve Competent Persons Report: Pinto Valley, (Preece and Baird, 2012) The author believes that the combined information, conclusions, and recommendations are accurate and reliable. The author also believes that the drilling, geological, and geochemical data reported by the companies and government agencies regarding the project and its environment are accurate and reliable and have been performed by competent professionals operating to industry standards and best practices. This Technical Report was prepared using public and private information provided by BHP and information from papers and previous technical reports listed in Section 19 of this report. The current report also relies on the work and opinions of non-QP (qualified person) experts and nonindependent QPs. However, the author believes that the information provided and relied on for the preparation of this report was accurate at the time of reporting, and that the interpretations and opinions expressed by these individuals are reasonable and based on a current understanding of the deposit. Each contributing QP has made a reasonable effort to verify the accuracy of the data used to develop this report and takes full responsibility for the information contained in this report. BHP Copper denied the author certain information relating to its business matters that were deemed confidential and industry-sensitive. BHP Copper, through legal counsel, determined what material was sensitive and unavailable for release. Although it is believed that all information relevant to the creation of this Technical Report has been disclosed, unrestricted and free access was not given to the author due to constraints under the U.S. laws. The results and opinions expressed in this report are conditional on the aforementioned information being current, accurate, and complete as of the date of this report, and provided with the understanding that no information has been withheld that could affect the conclusions made in this report. The author reserves the right to revise, but is not obliged to revise, this report and its conclusions if and when additional information becomes available, subsequent to the date of this report.

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Pinto Valley

N 4 PROPERTY DESCRIPTION AND LOCATION

4.1 LOCATION The Pinto Valley Mine and Concentrator are located at the west end of the Globe-Miami district, approximately six miles west of the town of Miami in Gila County, Arizona at an elevation of approximately 4,000 ft. Access to the mine is via U.S. Highway 60, approximately 80 miles east of Phoenix to the Pinto Valley Mine Road, then approximately 1.5 miles north (Figure 4-1).

y

N

Pinto Valley

N

FIGURE 4-1: PINTO VALLEY MINE LOCATION M AP (BHP 2013)

The Pinto Valley Mine is currently an operating open pit operation that consists of a single truck/loader pit that is approximately 340 m deep, 1.5 km wide, and 2.1 km long. The pit is Lshaped and is near the on-site infrastructure. There are suitable maintenance facilities for large CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 4-1

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pieces of earth-moving equipment, and for the mill and general personnel. Two previous tailings dams have been rehabilitated and two tailings dams are currently operational. There is a Solvent Extraction and Electro-winning (SX-EW) facility located on the eastern edge of the property, opposite the leach dump.

4.2 TENURE, OWNERSHIP AND ENCUMBRANCES On April 28, 2013, Capstone entered into a purchase agreement (Purchase Agreement) with BHP Copper Inc. (BHP Copper) pursuant to which Capstone proposed to purchase, through a whollyowned U.S. subsidiary, 100% interest in the Pinto Valley Mine and associated railroad operations for US$650 million. Pinto Valley is a combination of fee land, patented mining and mill site claims, and unpatented mining and mill site claims. As a whole, the land can support open pit mining, ore processing, tailings storage, waste rock disposal, and the operation of milling equipment. The unpatented mining claims and mill sites are accessible under the provisions of the U.S. federal Mining Law of 1872, subject to approval from the U.S. Forest Service after the completion of an environmental impact analysis under the National Environmental Policy Act (NEPA) in connection with a proposed plan of operations (POO) governing portions of the property. The NEPA review process includes interagency consultation on project alternatives and the mitigation of environmental impacts. Use of the fee lands and patented mining claims and mill sites are governed by a Mined Land Reclamation Plan (MLRP) and an Aquifer Protection Permit (APP), both issued by the Arizona Department of Environmental Quality. To use the project's surface rights and mine on the property requires the owner to obtain or transfer the plan of operations, the MLRP and APP, and a number of other federal, state, and local permits and approvals; some of these have been completed, and others are still in progress, but will be obtained or transferred before or concurrent with the transfer of the Pinto Valley mine to Capstone. (Note: A complete list of permits can be found in Appendix A).The core of the Pinto Valley property consists of 69 patented lode mining claims. Also included in the property are 53 patented mill sites. Adjacent to and nearby the patented claims are 329 unpatented lode mining claims and mill sites. Most of the unpatented mining claims and mill sites were staked on federal land administered by the U.S. Forest Service, but a limited number of the unpatented mining claims and mill sites are on federal land administered by the Bureau of Land Management (BLM). Seven parcels of fee (private) land are associated with the property. A list of the unpatented mining claims and mill sites, patented mining claims and mill sites, and fee lands can be found in Appendix B. BHP Copper owns the patented mining claims and fee land parcels, which are private lands that provide the owner with both surface and mineral rights. BHP Copper also owns the patented mill sites. The patented mining claim block, located in the core of the property, is indicated in the field by surveyed brass caps on short pipes cemented into the ground. The fee lands are located by legal description and recorded at the Gila County Recorder’s Office. The patented mining claims, mill sites, and fee lands are subject to annual property taxes. As long as the property taxes are paid annually on these claims, there is no expiration date. CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 4-2

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BHP Copper also owns the unpatented lode mining claims and mill sites that are adjacent to and nearby the patented claims. Wooden posts and stone cairns mark the unpatented mining claim corners, end lines, and discovery monuments; all of these have been surveyed. The unpatented mining claims and mill sites have no expiration date and can be maintained by filing the required documents with the BLM, providing the required records to Gila County, and paying an annual maintenance fee to the BLM of $140 per claim. As Capstone is purchasing an operating mine, the property is subject to ongoing environmental liabilities and reclamation obligations. A 2% net smelter return (NSR) royalty applies to 26 of the unpatented mining claims.

4.3 PERMITS The following sections list the permits that were required by Pinto Valley (detailed in Table 4.1): TABLE 4.1: PERMITS, LICENSES AND AUTHORIZATIONS FOR THE PINTO VALLEY PROJECT

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5 ACCESSIBILITY, CLIMATE, INFRASTRUCTURE AND PHYSIOGRAPHY The Pinto Valley Mine and Concentrator are located at the west end of the Globe-Miami district, approximately six miles west of the town of Miami in Gila County, Arizona at an elevation of approximately 4,000 ft. Access to the mine is via U.S. Highway 60, approximately 80 miles east of Phoenix to the Pinto Valley Mine Road, then approximately 1.5 miles north (Figure 5-1).

FIGURE 5-1: PINTO VALLEY MINE LOCATION PHOTO

The Pinto Valley Mine is currently an open pit operation that consists of a single truck/loader pit that is approximately 340 m deep, 1.5 km wide, and 2.1 km long. The pit is L-shaped and is near the onsite infrastructure. There are suitable maintenance facilities for large pieces of earthmoving equipment, and for mill and general personnel infrastructure. Two previous tailings dams have been rehabilitated and two tailings dams are currently operational. There is a Solvent Extraction and Electro-winning (SX-EW) facility located on the eastern edge of the property, opposite the leach dump. The Pinto Valley Mine is located on Pinto Valley Road (FR 287). The site is approximately 4.8 km (3 miles) north of U.S. Highway 60. The site can be accessed from Phoenix, Arizona, approximately 80 miles to the west), by traveling east on U.S. Highway 60. The site can also be accessed from Tucson, Arizona (100 miles to the south) by traveling north on State Route (SR) 77 and then west on

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U.S. Highway 60. The mine property can be accessed using existing mine roads and the southernmost segment of FR 287. A large network of roads has been built to serve the Pinto Valley Mine. The primary access, FR 287, is a paved road; all other roads are unpaved. Some roads are well-maintained to accommodate daily traffic, whereas others are not maintained and require four-wheel drive vehicles. Although FR 287 is a public road that passes through the mine property, public access to the mine facilities is restricted and managed by gates and Pinto Valley Mine security personnel. The regional climate is semi-arid. The average annual precipitation in the region is 58.4 cm and falls in a bimodal pattern. Most of the rainfall occurs during the winter and summer months, with dry periods in the spring and fall. Precipitation during the winter months (December through March) usually occurs as long, steady storms. Although snow may occur at higher elevations, it does not typically accumulate. Rain events during the summer months (July to early September) are typically short with greater intensity due to the convective nature of thunderstorms. May and June are typically the driest months of the year and can commonly result in drought conditions. For approximately one year out of every four, the region may experience little to no precipitation for an entire month. The National Oceanic and Atmospheric Administration’s Climate Atlas of the United States and the Western Regional Climate Center records include data from a station in Miami, Arizona approximately 6 miles east of the site. The period of record for the Miami station is from 1914 to 2005. The average annual maximum temperature for the period of record at this station is 25°C . July is the warmest month with an average maximum temperature of 36°C. The average annual minimum temperature for the coolest month is 1°C in January. The town of Miami, located 13 km (8 miles) east of the mine, had approximately 1,800 residents in 2011, and the town of Globe (the County seat), located 21 km (13 miles) east of the mine, had approximately 7,500 residents in 2011. Copper mining provides the largest number of jobs in the area. And because of a long-standing mining tradition in the area, local services are already in place to supply the project's needs. The current level of community services is deemed to be adequate for the needs of the mine. Medical facilities are available at the Cobre Valley Community Hospital located in Miami. Fire, police, public works, transportation, and recreational facilities are in place and fully functioning. The community has an adequate supply of permanent housing and temporary housing to accommodate the Pinto Valley Mine's current workforce. The Pinto Valley Mine is located in east-central Arizona in the structural transition zone between the Sonoran section of the Basin and Range physiographic province to the south-southwest, and the Colorado Plateau to the north. The terrain surrounding the mine property is generally mountainous, dominated by sharp landforms and prolific exposures of the variety of bedrock formations present in the region. The Pinto Valley Mine is entirely within the Pinto Creek watershed, where local elevations range from about 1,067 m to 1,524 m above mean sea level.

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The Pinto Valley Mine lies entirely along the eastern flank of Pinto Creek, with numerous southwesttrending to northwest-trending, ephemeral Pinto Creek tributaries crossing the property. Most of the headwaters of these tributaries originate along a regional surface water divide that runs north to south near the eastern Pinto Valley Mine property line. All surface water runoff from the site ultimately flows into Pinto Creek, just west of the western boundary of the property. Pinto Creek flows from the south to the north and flows into Roosevelt Lake and the Salt River. Two types of hydrogeologic units are present at the site. The first and uppermost is the alluvial system: this is a near-surface groundwater system consisting of shallow-circulating water moving in the alluvium and the upper weathered portions of the underlying bedrock. The second is the bedrock system: this consists of deeply-circulating groundwater moving through fractures and joints in the consolidated bedrock underlying the area. Some units/sections of the bedrock system act more like the alluvial system, including deeper weathered portions of the fractured bedrock and the Gila Conglomerate. The Pinto Valley Mine is near the boundary of areas mapped as the Interior Chaparral biotic community and the Arizona Upland subdivision of Sonoran desertscrub biotic community. Plant species on the property that are characteristic of the Arizona Upland community include saguaro, blue palo verde, velvet mesquite, catclaw, four-wing saltbush, ocotillo, and Engelmann prickly-pear. Plant species more characteristic of the Interior Chaparral community include Arizona white oak, shrub live oak, one-seed juniper, point-leaf manzanita, sugar sumac, skunkbush, and canotia. A variety of mammals, birds, reptiles, and amphibians comprise the wildlife community at the Pinto Valley Mine. Because the property is located on the ecotone between two major plant communities, wildlife diversity on the site also represents species adapted to both communities. Common wildlife species that have been observed on site include rock squirrel, coyote, mule deer, Gambel’s quail, Cooper’s hawk, mourning dove, Bell’s vireo, western scrub-jay, phainopepla, and canyon towhee. Most of the species observed have wide environmental tolerances and are present in both plant communities on the property. The southwestern parts of the mine are near the perennial reach of Pinto Creek. The Pinto Creek riparian zone is dominated by Fremont cottonwood, Goodding willow, Arizona sycamore, Arizona cypress, and seep willow.

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6 HISTORY The Globe-Miami district is one of the oldest and most productive mining districts in the United States. The first recorded production from the district was in 1878. Since that time, over 15 billion pounds of copper have been produced. Pinto Valley Mining Division originated as Miami Copper Company in 1909. In 1960, the Tennessee Corporation took over Miami Copper Company, and, in 1969, Cities Service Company merged with the Tennessee Corporation. In late 1982, Occidental Petroleum Corporation (Occidental) acquired Cities Service Company. In February 1983, Occidental sold the Miami operations to Newmont Mining Corporation. At this time, the company's name was changed to Pinto Valley Copper Corporation (Pinto Valley Copper). In November 1986, Newmont merged the Pinto Valley Copper assets into Magma Copper Company holdings, and Pinto Valley Copper became the Pinto Valley Mining Division of Magma Copper Company. In December 1995, Broken Hill Proprietary Company Limited (BHP) purchased Magma Copper Company. With the merger of BHP and Billiton in 2001, the Pinto Valley Mining Division became the Pinto Valley Operations of BHP Copper Inc. Development of the Pinto Valley open pit began in 1972, and the mine and concentrator went into production in 1974. Previously, a chalcocite-enriched zone of the deposit was mined from 1943 until 1953, as the Castle Dome Mine. Sulphide ore from the Pinto Valley open pit operation was processed at the unit's concentrator, which produced a copper concentrate containing approximately 28% copper and a molybdenum disulphide by-product. The copper concentrate was then trucked to a smelter and refinery in San Manuel, Arizona. In February 1998, sulphide mining and milling was suspended due to depressed copper prices. The concentrator was placed under care and maintenance and the mining equipment fleet was sold. Operating and environmental permits were maintained during the suspension of sulphide operations, as were the water and electrical systems, although these were maintained at lower usage rates than during mining and milling operations. Cathode copper production continued during the suspension of sulphide operations at the Pinto Valley and Miami SX-EW facilities. In April 2006, a study was completed to determine the feasibility of rehabilitating the mill and flotation plant and restart mining activities; it concluded with an Independent Peer Review in September 2006. A provisional approval for restart was granted in December 2006 and final approval was granted in early 2007. The resource and reserve estimates made in 1996 were reviewed and validated during the Feasibility Study, and these estimates were restated in June 2007. The Pinto Valley Mine operated for 18 months before depressed copper prices forced it to be placed under care and maintenance again. The notice and cessation of the operation occurred on January 20, 2009. In 2011, a new study was commissioned to restart the mine; it was peer reviewed and approved by BHP Copper Inc. in January 2012 and the mill was restarted in December 2012. The declared resource and reserve statement (JORC compliant) for Pinto Valley by BHP Copper Inc. are published in “BHP Annual Report 2013”. Capstone has not completed the work necessary to CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 6-1

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verify the classification of the resource and reserve statement. Capstone is not treating the resource and reserve statement as NI 43-101 defined mineral resources and mineral reserves verified by a qualified person. The historical estimates should not be relied upon. The Pinto Valley Operation will require considerable further evaluation which Capstone’s management and consultants intend to carry out in due course. Capstone does not have a copy of the report that includes the resource and reserve statement signed by a professional geologist. Therefore, Capstone cannot verify the resource or reserves or comment on whether the estimate was made in compliance with the current standards. Capstone is not relying on these estimates. As at June 30, 2012 the Pinto Valley copper resources and reserves are as reported as follows: TABLE 6.1: BHP JORC COMPLIANT RESOURCES FOR PINTO VALLEY AS AT JUNE 30, 2012

TABLE 6.2: BHP JORC COMPLIANT PROVEN AND PROBABLE RESERVES FOR PINTO VALLEY AS AT JUNE 30, 2012

Note that the resources listed in Table 6.1 are inclusive of reserves. Also note that Sulphide resources and reserves are reported at a 0.25% TCu cut-off grade whilst the Low Grade Leach resources and reserves are reported at a 0.10% TCu cut-off grade. BHP Copper did not publish or report molybdenum resources or reserves. Pinto Valley resumed mining in November of 2012 and resources were recalculated and published in “BHP Annual Report 2013”. As at June 30, 2013 the Pinto Valley copper resources are reported as follows:

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TABLE 6.3: BHP JORC COMPLIANT RESOURCE FOR PINTO VALLEY AS AT JUNE 30, 2013

TABLE 6.4: BHP JORC COMPLIANT PROVEN AND PROBABLE RESERVES FOR PINTO VALLEY AS AT JUNE 30, 2013

Note that the resources listed in Table 6.3 are inclusive of reserves. Also note that Sulphide resources and reserves are reported at a 0.25% TCu cut-off grade whilst the Low Grade Leach resources and reserves are reported at a 0.10% TCu cut-off grade. During financial year ending June 30, 2013, sulphide mining resumed at Pinto Valley with production for financial year ending June 30, 2013 of 16.6 kt of copper concentrate and 4.9 kt of copper cathode.

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7 GEOLOGICAL SETTING AND MINERALIZATION 7.1 GEOLOGICAL SETTING The Pinto Valley Mining Division is located within the Globe-Miami mining district of central Arizona. Several mines and numerous prospects have been developed in the area. Larger mines in the district are porphyry copper deposits (Creasey, 1980) associated with Paleocene (59 to 63 Ma) Granodiorite to Granite Porphyry stocks. The porphyry copper deposits have been dismembered by faults and affected by later erosion and minor oxidation. Vein deposits and possible exotic copper deposits are also found within the district. The Globe-Miami district contains igneous, metamorphic, and sedimentary rocks of Precambrian, Paleozoic, Tertiary, and Quaternary age. Figure 7-1 shows a simplified geological map of the western half of the district. Figure 7-2 shows a diagrammatic sketch that indicates the age and spatial relationships of the major rock units. Precambrian basement rocks largely consist of Early Proterozoic Pinal Schist (~1700 Ma) intruded by granites correlative with 1450 Ma peraluminous two-mica granite batholiths that comprise the Proterozoic basement rocks throughout southern Arizona and New Mexico. The Late Proterozoic Apache Group consists of (from oldest to youngest): the Pioneer Formation, including the basal Scanlan Conglomerate; the Dripping Spring Quartzite, including the Barnes Conglomerate; the Mescal Limestone; and, minor Basalt closely associated with the Mescal. These units are intruded by 1100 Ma Apache Diabase sills of various thicknesses. Paleozoic rocks in the district are the Cambrian Troy Quartzite, Devonian Martin Limestone, Mississippian Escabrosa Limestone, and Pennsylvanian to Permian Naco Formation. During the Eocene (60 to 62 Ma), a large pluton of Schultze Granite was intruded into the Precambrian and Paleozoic wall rocks. Near the northern-most exposures at the Inspiration mineral deposit, it has various textures and compositions that have been called Granodiorite, Quartz Monzonite, and Porphyritic Quartz Monzonite (Olmstead and Johnson, 1966). Creasey (1980) refers to this as the porphyry phase of the Schultze Granite. A separate, Granite Porphyry has been mapped at Pinto Valley, Copper Cities, Diamond H, and Miami East, and is seen near the vein-controlled mineralization at Old Dominion. Rocks identical to this Granite Porphyry are seen in the Miami-Inspiration mineral deposit, but they have not been systematically mapped as a separate unit. Tertiary sedimentary and volcanic rocks cover the mineralized units. The Whitetail Conglomerate was formed as a result of regional uplift approximately 32 Ma. Rocks of the Whitetail Conglomerate contain weathered clasts of older rocks in a red iron oxide-rich, very fine-grained CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 7-1

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matrix, and detrital to exotic copper mineralization is not unknown. A Miocene ash-flow tuff, known as the Apache Leap Tuff, covered the area following the Whitetail Conglomerate (21 Ma). Further Basin and Range faulting and subsequent erosion produced the Tertiary to Quaternary Gila Conglomerate from all older rocks. On the west side of the Pinto Valley open pit, the Gila Conglomerate contains a basalt sill.

FIGURE 7-1: GEOLOGICAL MAP OF THE WESTERN HALF OF THE GILA-MIAMI DISTRICT (CREASEY, 1980)

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Note: Abbreviations used for Figure 7-2 are as follows: AG, Apache Group; AL, Apache Leap Tuff; DB, Diabase EL, Escabrosa Limestone; GC, Gila Conglomerate; GM, granite of Manitou Hill; LG, Lost Gulch Monzonite; MD, Madera Diorite; MF, Martin Limestone; NL, Naco Limestone; PS, Pinal Schist; RG, Ruin Granite; SG, Schultze Granite; SOG, Solitude Granite; TQ, Troy Quartzite; WS, Willow Spring Granodiorite; WT, and Whitetail Conglomerate.

FIGURE 7-2: DIAGRAMMATIC SKETCH OF THE GEOLOGIC RELATIONS OF THE ROCK UNITS IN THE GLOBE-MIAMI DISTRICT (CREASEY, 1980)

7.1.1

Mineralization

The hydrothermal ore deposits in the district comprise vein deposits and typical porphyry copper deposits. On the basis of predominant metals, the vein deposits can be further divided into copper veins, zinc-lead veins, zinc-lead-vanadium-molybdenum veins, manganese-zinc-lead-silver veins, gold-silver veins, and molybdenum veins (Peterson, 1962). The primary minerals of the porphyry copper deposits are chiefly pyrite and chalcopyrite with minor amounts of molybdenite; gold and silver are recovered as by-products. Sphalerite and galena occur locally in very small amounts. Silicate alteration associated with the deposits includes potassic, argillic, sericitic, and propylitic alterations.

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The Pinto Valley is a hypogene orebody with chalcopyrite, pyrite, and minor molybdenite as the only significant primary sulphide minerals. It is the underlying protore of the chalcocite-enriched Castle Dome deposit exhausted in 1953 (Peterson et al., 1951). Host rock for the Pinto Valley porphyry copper deposit is the Precambrian age Lost Gulch Quartz Monzonite, which is equivalent to the Oracle or Ruin Granite (Breitrick and Lenzi, 1987). Formation of the deposit was associated with the intrusion of small bodies and dikes of Granite Porphyry and Granodiorite that are of similar composition and age as the Schultze Granite, at about 61.2 Ma. Copper mineralization has been dated at 59.1 Ma (Creasey, 1980). Primary sulphide ore minerals consist of pyrite, chalcopyrite, and minor molybdenite that occur in veins and microfractures, and less abundantly as disseminated grains predominantly in biotite sites. The ore zone grades outward into a pyritic zone with higher total sulphide content and the ore zone grades inward toward the low-grade core which has lower total sulphides. Molybdenum distribution generally reflects copper distribution, with higher molybdenum values usually found in the higher-grade copper zones. Sulphide deposition at Pinto Valley is controlled to some extent by the host rock. For the most part, the host is Lost Gulch Quartz Monzonite and Porphyritic Quartz Monzonite, which are similarly altered and mineralized. The sulphide content decreases in Precambrian Aplite intrusions. Aplite usually contains less than 0.25% copper, whereas adjacent Quartz Monzonite may have as much as 0.6% copper. The deficiency of copper in Aplite is probably due to the absence of biotite, which makes up about 7% of Quartz Monzonite. Disseminated chalcopyrite shows an affinity for biotite, where it is seen to be disseminated through the biotite or partially replacing it. Additional chalcopyrite is also present in veins which cut both rock types. Small intrusions of Granite Porphyry extend beyond the main mapped unit shown in Figure 7-3 as mimicking the pit outline. Where Quartz Monzonite constitutes ore (more than 0.3% copper), and the Granite Porphyry does not usually contain ore grades (about 0.15% to 0.2% copper). Granite Porphyry contains sulphide veins but generally lacks disseminated sulphides in biotite sites. The shell has the appearance of a hook in plan view (Figure 7-3) and mimics the pit outline. Rock located south of the ore has decreasing sulphide content and numerous barren quartz veins. This area has been interpreted as a low-grade core, and this low-grade zone corresponds spatially with the Granite Porphyry, which is seen as a poor lithologic host for ore-grade mineralization elsewhere in the deposit. Rock located north of ore has progressively more abundant, late-stage quartz-pyrite-sericite veins. Cross section 3000 West (Figure 7-4) shows drill holes and sulphide copper block model contours based on BHP’s JORC-compliant 2007 block model. The section is drawn through the "hook" in Quartz Monzonite west of the large granodiorite and Granite Porphyry exposures. It shows a central low-grade zone surrounded by an ore shell. The core of the shell dips steeply to the north. CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 7-4

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The South Hill fault cuts the ore shell and associated alteration to the south. The shallow dipping Flat Fault cuts off the ore beneath the southern limb of the grade shell. The sections suggest that the original configuration of the copper zone was that of a distorted, inverted bowl with its long axis striking approximately N80E. The deposit is bound by post-mineral faults. The South Hill fault is on the south side, the Jewel Hill fault is on the east side, and the Gold Gulch fault is on the west side. Minor post mineral normal displacement has taken place on the Dome fault, a pre-mineral structure that strikes northeasterly across the north limb of the deposit. Diabase forms thin dikes in pit exposures. These dikes commonly contain higher copper content than surrounding Quartz Monzonite. In the eastern part of the deposit, a Diabase sill lies at the top of the ore. Diabase west of the Gold Gulch fault is mineralized by pyrite and chalcopyrite veins with abundant magnetite near mineralized Granite Porphyry. A geological mapping exercise of Pinto Valley was conducted in early 2012 using the Anaconda method producing three, GIS-registered layers showing geology, alteration style and mineralization. A total of 45 rock samples were submitted for analysis using Iogas geostatistics. Both transmitted and reflected-light thin sections were prepared for petrographic analysis of select samples. Spectral analysis of clays and micas from select sites was performed to determine if clay species were of hydrothermal origin. Mapping the regional Pinto Valley tenement has identified a number of new mineral occurrences. Copper mineralization was observed at a number of contacts between two genetically different granitic bodies. Surface exposure of porphyry breccia systems were also found bearing pyrite and chalcopyrite in a jarosite-dominated oxide precipitate. These sites were analyzed with field portable TerraSpec which detected dickite, indicating hydrothermal alteration. A number of massive magnetite/hematite seams bearing manganese, pyrite, and copper were mapped in skarn contacts around the fringe of limestone bodies. A skarn occurrence was found in contact with an intrusive Diabase unit bearing a stockwork of sulphiderich "D" veins. Also a number of old workings were found throughout the area, testing a range of copper-bearing geological settings, such as porphyry stock, pegmatitic intrusive, mineralized skarn, intrusive contact, and oxide occurrence under tertiary cover.

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FIGURE 7-3: SURFACE GEOLOGY M AP OF THE PINTO VALLEY MINE (PETERSON ET AL, 1951)

FIGURE 7-4: OREBODY CROSS SECTION 3000 W LOOKING WEST (BHP, 2007)

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Local Geology and Alteration

The following sections describe the main rock, alteration, and mineralization types on site as shown in Figures 7-5, 7-6, and 7-7.

FIGURE 7-5: PINTO VALLEY GEOLOGY PLAN (BHP 2012)

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FIGURE 7-6: GENERALIZED COLUMNAR SECTIONS OF SEDIMENTARY AND VOLCANIC ROCKS, CASTLE DOME AREA (PETERSON ET AL, 1951)

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FIGURE 7-7: PINTO VALLEY ALTERATION PLAN (BHP 2012)

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Pinal Schist Lower Precambrian Pinal Schist is a fine-grained, well-bedded sediment dominated by biotite lesser muscovite and quartz, and in some areas, such as south of the south hill fault, bears garnet and chlorite. Grain sizes range from coarse quartz sericite schist to fine-grained quartz, sericite, and chlorite schist which at times displays magmatic segregation of biotite and quartz-rich seams up to 15 cm wide. The rock is extensively deformed bearing tight to isoclinal folding and faulted extensively by various intrusive events. Dripping Spring Quartzite Precambrian Dripping Spring Quartzite contains a range of internal variation from upper coarse to medium-grained quartzite with cross bedding to lower thinly laminated finegrained, well-sorted sediments at the base. This unit is typified by variably-coloured beds of fine sediment that display the well sorted nature of the rock which preserves current direction and energy regimes. Beds range from red-brown to red-purple to purple-black alternating with thin beds of arenatious shale. Mescal Limestone Mescal Limestone, a sedimentary unit, was observed mainly in the northwestern part of the study area. It is comprised of limestones, dolomites, and large amounts of chert. This Precambrian unit overlies the Pinal Schist and is overlaid by the Precambrian Basalt. Precambrian Basalt Precambrian Basalt, a basic volcanic unit, was recognized in the northern limit of the Pinto Valley tenements. This rock has a black colour, with vesicles and some calcite-calcedonic amygdales. This unit overlies the Mescal Limestone and is cover by the Troy Quartzite. Troy Quartzite Troy Quartzite, a Cambrian unit, is a distinct marker unit underlying the Martin Limestone, with unconformable boundaries separating upper and lower limestone units. Welded by cherts and siliceous cements, this fine-grained sediment is very resistant to weathering, and, therefore, it forms ridges and escarpments adjacent to limestone units. Where outcropped, the quartzite is a well- bedded, well- sorted unit forming gullies and gorges when exposed, sculptured by surface water ways. A quartzite conglomerate bed exists at the base of this unit comprised of well-rounded quartz pebbles in a sandy silicified matrix; iron oxide staining gives this rock is characteristic red-brown colour. Martin Limestone Martin Limestone is a massive sequence of layered brown to grey-coloured carbonatious rocks with only a minor presence of fossil fragments. It is interbedded with fine red sandstones and shales. This unit overlies the Troy Quartzite and it underlies the Escabrosa Limestone.

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Escabrosa Limestone Escabrosa Limestone is a more massive, poorly-bedded limestone; this unit outcrops as bold cliff faces appearing as a medium to light grey colour underlying the Naco Limestone. Mississippian in age, these lower beds appear oolitic with nodular calcareous formations; some beds contain crionoid fragments. Naco Limestone Naco Limestone is thinly-bedded and has a mid-grey colour with thin laminations of calcareous sediments and marls separating limestone beds displaying crinoids, bivalves, and other marine fossil fragments. Lower horizons and the basal unit are especially comprised of cherts, marls and well-bedded calcareous sediments. Whitetail Conglomerate Tertiary in age, the Whitetail Conglomerate is distinguished from other sedimentary units by the exclusion of dacite and tuff lithologies. Mostly well-bedded, often hematite-rich in both matrix and coating of clasts, this unit only outcrops where it is revealed by the erosion of the dacite cover. The unit is matrix-supported, generally well-bedded displaying gradational fining-up sequences. Clasts are subrounded to angular in a poorly sorted matrix with some quartzite horizons comprised of well-rounded quartz-rich and lithic fragments cemented by coarse quartz sands. This unit overlies and postdates mineralization; therefore, it has little potential for economic value. Gila Conglomerate The Gila Conglomerate unit overlies and is the youngest of all sedimentary units of tertiary and quaternary age. The unit is distinguished by the inclusion of all local lithologies: the Apache Group, Paelozoic Limestones, Diabase, and dacite tuff with some Pinal Schist fragments. Poorly sorted but in parts moderately well-stratified, it is compositionally matrixsupported. The unit is comprised of dominantly cobble to pebble-sized subrounded clasts. The composition of the rock is highly variable, often representing the dominant local lithology. Clast sizes decrease to the east of the project area where the unit becomes more of a distal fan conglomerate with bedding stratification. This unit overlies and postdates mineralization; therefore, it has little potential for economic value. Tertiary Alluvium Tertiary Alluvium is a poly-lithologic detritus of some boulder-sized, but mostly cobble and more finely-sized, poorly sorted and poorly cemented sediments. Detritus lines low lying areas, commonly occurring at the base of steep slopes undergoing active erosion. Components often show evidence of reworking, resedimentation, and welding by modern calcrete and silcrete cements.

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7.2 INTRUSIVE PHASES In the Pinto Valley project area, a series of intrusive bodies have been mapped with lithochemistries ranging from intermediate to acid digenetic composition. Units have been classified using mineralogy, crosscutting, and inclusion relationships into an order of emplacement. The intrusive history of Porphyry Copper (Molybdenum) emplacement in the Pinto Valley district is classified into pre, intra and post-mineralization stages. Descriptions of copper-bearing intrusive events are detailed below. 7.2.1

Pre-Mineralization Intrusives

Manitou Granite Manitou Granite is prevalent in the southeast portion of the study area, approximately 700 m from the Pinto Valley pit. Occupying an area of approximately 0.2 km 2 and outcropping as elongate bodies trending in a northeasterly direction, this unit intrudes the Precambrian Pinal Schist basement. The Manitou Granite itself has been intruded by Precambrian Ruin Granite and a series of fine and course-grained aplitic intrusive phases related to this magmatic event. The Schultze Granite was the last unit to intrude the Manitou Granite in a much later tertiary period. Macroscopically this rock is dark brown with a phaneritic texture; it is equigranular, mediumgrained, with anhedral crystals of quartz (20%), subhedral undifferentiated mafics (7%), anhedral muscovite (5%), orthoclase (25%), and subhedral-euhedral plagioclase (38%). This unit has a prevalent slight to moderate foliation which has deformed the original equigranular texture. Minerals are generally elongate with the long axis of grains ordered in a preferred orientation or, in some cases, partially destroyed: this has been observed in some locations with respect to mafic minerals. Manitou Granite is the youngest Precambrian Intrusive. Willow Spring Granodiorite Willow Spring Granodiorite is an intrusive unit that outcrops in the southeastern sector of the study area, occupying approximately 0.4 km 2 . This unit outcrops as elongate bodies trending north-northeast, intruded by Precambrian Ruin Granite and also by the Tertiary Schultze Granite. It is also in fault contact with the Gila Conglomerate unit. Macroscopically this granite is mottled by dark brown minerals, has a slightly porphyritic, phaneritic and inequigranular texture with medium-sized grains. The rock is comprised of quartz anhedral-subhedral (15%), biotite-amphibole (12%) which is partially replaced by chlorite, orthoclase (15%) subhedral-euhedral of sizes ranging from 4-10 mm, and subhedral-euhedral plagioclase (38%). This intrusive unit is Precambrian age; this has been determined by crosscutting relationships, and has also been dated by Creasey (1980).

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Ruin Granite Ruin Granite is an intrusive unit that outcrops over an area of approximately 2.1 km2, which has been exposed primarily by the excavation of the Pinto Valley pit. This rock is the primary host rock of copper mineralization in economic concentrations and has been dated at Precambrian age (Creasey, 1980). The granite has also experienced a series of magmatichydrothermal events resulting in the emplacement of porphyry copper systems. The Ruin Granite is in fault contact with the Pinal Schist unit to the south and a stacked series of faults to the west, with repetitious sedimentary units. Granites of the southeastern sector of the study area have been intruded by the Willow Spring Granodiorite and Tertiary Schultze Granite, and in one area it is in fault contact with the Gila Conglomerate. A zone to the north of the Pinto Valley pit puts the Ruin Granite in contact with Precambrian Dripping Spring Quartzite sediments and Diabase dike intrusions. Macroscopically, this rock has pinkish-brown colour, with phaneritic, inequigranular coarse texture with anhedral quartz crystals (25%), anhedral-subhedral biotite (7%), anhedral muscovite (3%), subhedral-euhedral orthoclase (35%) with some phenocrysts up to 60 mm, and subhedral-euhedral plagioclase (38%). There have been a series of aplitic phases related to Ruin Granite emplacement, the highest concentration of these is in the southeastern sector of outcrop. Numerous small dykes also occur within the Pinto Valley pit. The aplitic intrusives are a pinkish-brown colour, dominated by equigranular quartz; they have a fine-grained sugary texture, and are dominated by potassic feldspar. The intrusive complex related to the Ruin Granite has Precambrian age (Creasey, 1980). Diabase Diabase is a sub-volcanic Cretaceous or later unit that is most prevalent in the northern area of the project, but it also occurs as sills and minor dykes throughout most of the project area. This unit occupies approximately 1.5 km2 of the project area. The Diabase most commonly intrudes Precambrian units, such as the Apache Group sediments and Ruin Granite. The unit is generally covered by post-sedimentary units, including the Martin, Escabrosa, and Naco Limestones, and is partially covered by Gila Conglomerate and the Apache Leap Tuff. This unit is of fine to medium-grained mafic composition, bearing pyroxene and hornblende mafics minerals, and lesser plagioclase. This unit has different phases, with early medium to coarse textures that range to later, fine-grained, textured intrusions. This unit commonly contains 1% to 2% disseminated pyrite and trace chalcopyrite, but it will bear stronger sulphide content, especially chalcopyrite when proximal to a porphyritic source.

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Schultze Granite Schultze Granit is Tertiary in age; this plutonic body has been dated at 61 Ma from similar outcrops sampled in the Miami-Inspiration area (Creasey, 1980). This unit represents the main pre-mineral stage of the Laramide intrusions and the magmatic source of the metal-bearing porphyritic intrusions in the district. This unit outcrops generally in the southern part of the project area with batholitic dimensions of 1.5 km2 outcrops. This unit has also been observed intruding the Ruin Granite and Pinal Schist. In some places, the unit is covered by the Quaternary basalt and is in fault contact with the Gila Conglomerate. Macroscopically, this rock has phaneritic texture and inequigranular texture of medium to coarsesized grains, with books of biotite (8%), subhedral 1-3 mm sizes, quartz (20%), subhedral 2-8 mm sizes, K-Feldspar of orthoclase variety (25%), subhedral-euhedral 3-15 mm sizes, and plagioclase (47%) with 2-4 mm sizes. 7.2.2

Intra-Mineralization Intrusive Phases

In the Pinto Valley district a suite of porphyritic intrusive units have been identified that have age and genetic relationships with a number of igneous events. Intrusives were found to have a composition varying from Quartz Monzonite to Granite. The following sections describe these units. Early Granite Porphyry A family of porphyritic intrusives appear in the form of dykes and stocks in the central sector of the Pinto Valley pit. A number of small finger-like projections stemming from granitic porphyry stocks and dykes also exist in the western section of the pit, with a predominant northeast trend. This Early Granite Porphyry unit has been observed intruding the country rock Ruin Granite, and has been observed to have been crosscut by the Intramineral-late granodiorite phases. Macroscopically, the rock is pinky-brown to grey in color, phaneritic, of porphyritic texture with an inequigranular grain shapes. Mineral composition comprises 40% phenocrysts with approximately 60% groundmass characterized by aggregates of quartz and feldspar: quartz eye phenocrysts (3% to 7%) are euhedral-subhedral that range between 2-4 mm in size; books of biotite (5% to 8%) are subhedral that range between 1-3 mm in size; orthoclase feldspar occupies (20% to 25%) are euhedral-subhedral that range between 3-5 mm in size; and, plagioclase (60% to 65%) are subhedral-euhedral that range between 2-5 mm in size. There are a number of additional observations for this unit that are associated with magmatichydrothermal activity and suggest this intrusive phase is responsible for introducing mineralization into the Pinto Valley system. It has been recognized that a clear relationship exists between the development of strong late-magmatic and early hydrothermal potassic alteration (KFeld, biotite, and silica). Early hydrothermal activity has also produced extensive quartz “A” vein development, along with sulphide mineralization where chalcopyrite content is greater than pyrite. The presence of quartz "B" veinlets with minor molybdenite content also occurs in close proximity to the "A" vein sets. CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 7-14

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Intramineral Granite Porphyry An intramineral phase of phorphyry has been identified in the northeastern sector of the Pinto Valley pit. Intramineral Granite Porphyry outcrops as a stock elongate in an east-west direction hosted in Ruin Granite, though crosscutting relationships were not observed between this and the Earlier Granite Porphyry. This intrusive unit mainly crosscuts the Ruin Granite country rock, Pinal Schist, and Diabase lithologies. In a hand specimen this rock is brown-grey in colour, with a phaneritic texture, inequigranular with a strong porphyritic texture with 40% to 45% phenocrysts and remaining 55% to 60% as groundmass with aggregates of quartz and feldspar. Mineralogically, eye quartz comprises 10% to 15% of the rock; grains are euhedral-subhedral and range between 2-4 mm in size. Books of biotite comprise 3% to 5% and grains are subhedral and range between 1-3 mm in size. Orthoclase feldspar comprise 30% to 35% and grains are euhedral-subhedral and range between of 4-10 mm in size, and plagioclase comprise 50% to 55% and grains are subhedral-euhedral and range between 2-5 mm in size. This porphyritic unit exhibits minor hydrothermal alteration and only displays minor potassic alteration and “A” quartz vein sets. Minor disseminated mineralization has been observed; the unit was found with a zone of strong phyllic alteration in the Pinto Valley deposit associated with extensive “D” veining. The observed mineralogy and alteration styles suggest that this intrusive was emplaced later in the magmatic-hydrothermal history of Pinto Valley porphyry copper deposit. Intramineral-Late Granodiorite The Intramineral-Late Granodiorite unit outcrops as a large body in the southeastern area of the Pinto Valley project with a second zone in the west mapped as northeast-trending minor bodies. Crosscutting relationships suggest that this unit intruded both porphyritic units in the mine. In a hand specimen this rock is grey-brown in colour with a phaneritic texture; it is equigranular, fine to medium-sized grain with the following mineral composition: hornblende (5%), subhedraleuhedral 1-2 mm size; books of biotite (5%), subhedral 1-2 mm size; K-feldspar (10%) subhedral 2-3 mm; quartz (12%), and crystals of plagioclase (68%) subhedral to euhedral with 2-3 mm in size. This unit exhibits only minor mineralization as 1% to 2% disseminated pyrite-chalcopyrite; quartz veins exist but are generally unmineralized. Only weak hydrothermal alteration observed and described as a weak potassic alteration; this suggests that this intrusive unit injected late in the Laramide intrusive history. Crosscutting relationships indicate that this truncates the late-magmatic potassic event.

thin was was unit

Porphyritic Granodiorite The Porphyritic Granodiorite intrusive unit was observed in the southwestern boundary of the Pinto Valley area as a small body intruding into the Pinal Schist and the Schultze Granite (Figure 7-4). CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 7-15

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In a hand specimen, this unit has medium-sized grains, inequigranular with some porphyritic textures. Mineral composition is: quartz (10%) anhedral 1-3 mm in size; books of biotite (8%) subhedral-euhedral size of 1-3 mm diameter; hornblende (2%) subhedral averaging 1-2 mm; KFeldspar (15%) subhedral 2-4 mm diameter; and, plagioclase (65%) subhedral-euhedral that range between 2-6 mm. This intrusive was found at a site which had been disturbed by a small shaft and old workings. Copper oxide was evident coating rocks close to the mouth of the small mine opening. Minor hydrothermal alteration was observed as chlorite replacing mafic minerals. This intrusive is most probably related to the granodioritic intrusive event in the Pinto Valley area. Breccia Porphyry Near the southeastern boundary of the Pinto Valley Mine area, two sub-outcrops of a unit with intrusive brecciaed features were found. This unit is called Breccia Porphyry and intrudes the Ruin Granite as a small dike swarm (Figure 7-5). In a hand specimen this unit displays a brecciated texture, comprised predominantly of a groundmass material (approximately 70%), with surrounding fragments of rock and broken eye quartz (10-15%) that range in size between 2-4 mm. This unit was tested using a PIMA spectrometer for hydrothermal alteration minerals revealing an upper crustal association of dickite-kaolinite-pyrite. Some leaching of minerals, mainly jarosite and minor goethite, were also confirmed by TerraSpec analysis. This is an extremely important finding because the mineral is associated with the advanced argillic alteration zone in the upper crust. Microscopic study of thin sections revealed the presence of a brecciated texture. Intrusive fragments of granite monzogranite were observed with clearly defined borders, only some had moderately rounded margins indicating a lack of any reaction with the matrix. The matrix is composed of rock flour, various clay species, disseminated dickite, and traces of muscovite and brown biotite. Features described in this rock suggest a stage of phreatic brecciation, possibly related to the activity of a nearby hydrothermal system.

7.3 REGIONAL STRUCTURAL FRAMEWORK A number of structural events were identified during the mapping exercise showing a high level of complexity in both the extent of deformation and the timing of the various events. Considerable deformation of the units has persisted from the Precambrian era to Tertiary Basin and Range events involving reactivation of many earlier structures.

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The main structures identified in the project are related directly to a set of lineaments, faults, and fractures with north-south orientation (Figure 7-8). The oldest fault observed is the South Hill Fault. Field observations suggest that this fault controlled the emplacement of all the Precambrian intrusive phases along a northeast trend. The last reactivation along this fault has reverse movement, with a southeastern dip which has truncated mineralization of the Pinto Valley deposit; this fault has placed the Pinal Schist over the Ruin Granite. Most north-south structures are a product of extensional deformation from the Basin and Range event; the best example is the Gold-Gulch Fault that separates, via horst and graben blocks, the Apache Group sediments and the Ruin Granite, respectively. Other big faults are the Dome Fault and the Jewel Hill Fault with normal movement, displaying more restricted deformational features. Locally, the fault systems at surface present a north-northwest pattern with normal movements. Some minor reverse and transcurrent faults were observed and are closely related to the huge structures like Riedel-type faults, which all show subvertical dips.

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Note: South Hill Fault, Gold-Gulch Fault; Dome Fault; Jewel Hill Fault and the blue colour represent the secondary structures.

FIGURE 7-8 LOCATION AND DISTRIBUTION OF THE MAIN STRUCTURES OF THE PINTO VALLEY DISTRICT

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8 DEPOSIT TYPES Pinto Valley is classified as a copper-molybdenum porphyry system. A large volume of literature exists on porphyry deposits because of their large size and economic importance. The following description of a porphyry deposit is from a summary by Sillitoe (2010): “Porphyry deposits are typically centred on polyphase stocks and porphyry dyke swarms, with skarn deposits formed adjacent to and epithermal deposits above the porphyry mineralization (see Figure

8-1). The metal endowment of a porphyry system is related to the geochemistry of the oxidized magmas that contribute to the formation of the stocks and dykes, with gold and/or molybdenum commonly found in association with copper. Porphyry deposits typically occur in association with Mesozoic and Tertiary intrusions, probably as a result of poor preservation of older rocks.”

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FIGURE 8-1: ANATOMY OF A TELESCOPED PORPHYRY SYSTEM (SILLITOE, 2010)

Porphyry systems are typically zoned from a potassic-altered (biotite-potassium feldspar) core overlying barren, calcic-sodic altered rock, upward through phyllic-altered (sericite or chloritesericite) margins to propylitic-altered (chlorite-epidote) rocks (Figure 8-2). Porphyry systems also grade upward into advanced argillic and silicic alteration related to epithermal mineralization. Alteration zoning may be complex and overlapping due to successive injections of magma into

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country rocks. The vertical distance between porphyry mineralization and overlying epithermal mineralization may range from one telescoped kilometre to several un-telescoped kilometres.

FIGURE 8-2: GENERALIZED ALTERATION-MINERALIZATION ZONING PATTERN FOR TELESCOPED PORPHYRY COPPER DEPOSITS (SILLITOE, 2010)

Hypogene copper mineralization is disseminated and veinlet-hosted, and zoned from bornite-rich in the core through chalcopyrite to pyrite in distal areas. Magnetite (in copper-gold porphyries) and molybdenite (in copper-molybdenum porphyries) are common accessory minerals. Quartz veins and veinlets as stockworks and sheeted arrays are ubiquitous in these systems, and typically occur in a sequence from early quartz-feldspar "A" veins, through quartz-sulphide (mainly chalcopyrite-molybdenite) "B" veins with potassic-altered margins to late, sulphide-dominant (primarily pyrite) "D" veins with phyllic-altered margins (Gustafson and Hunt, 1975), as shown in Figure 8-3. Veining in copper-gold deposits may differ slightly, with quartz-magnetite-chalcopyrite and magnetite-dominant "M" veins present or dominant (Arancibia and Clark, 1996).

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FIGURE 8-3: PINTO VALLEY ALTERATION AND MINERALIZATION PLAN M AP (BHP, 2012)

Due to the large amount of disseminated pyrite in most porphyry systems, these systems are susceptible to supergene weathering and leaching. Copper is oxidized and leached from areas above the water table and deposited as chalcocite and other supergene copper minerals at or near the water table, leading to enrichment in copper grades. Supergene chalcocite enrichment can increase grades locally by 200% to 300% or more, with a significant impact on the overall economics of these deposits. CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 8-4

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Alteration and mineralization associated with high sulphidation epithermal deposits in the upper portions of porphyry systems consist of pyrite, enargite, and covellite hosted in silicified and often brecciated silicified volcanic rocks, accompanied by advanced argillic alteration minerals, including pyrophyllite, alunite, dickite, and kaolinite (Hedenquist et al, 2000). Alteration and mineralization at this elevation in the system comprise a lithocap and may be far more laterally extensive than the porphyry deposit itself. Proximal skarn deposits are typically located laterally from porphyry deposits (Meinert, 2000). They consist of replacement bodies within (endoskarn) or marginal to (exoskarn) the causative intrusion. Skarn may be particularly well-developed in limestones and other calcium or carbonate-rich rocks. Skarn alteration assemblages include garnet, pyroxene, wollastonite, magnetite, actinolite, pyrite, magnetite, and chalcopyrite. Copper-molybdenum porphyry and skarn mineralization are all found in close proximity in the Pinto Valley area. Mineralization is associated with an overlap of phyllic and potassic alteration, a supergene chalcocite blanket, and adjacent areas of hornfelsing and skarn alteration.

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9 EXPLORATION Surface mapping has been the main source of additional data throughout the identification phase for Pinto Valley 2 (PV2). Two campaigns were conducted on separate occasions to improve both the geotechnical and geometallurgical knowledge of the deposit. All work stated in this section was performed by or on behalf of BHP Copper. The surface mapping for geotechnical information focused primarily on the bedding planes, major structures, and overall geological strength index. As a result, a more targeted geotechnical testing program has been developed for the selection phase. Various ore-types were confirmed using surface mapping and by reviewing core logs. Alteration zones and ore-types were identified in the pit wall and correlated against core samples taken in previous drill campaigns. The visual ore classification will be confirmed (and refined if necessary) using the laboratory petrographic facilities, labspec, and whole rock chemical analysis. Descriptions from the core logs were used to plot the correlation between rock type and alteration zone (Figure 9-1) using ioGlobal software. On completion of this analysis, the primary ore-types were classified to determine the necessary sampling program for the selection phase. Table 9.1 shows the proportion of ore-types in the overall deposit for PV2. The most important ore-types were narrowed down to Ruin Granite, Quartz Monzonite, and Diabase (ore types 1, 2, and 4, respectively, are shown in Table 9.1). These ore-types are based on relative abundance, gangue mineralogy, copper grade, alteration, and the potential impact on overall production (recovery, throughput, and consumption of reagents/energy). Ruin Granite/Biotite Quartz MonzonitePorphyry/Chloride/Clay

Quartz MonzoniteRuin granite/No Alteration/Sericite

Granodiorite/

Diabase//CalciteBiotite-No alteration

Aplite/No alterationSericite

FIGURE 9-1: INTENSITY M APPING OF MINERALIZATION TO DEFINE DOMINANT ORE-TYPES.

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TABLE 9.1: ORE TYPE SUMMARY FOR PINTO VALLEY DEPOSIT

Ore ID

Ore-Type

TCu% Range

Averg e TCu%

1

Ruin Granite/Quartz Monzonite

0.2 – 0.40%

0.37%

80-85%

Potassic

2

Quartz Monzonite (with quartz veins)

0.2 – 0.40%

0.36%

6-10%

Potassic

3

Granite Porphyry

0.2 – 0.25%

0.22%

5-8%

Quartz Sericite

4

Diabase

0.2 – 1.0%

0.45%

2-3%

Potassic

5

Aplite

0.2 – 0.25%

0.20%

1-2%

Potassic

6

Quartzite/Granodiorite

0.2 – 0.25%

0.22%

0-1%

No alteration

Observed Proportion

Alteration

During the brownfield surface mapping campaign in the Pinto Valley district a number of new copper mineralization occurrences were identified. Three principal targets zones are presented below.

9.1 KOZI PROSPECT Mapping over the Ruin Granite, southeast of the Pinto Valley pit, a zone of small bodies with a brecciated texture (Breccia Porphyry) was found bearing some evidence of hydrothermal alteration, relict sulphide boxwork, and some pyrite grains. Outcrop is generally poor due to the steep angle of hill sides and narrow but rounded ridge tops. It is difficult to find moderately fresh rock in this area; most surface material is extensively weathered and or loose surface rubble. Particular attention was paid to the bleached-looking alteration of feldspars; spectral analysis suggests the presence of Dickite-Kaolinite. Small 1 mm diameter muscovite flakes appear to be a later generation of alteration; biotites are also altered and act as a nucleus around which sulphides have precipitated. Sulphide boxwork and primary pyrite grains were recognized. This zone of clay alteration appears to cover an area of approximately 20 m 2 , and is strictly related to the Breccia Porphyry. Further evidence of alteration and porphyry emplacement was observed and this was confirmed to be a thin section of breccia with a rock-flour matrix, broken quartz fragments, and the lithics of granitic compositions along with the presence of kaolinitic clays and dickite in the matrix . The reflected-light thin section of this rock shows the presence of sulphides, mainly pyrite and minor chalcopyrite in the matrix of breccia, which has been partially replaced by goethite. Note: These rocks are partially leached.

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This reflected-light thin section clearly indicates that this rock is a breccia, suggesting a hydrothermal origin related with phreatic stages. This is because it has a majority of subrounded fragments and lower metal content along with the presence of rock-flour matrix and development of advanced argillic clays. Mapping the boundary of Ruin Granite 120 m to the southeast of the Breccia Porphyry, a zone bearing copper oxides along the Schultze Granite contact was evident. Oxides coat Shultz Granite outcrop and subcrop, especially in an area surrounding a milky quartz vein. The vein is generally very vuggy and bears boxwork after sulphide dissolution. At Site 361, copper oxides are dominantly comprised of malachite and azurite precipitating with siliceous cement over an area of approximately 25 m2 of subcrop. Chemical assay reports for samples taken from this area indicate > 1% Cu (Table 9.2). The copper oxide species indicate that it originates within the quartz veins. Veins contain abundant (up to 4%) course-grained chalcopyrite with some grains up to 5 mm; some are moderately fresh, and goethite boxwork runs extensively through the centre of the vuggy coarse vein. Note: The Ruin Granite-bearing disseminated chalcopyrite also contains coarse muscovite, calcite, and quartz. The rock displays some in situ oxidation of chalcopyrite, with copper oxide precipitation on the muscovites and micas. Contact-style mineralization between the two genetically different granites is most prevalent in the Ruin Granite, which occupies the northern flank of this feature. Microscopic description indicates coarse-grained texture granite, with minor deformation of quartz, some subhedral orthoclase, and replacement of a later phase of coarse muscovite and calcite. TABLE 9.2: CHEMICAL ASSAYS RESULTS FOR RUIN AND SCHULTZE GRANITE Sample

Cu ppm

Mo ppm

Ag ppm

Zn ppm

75163 Ruin Granite

128

34.8

< 0.1

177

75164 Ruin Granite

3780

37.2

0.9

204

75165 Schultze Granite

> 10000

21.8

< 0.1

978

75181 Ruin Granite

7930

286

3

578

The chemical assay report for samples with chalcopyrite in the Ruin Granite show important anomalous content of copper, molybdenum, silver, and zinc (Cu-Mo-Ag-Zn) (Table 9.2). One hundred and fifty metres to the northeast of Site 361 in a creek line to the south, at the base of the above feature, float-bearing magnetite was encountered at Site 363. The source was not found; however, the float displayed a vuggy rock re-welded with hematite (martite).

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Appearing as an extensively altered Ruin Granite with coarse muscovite, no outcrop exists at this site; however, there were a number of float rocks in random locations in this vicinity. Rock chip samples bearing magnetite returned encouraging results from multi-element assay reports displaying anomalous copper; it is expected that this rock is also anomalous in gold, although assays are still pending. Surrounding this location, goethite and chalcopyrite grains up to 3 mm in diameter in Ruin Granite were observed in a rock with moderate to strong coarse muscovite. This altered zone appears to be locally related to the intrusion of Schultze Granite, but the anomalous mineralization of Cu-Mo-Ag-Zn suggests that this system must be surrounding a hydrothermal system. Evidence of hydrothermal alteration was not observed in relation to the porphyritic system, but an intense hydrolytic event is related to the coarse muscovite in Ruin Granite. This prospect has two types of geological indicators of hydrothermal activity. The first indicator is the phreatic breccia, with occurrences of dickite-kaolinite and pyrite; this suggests that this zone has been exposed to advanced argillic alteration. This is because dickite-kaolinite exists in the upper crustal conditions following hydrothermal alteration associated with porphyry copper emplacement. The specimens tested may belong to the roots of an advanced argillic-altered zone, as evidenced by the presence of remnants that usually follow extensive weathering and erosion. The second indicator is related to the Cu-Mo anomalies in the Ruin Granite: all the features suggest a possible connection to the pegmatite zones related to the intrusion of granitic magma-in this case, the Schultze Granite.

9.2

BONDI PROSPECT The Bondi Prospect is related to the Dripping Spring Quartzite, and some zones with hornfels of biotite-magnetite outcrop as a 90-metre high cliff face and narrow gully incised by active creek systems, near the tails facility. The quartzite is very fine to fine-grained, well bedded, well sorted quartz dominated sediment with minor pebble conglomerate beds. On a number of cliff faces in this gully, copper oxides line exposed surfaces and natural cave formations. The oxides, including malachite and azurite, appear to have been introduced via seep of underground aquifer movement. Sediments in some bands near the occurrence of copper oxides are studded with up to 4% finegrained disseminated mineralization and little veins of pyrite grains, and possible chalcopyrite. These beds are discrete, greater than 10 m from oxide occurrences; sediments exhibit a much lower 1-2% disseminated mineralization. The area warrants further review to identify the source of copper oxide precipitate. A unit contact between the Mescal Limestone and the Dripping Spring Quartzite exhibited hematite and iron oxide seams in replacement silica rich beds. Narrow seams of limestone have been replaced by a calc silicate event forming wollastonite crystals up to 3 mm in diameter, diopside, and disseminated pyrite and minor chalcopyrite.

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Some bands have been metamorphosed and marbleized into light green, very hard chert-rich beds which are strongly outcropped and more resistant to weathering. In this area, limestone beds predominantly displayed disseminated magnetite over an area of 150 – 200 m. Near the tailings dam, at Site 1118, a series of massive magnetite veins outcrop at up to 40 m long and 3 m wide. As massive magnetite veins, these replacement beds are very hard and resistant to weathering, contain abundant hematite oxide and some disseminated pyrite and possible traces of chalcopyrite and bornite. These wide veins and narrower outlying magnetite veins are parallel-bedded, produced by dissolution and replacement of calcareous horizons. This site displays a high development of prograde skarn alteration indicated by the development of brown garnet, pyroxene, diopside, and wollastonite. Wollastonite grains are particularly well developed, up to 4 mm in diameter with well formed crystal habits. Diopside and garnets are fewer and rarely occur in close proximity to massive metalliferous veins. A retrograde mineral assemblage has also been observed comprised of chlorite, magnetite, hematite, pyrolusite, and silica. Sulphide assemblage includes pyrite and traces of chalcopyrite and bornite in limestone beds. A Diabase sill injected into the Mescal Limestone has explored a bedding parallel zone, mapped in road cutting outcrops within the Mescal unit. The Diabase unit has numerous iron oxide veins as a stockwork of near vertical vein sets at approximately 30 cm intervals, regularly between 0.5-1.5 cm in diameter. The vein wall rock interface alteration is also strongly iron-stained; very little quartz was observed in the iron oxide vein sets. The vein set post dates the Diabase emplacement as veins cross cut the body and penetrate a short distance into the surrounding limestone beds. It is difficult to state the copper source at this prospect due to the oxidation observed in the quartzites, and it is important to note that this state is structurally complex and partially covered by post-mineral cover (Whitetail Conglomerate). The skarn evidence may be related to the Diabase intrusions, but the presence of strongly altered rock and a source of sulphur and metal can precede a close granitic source. It is important to note a stockwork of leached veins was found in the Diabase, which is possibly related to another fluid source.

9.3 MATI PROSPECT Mapping in the limestones sequences 250 m to the northeast of the pit revealed a skarnification zone, identified by prograde stage development of pyroxene and wollastonite and retrograde stage of epidote. Both are associated with iron replacement stages in the limestones with injection of sulphide to the system, represented by pyrite-chalcopyrite and bornite. The supergene process was observed with the presence of copper oxide mineralization, mainly malachite and azurite. This zone is related to old mine workings. The magnetite, sulphide bed had a 50 x 50 m zone that varied from 4 to 12- metre orientated bedding parallel to the limestones.

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This prospect is particularly interesting because the presence of copper sulphides related to the magnetite replacement suggests an origin associated with a tertiary intrusion. This is because the host rocks are Paleozoic limestones that formed post-Diabase intrusion; in this case, the only probable source must be related to a later intrusive.

9.4

OTHER COPPER OXIDE EXPLORATION Two small zones with copper oxide mineralization were identified. The first one was in the southwest boundary of Pinto Valley, near the Carlotta mine cross road. An old mine of copper oxides was discovered: the mineralization is primarily comprised of malachite and is related to a dyke of Porphyritic Granodiorite. This rock intrudes the Schultze Granite and is a restricted body with anomalous concentrations of greisens veins bearing copper sulphides. No disseminated mineralization was observed. Another occurrence of copper oxides was found in an outcrop of Apache Leap Tuff related to a small paleochannel in an active creek. The mineralization observed consists mainly of chrysocolla, black copper oxides, and minor malachite. This zone extends for only 5-6 m and no primary source was detected.

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10 DRILLING A data room was setup by BHP to disclose information and reports, including the drill hole data, required during the due diligence process; these data continues to be available until the purchase date of the property. Drilling documentation was limited to internal reports, and there were no listings for vintage data, methods used, or pre-2010 drilling procedures, other than those found in the internal reports. A complete list of the drill hole collars included in the BHP Pinto Valley database can be found in Appendix C. The pre-2006 Pinto Valley drilling programs were comprised of a combination of core, rotary, and churn drill holes. Churn holes defined much of the early Castle Dome reserve, which has been mined out. Post-Castle Dome holes were drilled on an original spacing of 400 ft east-west and 200 ft north-south. Later, drilling was done to infill the original grid to 200 ft spacing in some areas. Drilling that has occurred since the 1986 block model was constructed includes 10 core holes (E 52 through E 61) and 3 reverse circulation rotary holes (RC62 through RC64) drilled in 1992. From the beginning of 1996 to April 1997, 67 reverse circulation exploration and infill holes were drilled: 48 RC holes (AD and NR-Series totalling 29,665 ft) drilled in 1996, and 19 RC holes (WW and 97Series totalling 8,520 ft) drilled during 1997. The WW and 97-Series were drilled in the interior pit and through the Gold Gulch and Continental faults. Seven of the exploration holes were drilled east of the existing pit and laid the ground work for future plans of an east pit expansion, known as the Satellite Pit. The current Pinto Valley drill hole database contains a significant amount of drilling that defined the grades in the block model that have been mined out, especially as they relate to the Castle Dome mining activity shown in Figure 10-1.

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FIGURE 10-1: DRILL HOLE SECTION SHOWING CURRENT TOPOGRAPHY AND PRELIMINARY OPTIMIZED PIT

All drill hole collar locations were surveyed. The majority of the drill holes are vertical and, therefore, do not have downhole surveys. However, a majority of the inclined holes do have downhole surveys. From 2006 through 2008, there have been various drilling campaigns with mixed purpose: delineation, exploration, geotechnical, and resource classification upgrade drilling. These include 18 G-Series geotechnical holes, 11 HW-Series holes in 2007, 17 PZ-Series holes drilled in 2008, 17 SSeries holes drilled in 2008, 24 B-Series holes drilled in 2008, and 4 DH-Series holes drilled in 2008. The most current drilling occurred in 2010 which focused on exploration, and in 2011 and 2012 which focused on infill drilling for resource classification upgrade in support of restarting operations. Ten holes were drilled in 2010, 40 holes were drilled in 2011, and 64 holes were drilled in 2012. Figure 10-2 shows a plan view with topography and the 2010, 2011, and 2012 drilling campaigns.

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Note: 2010, 2011, and 2012 drilling shown in red, green, and blue, respectively.

FIGURE 10-2: DRILL HOLE PLAN

FIGURE 10-3: ALL DRILL HOLE COLLARS

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The combined database (Appendix C) comprises 1,031 drill holes, as shown in Figure 10-3. Note: Assay results were pending for seven 2011 holes and thirty-four 2012 holes at the effective date of this report.

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11 SAMPLE PREPARATION, ANALYSES AND SECURITY Once drilling is completed, the core is transported to the core handling facility. Here it is placed in wax-covered core boxes with depth markers for every drill run of up to 10 ft. QuickLogs are done at core reception which includes initial lithology and a visual estimation of mineralization and alteration, particularly biotite content. The mine is set up on a bar code system for ease of handling and to track the core and samples. There is a triple bar code tag: the first tag is for the half core that remains in the box, the second tag is for the split that is sent to the lab for analysis, and the third tag is for the coarse duplicate and is used to tag the pulps and rejects. The core is logged for geology and split by saw at one of two stations. The QuickLog data and the detailed logs are entered into an acQuire® relational database system which also records the collar, survey, assay, lithology, alteration, mineralization, and geotechnical (RQD) data. This data is tagged and tracked using the bar codes, and all subsequent assay information provided by the laboratory, including the QA/QC data, is linked to the database. The system is secured by BHP using protocols and procedures which appear to be extremely stringent. A dispatch report is created which is then sent to the laboratory and subsequently matched against the shipments. Deviations and discrepancies are reported and investigated. Any updated assay data from the laboratory is linked to the bar code system and relayed to the company electronically via Excel® CSV files and imported into acQuire® automatically. The data is imported into MineSight for the purpose of resource estimation. A number of different companies and laboratories have provided assay services to Pinto Valley over the years. Details of sampling and assaying procedures used during the earlier stages of operation are not readily available. Procedures used by outside labs that ran assays for some of the later drilling campaigns, such as those performed by Mountain States for the RC holes and Chemex for the AD holes, are also not readily available. The analytical procedures currently in place at Pinto Valley are in line with industry standards for total copper, but procedures are BHP-specific with respect to acid soluble copper (i.e., digestion with 10% sulphuric acid, placed in a hot bath at 40C, and read after 40 minutes). Samples were assayed for total copper and acid soluble copper. Composites representing 30-50 ft of the sample rejects were made and these composites were assayed for total copper, oxide copper, molybdenum, sulphur, and trace metals of gold and silver. Comparisons were made between the total copper and acid soluble copper assays from the original assay intervals and the composite intervals.

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Independent audits of the Pinto Valley assays were conducted in 1992 and 2000. Results were as follows:   

 

assay values in the Pinto Valley database have been reliably entered; total copper assays in the Pinto Valley database are reproducible and can be considered representative within normally-accepted limits of error; total copper assays in holes below the current pit base can also be considered representative within normally-accepted limits of error, except in the deeper parts of some RC holes where they may be low-biased. However, using these assays to estimate grades in the model is acceptable because they will tend to provide a conservative rather than an overly optimistic estimation of grades; acid soluble assays in the Pinto Valley database vary considerably depending on the drilling campaign and; reserves, resources, and production at Pinto Valley are reported as sulphide copper, which is calculated by subtracting acid soluble copper from total copper. Because biases exist in the acid soluble copper assays, this procedure generates sulphide copper values that are biased relative to each other as a function of the drilling campaign. However, sulphide copper values are only slightly lower than overall total copper values, so it can be reasonably assumed that the sulphide copper values are also globally correct within normally-accepted limits of error.

As part of the start-up Feasibility Study done in 2006, a QA/QC program was conducted on 101 randomly selected drill hole assay interval pulp samples and 15 randomly selected core assay intervals. Samples were sent to Skyline Assayers and Laboratories (Skyline Labs) in Tucson, Arizona to be analysed for total copper and acid soluble copper. Skyline Labs was instructed to analyse the samples for acid soluble copper using BHP lab procedures. Before the lab processed these samples, BHP provided instructions for the pulp sample analytical procedures and also provided a sequential pulp sample list. Included in this QA/QC program for the Feasibility Study were seven sets of a known National Institute of Standards and Technology (NIST) standard pulps: Copper Ore Mill Heads standard at 0.84% Total Copper, and a Copper Mill Tails standard at 0.091% Total Copper. These known standard sets were inserted in sequential order for analysis preceding the 15th pulp sample in the analytical run. All relative precisions are discussed at a 95% confidence level (estimated using the Student’s T-distribution). The analytical results from the standard samples are shown in Table 11.1 and Figure 11-1; both include standards supplied by the Pinto Valley Operations (PVO) project team and those used by Skyline Labs for internal QA/QC. A relative bias of -2% (Skyline Labs is lower than acceptable) is determined from these samples, with a relative precision of 4% for the standards greater than 0.1% Cu and 10% for the reference sample containing 0.09% Cu. These results provide an estimated precision for pulp and instrumentation sampling.

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TABLE 11.1: ANALYTICAL RESULTS FOR STANDARD REFERENCE MATERIALS (2006 PINTO VALLEY Q/A PROGRAM) No.

Accepted Value

Ave. Skyline

Std. Dev. Skyline

Relative Difference

Relative Std. Dev.

Relative Precision

1

1.177

1.153

N/A

-0.020

N/A

N/A

1

0.646

0.650

N/A

0.006

N/A

N/A

1

1.947

1.939

N/A

-0.004

N/A

N/A

1

0.318

0.317

N/A

-0.003

N/A

N/A

7

0.840

0.820

0.006

-0.024

0.007

0.017

7

0.091

0.089

0.004

-0.027

0.043

0.104

Total (All Samples)

18

0.589

0.579

N/A

-0.018

0.033

0.070

Total (> 0.1% Cu)

11

0.906

0.891

N/A

-0.017

0.021

0.048

Standard Internal Skyline

CGS-2 CGS-3 CGS-4 CGS-6

Low-grade

2.0 Skyline Standards PVO Standards

Skyline Values (wt% Cu)

PVO

High-grade

1.5

1.0 y = 0.99x - 0.00 R2 = 1.00

0.5

0.0 0.0

0.5

1.0

1.5

2.0

Accepted Values (wt% Cu)

FIGURE 11-1: ANALYTICAL RESULTS FROM STANDARD REFERENCE MATERIALS

The re-assay program for stored pulp samples shows that historical quality control measures used in the PVO analytical laboratory were variable: at times they were extremely good, but at other times CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 11-3

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they were lower, although at acceptable levels. The relative half differences (RHD) of the samples are presented in sequential order in Figure 11-2; it can be seen that the drill hole series is well correlated with the variability and bias of repeat assays. Because of the consistent results from the reference standards included in the samples submitted to Skyline, it can be assumed that the variability in the drilling programs originate with the analytical precision at PVO, and not at Skyline Labs. 0.1% Cu samples

Standards

0.20

Relative Half Difference

0.10

0.00

-0.10

-0.20 WW- ,RC- and Eprefix Holes

97-prefix Holes

AD-prefix Holes

-0.30

-0.40

-0.50 0

20

40

60

80

100

120

Item Number

Note: Samples are shown in sequential order of analyses, but are grouped by drill hole identification.

FIGURE 11-2: RELATIVE HALF DIFFERENCES IN REPLICATE PULP ANALYSES (COMPARES ORIGINAL PVO COPPER ASSAYS WITH SKYLINE LABORATORIES REPEATS)

Table 11.2 shows the statistical summaries of the 2006 quality assurance program on replicate pulp assays, broken down by drilling campaign. Although close similarities exist between the WW-, RC-, and E-Series holes, there are only limited samples from the latter two series, and these tend to be low-grade. Because the WW- and 97-Series holes were drilled around the same time and at a much different time than the remaining holes, these holes should be categorized as having similar laboratory quality practices. The AD-Series holes seem to have been assayed under different protocols, and are grouped with the E-Series because of their similar drilling dates. Additional information presented below further suggests this grouping for the purpose of estimating analytical uncertainty. Based on the replicate pulp program, the AD- and E-Series holes have a relative bias of

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+2.5% (original assays higher than Skyline) and precision of 6%, compared to the remaining holes that have a bias and precision of approximately -1.5% and 9%, respectively (Table 11.2). TABLE 11.2: ANALYTICAL RESULTS FOR REPLICATE PULP ASSAYS (2006 PINTO VALLEY Q/A PROGRAM) Drill Hole Program

WW-, RC& E-Series

AD-Series 97-Series All Samples

Copper Ave. (%)

Linear Fit

Average

Relative

Data Subset

No.

Skyline

PVO

Slope

RHD

ARHD

Precision

All Data

29

0.254

0.247

0.95

0.000

0.049

0.138

> 0.1% Cu Only

23

0.313

0.303

-0.017

0.035

0.103

All Data

50

0.277

0.291

0.016

0.034

0.135

> 0.1% Cu Only

45

0.302

0.318

0.025

0.025

0.058

All Data

22

0.300

0.290

0.91

-0.016

0.029

0.080

All Data

101

0.275

0.278

1.00

0.004

0.037

0.123

> 0.1% Cu Only

90

0.304

0.307

0.005

0.029

0.074

1.05

Note: RHD (relative half difference) defined as (PVO-Skyline)/(PVO+Skyline); ARDH (absolute relative half difference); Rel Err (relative error), calculated as the square root of the average squared relative half difference at the 95% confidence level as estimated through the Student's T-distribution.

Fifteen field duplicates of split core from drill holes lying in sequence between E-21 and E-60 are summarized in Table 11.3 and Figure 11-3. The relative bias between the two core halves is nearly identical to that seen in lab assays for the AD-Series holes, with PVO core assays approximately 3% higher grade than the replicate values. The relative precision of the two core halves at copper grades above 0.1% Cu is slightly more than double the analytical precision of AD-Series pulp replicates (Table 11.3). The AD-Series replicate pulp assays plot on the least square linear fit from the ESeries duplicate core assays; this further suggests the similarity between the results. TABLE 11.3: ANALYTICAL RESULTS FOR DUPLICATE CORE PREPARATION AND ASSAYS (2006 PINTO VALLEY Q/A PROGRAM) Sample Set

No.

Skyline Cu%

PVO Cu%

RHD

ARHD

Relative Precision

All Samples

15

0.304

0.322

-0.006

0.114

0.453

Samples > 0.1% Cu

12

0.368

0.389

0.032

0.058

0.167

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0.80 Core Duplicates

PVO Assay (wt.% Cu)

Pulp Replicates 0.60

0.40

0.20

0.00 0.00

y = 1.00x + 0.02 R2 = 0.94

0.20

0.40

0.60

0.80

Skyline Assay (wt. % Cu) FIGURE 11-3: COMPARISON OF 15 FIELD DUPLICATE SAMPLES (2006 PINTO VALLEY Q/A PROGRAM)

Based on the E- and AD-Series results, the total relative sampling standard deviation for the split core samples above 0.1% Cu is estimated to be approximately 8%: 86% of the sampling variance is due to core splitting and sample preparation errors, and 14% is due to analytical variance within the PVO lab. Instrumentation errors associated with the QA/QC analytical process is responsible for about 0.5% of the total variance. The relative bias of about 2.5% between PVO and Skyline laboratories is the result of an absolute bias of -2.7% between the Skyline Lab and the international standard; these results are summarized in Table 11.4. The sampling and preparation errors of the reverse circulation samples could not be fully determined due to a lack of field duplicates, which occurred during the original program or the current program. Field sampling of RC cuttings are generally associated with lower variances than sampling of drill core, which can offset the higher laboratory variances measured for the 1996-1997 programs (Table 11.4). The analytical bias seen in these samples, corrected for the Skyline bias, are estimated to be 4% lower than the international standards.

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TABLE 11.4: TOTAL AND STEPWISE SAMPLING ESTIMATES AND ANALYTICAL VARIANCES Drill Hole Samples

Total Relative Errors

Stepwise Relative Error

No.

Bias

Std. Dev.

Variance

Bias

Variance

Std. Dev.

Core Sampling Variance (E-Series core duplicates)

12

0.032

0.0760

0.00577

0.006

0.00495

0.070

PVO Analytical Variance (AD-Series pulp replicates)

45

0.025

0.0287

0.00082

0.001

0.00079

0.028

Skyline Analytical Variance (Reference Material)

7

0.027

0.0058

0.00003

0.027

0.00003

0.006

Reverse Circulation Variance (WW- and 97- series)

Unknown

PVO Analytical Variance (WW/97-Series pulp replicates)

43

0.017

0.0454

0.00206

0.044

0.00203

0.045

Skyline Analytical Variance (Reference Material)

7

0.027

0.0058

0.00003

0.027

0.00003

0.006

The current Pinto Valley QA/QC procedures are based on leading practices as defined by BHP Billiton and used throughout BHP's group of assets. These have been developed in conjunction with other BHP Billiton base metal mines. The process, as shown in Figure 11-4, ensures that suitable checks are in place for each step of the sampling and data gathering activities.

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FIGURE 11-4: CONDENSED SAMPLE HANDLING AND CHAIN OF CUSTODY STREAM

The following QA/QC criteria were used to validate the results and samples: i)

TCu > AsCu, except when; a. TCu < 0.1 and ASCu < 0.1 b. TCu/SCu > 1.05 If not (AsCu > TCu), reject and report loss of precision to the laboratory and BHP geologists, and send the following for reanalysis: 10 samples before and 10 samples after the rejected sample. Include results in the monthly QA/QC report.

ii)

Blanks (Cu): a. < 6 times TCu, threshold limit = OK b. < 6 times Mo, threshold limit = OK c. If not, reject and report lost of accuracy to the laboratory and BHP geologists, and send the following for reanalysis: 10 samples before and 10 samples after the rejected sample. Include results in monthly a QA/QC report.

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Standards (Cu): a. < 2σ = OK b. If > 2σ, reject and report lost of accuracy to the laboratory and BHP geologists, and send the following for reanalysis: 10 samples before and 10 samples after the rejected sample. Include results in monthly QA/QC report. c. >3σ Reject and report lost of control of accuracy to the laboratory and BHP geologists, send to reanalysis 10 samples before and 10 samples after the sample rejected. Include in monthly QA/QC report.

iv)

Field Duplicates, Crushing, and Pulp Duplicate (for Cu): a. Protocols and procedures are in place to define sampling and laboratory errors within a large group of samples and batches however; this is not used to reject a batch.

Assays are imported to the BHP Server for approval. This is done for each batch according to the criteria above. The geologist that logged the drill hole uses the following procedures to approve the QA/QC for each batch: 1. The authorized geologist or data manager enters the BHP Data Portal and selects the area, project, and Batch List. 2. Review QA/QC results, particularly “Company Standards” (that includes blanks) and “Lab Standards” to approve a batch according to points 2.ii and 2.iii, above. 3. Review the Field Duplicates, Coarse Duplicates, Pulp Duplicates, and Lab Assay Repeats as well. This information is then compiled to generate a QA/QC report detailing any errors associated with the splitting and crushing procedures for that particular batch.

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12 DATA VERIFICATION Garth Kirkham, P. Geo., visited the property on May 14, 2013. The site visit involved an inspection of the core logging facilities, offices, outcrops, historic drill collars, core storage facilities, core receiving area, core sawing stations, and a tour of the major centres and surrounding towns that are affected by the mining operation. The tour of the offices, core logging and storage facilities showed a clean, well-organized, professional environment. On-site staff led the author through its chain of custody and methods used at each stage of the logging and sampling process. The author randomly selected four complete drill holes from the database and laid the core out at the core storage area. Site staff supplied the logs and assay sheets so the author could verify the core and logged intervals. The data correlated with the physical core and no issues were identified. In addition, the author toured the complete core storage facility, pulling and reviewing core throughout the tour. No issues were identified and recoveries appeared to be very good to excellent. The author is confident that the data and results are valid based on the site visit and inspection of all aspects of the project; this confidence extends to the methods and procedures used. It is the opinion of the independent author that all work, procedures, and results have adhered to best practices and industry standards required by NI 43-101. No duplicate or verification samples were taken to verify assay results, but the author believes that the work is being conducted by a well-respected, large, multi-national company that employs competent professionals that adhere to industry best practices and standards. The author also visited the Skyline Assayers & Laboratories (Skyline Labs) on May 15, 2013. The laboratory tour was performed by Jim Martin, Senior Chemist and Arizona Registered Assayer (No. 11122), who provided a complete review of the laboratory facilities, laboratory preparation procedures, instrumentation, assay methods, quality assurance and control protocols, and reporting procedures. The laboratory appeared to be operated in a very professional manner as is expected from a widely-used North American laboratory facility. Skyline Labs, because of its long-standing service to many large copper mines, appear to specialize in and have extensive experience with the assay processes and procedures for copper. Skyline Labs have been ISO 17025 certified since 2008.

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13 MINERAL PROCESSING AND METALLURGICAL TESTING 13.1

PREFACE

The Pinto Valley Mine has previously been in production and preliminary metallurgical and geometallurgical work has been completed, as described below. However, a more detailed and advanced program is currently underway that will augment this previous work and form the basis of a Pre-feasibility Study planned for late 2013. The work described below is included only as it relates to thoroughness. Note: the only information derived from this section is a broad characterization of recoveries for copper and molybdenum of 88% and 50%, respectively. The sections below were supplied by BHP and the author feels that this information is useful for the sake of thoroughness, and the author also feels that it is reliable information because the mine has an excellent understanding of the metallurgical and physical properties of the ore.

13.2

PINTO VALLEY PROCESS DESCRIPTION

Run-of-mine ore is delivered by haul truck to a Fuller-Traylor 60 x 89 inch gyratory primary crusher. Primary crushed ore is then transported by an apron feeder and conveyor to the coarse ore stockpile, which has a nominal live capacity of 30,000 mT. The primary crushed ore is reclaimed from the coarse ore stockpile to the fine crushing plant. The fine crushing plant consists of three secondary screens, three 7-ft standard Nordberg crushers, six tertiary screens, six 7-ft Nordberg short head crushers and a tertiary feed bin. The primary crushed ore is first screened to remove fines before the open circuit secondary crushing. The undersize from the secondary screens is conveyed directly to the fine ore storage bin. The secondary crushed product is screened and tertiary crushed in a closed circuit. The tertiary screen undersize is conveyed with the secondary screen undersize to the fine ore storage bin. The fine ore storage bin has a nominal live capacity of 39,000 mT. Ore is reclaimed from the fine ore storage bin to the primary grinding circuit which consists of six 18 x 21 ft Allis Chalmers overflow ball mills, each driven by a 4,000 hp motor and operated in a closed circuit with three 33-inch Kreb cyclones. The primary grinding circuit targets an 80% passing size (P80) of approximately 270 µm (28% + 65 Mesh). The primary grinding cyclone overflow is fed to the copper-molybdenum rougher circuit. Flotation reagents including lime, xanthate dithiophosphate (DTP), and fuel oil are added to the grinding circuit in preparation for flotation. In the copper-moly flotation circuit, additional lime, xanthate, DTP, and frothers are added to the pulp slurry, as required. The rougher flotation circuit consists of sixty-five 1,000-ft3 Wemco cells configured in three banks, with two ball mills feeding each bank. The rougher concentrate is CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 13-1

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reground in a closed circuit with two ball mills to a P80 of approximately 50 µm before being fed to four 8 x 40 ft column cells. The column cell concentrate, the final Cu-Mo concentrate, contains 27%–29% Cu and 0.35%–0.7% Mo. A bank of fifteen 300-ft3 Wemco cleaner scavenger cells processes the column cell tails. The thickened Cu-Mo slurry is sent to the Moly plant. The Moly plant consists of four banks of Agitair rougher cells of six 50-ft3 cells each and a column cleaner section. NaSH is added to the slurry to provide depression of copper and iron sulphides and fuel oil is added as a moly promoter. The moly rougher tailing is the final copper concentrate. The final molybdenum product is thickened in a 26-ft moly thickener, filtered on a disk filter, dried, and bagged for shipment. The final copper concentrate is thickened to 60% solids and flows by gravity from the copper thickeners to one of the two copper slurry storage tanks. The slurry is pumped from the storage tanks to the Filter Plant, where it is dewatered before it is dispatched by truck.

13.3

RECENT METALLURGICAL TESTWORK

Table 13.1 summarizes the geometallurgical test work that has been conducted on Pinto Valley ore since 2007. Some of this test work is still in progress and will be reported by September 2013. A selection of results from this test work is presented in this report.

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TABLE 13.1: SUMMARY OF TESTWORK 2007 GeoMet

2013 GeoMet

Validation

Total

Ore Characterization ICP-SAFus (including Re, S, Au, Ag)

-

48

-

48

Cu, Mo, Fe, S, Insol

49 *

-

11

60

AsCu

49 *

-

-

49

CNSolCu

-

48

-

12

Seq Leach

-

10

2

12

QEMSCAN

11

48

-

60

MLA

-

-

1

1

Density by Gas Pycnometer

-

48

-

48

Comminution SMC Tests

-

4

2

6

Full Bond Tests

7

10

11

28

Mod Bond Tests

14

48

-

62

Crushing Plant Survey for JKSimMet Modelling

-

1

-

1

Flotation Rougher Kinetics Test

2

21

11

34

Full MFT Tests

10

6

-

7

Variability MFT Tests

49

48

-

97

Flotation Survey for Fleet Calibration

1

-

-

1

Note: *Calculated from flotation products.

13.4

MINERALOGY OF THE ORE

The Pinto Valley ore can be divided into five ore types. The major ore type is a Ruin Granite/Quartz Monzonite, which comprises greater than 90% of the ore. Table 13.2 summarizes the five ore types.

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TABLE 13.2: SUMMARY OF PINTO VALLEY ORE TYPES Ore ID

Ore type

T Cu% Range

Average T Cu%

Observed Proportion

Alteration

1

Ruin Granite/Quartz Monzonite

0.2-0.4%

0.37%

90-97%

Potassic/Sericitic

2

Granite Porphyry

0.2-0.25%

0.22%

1-6%

Quartz Sericite

3

Diabase

0.2-1.0%

0.45%

-

Potassic

4

Aplite

0.2-0.25%

0.20%

-

Potassic

5

Quartz/Granodiorite

0.2-0.25%

0.22%

1-7%

No alteration

The mineralogy of 35 samples classified as Ruin Granite/Quartz Monzonite was measured using QEMSCAN. The modal mineralogy results are shown in Table 13.3. The major minerals in the Ruin Granite/Quartz Monzonite ore are quartz, feldspars (both K and Na-rich species), and mica (predominantly muscovite). Chalcopyrite is the predominant copper mineral.

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TABLE 13.3: MODAL MINERALOGY OF RUIN GRANITE/QUARTZ MONZONITE Min.

10th Percen tile

20th Percen tile

Median

Avg.

80th Percen tile

90th Percen tile

Max.

Chalcopyrite

0.243

0.410

0.550

0.844

1.095

1.743

1.850

2.453

Other CopperSulphides

0.000

0.000

0.000

0.000

0.000

0.000

0.000

0.001

Pyrite

0.011

0.048

0.076

0.270

0.608

0.678

2.070

3.763

Other Sulphides

0.002

0.004

0.006

0.011

0.021

0.021

0.037

0.170

Quartz

22.155

35.232

37.250

41.459

41.249

45.816

47.317

52.880

K-Feldspar

9.405

27.410

30.282

33.766

33.560

38.592

40.981

44.264

Plagioclase

0.216

1.097

2.053

4.147

4.710

7.348

8.592

12.811

Chlorites

0.018

0.054

0.167

0.491

0.870

0.877

2.200

6.051

Biotite/Phlogopite

0.126

0.618

0.769

1.548

2.544

2.733

3.472

28.248

Muscovite

3.693

5.146

5.316

8.420

9.236

11.608

13.882

24.638

Illite

0.948

1.807

1.965

2.873

3.170

4.170

4.962

5.876

Clays

0.068

0.081

0.097

0.148

0.148

0.172

0.193

0.496

Other Silicates

0.032

0.052

0.071

0.111

0.162

0.184

0.224

1.469

Fe/Ti-Oxides

0.223

0.399

0.441

0.593

0.840

0.921

1.305

4.724

Calcite

0.031

0.040

0.060

0.628

1.005

1.699

2.333

4.637

Other Carbonates

0.024

0.034

0.046

0.123

0.240

0.460

0.619

0.987

Apatite

0.060

0.108

0.147

0.271

0.287

0.367

0.459

0.948

Fluorite

0.000

0.000

0.000

0.001

0.152

0.033

0.059

2.615

Other

0.004

0.022

0.034

0.056

0.105

0.095

0.137

0.970

13.5

CRUSHABILITY

A small crushability dataset was created by conducting SMC tests on selected diamond drill core samples. The results of these tests are summarized in Table 13.4. The crushability of the Pinto Valley ore ranges from soft (DWi = 3.85 kWh/m3) to medium (DWi = 6.02 kWh/m3). DDH-101 was a sample of Diabase, which was found to have a hard crushability with a DWi of 9.40 kWh/m3.

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TABLE 13.4: SMC TEST RESULTS ON PINTO VALLEY ORE Sample

DWi 3 kWh/m

Mia kWh/mt

Mic kWh/mt

A

b

Axb

Category

t10 @ 1kWh/t

SG

ta

DDH 12-118

5.51

17.6

6.5

72.2

0.64

46.2

medium

34.1

2.55

0.47

DDH 12-79

6.02

17.9

6.7

69.5

0.64

44.5

medium

32.9

2.69

0.43

DDH 12-101

9.40

24.1

9.9

74.3

0.41

30.5

hard

25.0

2.85

0.28

DDH 12-145

3.50

12.2

4.1

66.0

1.11

73.3

soft

44.2

2.57

0.74

PV1 Comp 1

4.25

14.0

4.9

68.5

0.9

61.7

soft

40.6

2.61

0.61

PV1 Comp 4

3.85

13.2

4.5

67.9

0.98

66.5

soft

42.4

2.56

0.67

13.6

GRINDABILITY

The grindability of the major ore type, Ruin Granite/Quartz Monzonite, was measured by testing 35 samples selected from diamond drill core intervals. The modified Bond work index test was used with a closing screen size of 212 µm. The results are shown in Figure 13-1. The grindability of the Ruin Granite/Quartz Monzonite has low variability, ranging from 13.4 to 15.5 kWh/mt. A single observation of 17.1 kWh/mt was recorded. This interval, as noted in the geological log, contained some Diabase. A small selection of modified Bond work index tests was conducted on the minor lithologies. Two Granite Porphyry samples were tested and had results of 15.1 and 16.1 kWh/mt; this indicates that this lithology is harder to grind than the Ruin Granite. Three samples of Granodiorite were tested with results of 13.1, 12.5, and 13.9 kWh/mt; this indicates that the Granodiorite may be softer than the Ruin Granite. Two samples of Diabase have been tested with results of 17.0 and 17.3 kWh/mt; this indicates that the Diabase ore is significantly harder to grind than the other lithologies. Three samples of Aplite have been tested with results of 13.5, 13.7 and 14.3 kWh/mt; this indicates that the Aplite is not significantly different from the Ruin Granite to grind.

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18

100%

16

90%

80%

14

70%

12

Frequency

60% 10 50%

Frequency

8 40%

Cumulative %

6 30% 4

20%

2

10%

0

0%

0.1%

FIGURE 14-17: PLAN VIEW OF BLOCK MODEL SHOWING MOLYBDENUM GRADE MODEL AT 3230 ELEVATION > 0.003%

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FIGURE 14-18: SECTION OF BLOCK MODEL WITH COPPER GRADES > 0.1% SHOWN WITH GEOLOGY, TOPOGRAPHY, AND DRILL HOLES

14.10

MINERAL RESOURCE CLASSIFICATION

The spatial variation pattern incorporated in the variogram and the drill hole spacing can be used to help predict the reliability of estimation for copper metal. (In this case there are at least two potentially economic metals, but copper is likely the greatest contributor to net smelter return. Therefore, copper variation will dominate estimation uncertainty, and ultimately determine drill spacing.) The measure of estimation reliability or uncertainty is expressed by the width of a confidence interval or the confidence limits. Then, by knowing how reliably metal content must be estimated to adequately plan, it is possible to calculate the drill hole spacing necessary to achieve the target level of reliability. For instance, Indicated resources may be adequate for planning in most Pre-feasibility work. For feasibility studies, it is not uncommon to require Measured resources to define the production within the payback period, and then Indicated resources for scheduling beyond payback time. In the case of the current deposit there is some information available from several domains and the spacing between holes varies with much of the data at a spacing of about 200 ft. Results from this study should be validated against current and future drilling. Confidence Interval Estimation Confidence intervals are intended to estimate the reliability of estimation for different volumes and levels of drill hole spacing. A narrower interval implies a more reliable estimate and attempts should be made to have enough closely spaced holes in the drilling to accurately determine the spatial correlation structure of copper samples less than 200 ft apart. CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 14-19

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The study is based on the ideas outlined in the next several paragraphs. Using hypothetical, regular drill grids and the variograms from the composited drill hole sample data, confidence intervals or limits can be estimated for different levels of drill hole spacing and production periods or equivalent volumes. The confidence limits for 90% relative confidence intervals should be interpreted as follows: If the limit is given as 8%, then there is a 90 percent chance the actual value (tons and grade) of production is within ± 8% of the estimated value for a volume equal to that required to produce enough ore tonnage in the specified period (e.g., quarter or year). This means it is unlikely the true value will be more than 8% different relative to the estimated value (either high or low) over the given production period. The method of estimating confidence intervals is an approximate method that has been shown to perform well when the volume being predicted from samples is sufficiently large (Davis, B. M., Some Methods of Producing Interval Estimates for Global and Local Resources, SME Preprint 97-5, 4p.) In this case, the smallest volume where the method would most likely be appropriate is the production from one year. Using these guidelines, an idealized block configured to approximate the volume produced in one month is estimated by ordinary kriging using the idealized grids of samples. Relative variograms are used in the estimation of the block. (Relative variograms are used rather than ordinary variograms because the standard deviations from the kriging variances are expressed directly in terms of a relative percentage.) The kriging variances from the ideal blocks and grids are divided by twelve (assuming approximate independence in the production from month to month) to get a variance for yearly ore output. The square root of this kriging variance is then used to construct confidence limits under the assumption of normally distributed errors of estimation. For example, if the kriging variance for a block is 2m then the kriging variance for a year is 2y = 2m/12. The 90 percent confidence limits are then C.L. = ±1.645 x y. The confidence limits for a given production rate are a function of the spatial variation of the data and the sample or drill hole spacing. Drill Hole Grid Spacing For this exercise, the drill hole grids tested were 900 x 900 ft, 600 x 600 ft, 300 x 300 ft, and 150 x 150 ft.

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Further assumptions made for the confidence interval calculations are as follows: 

The variograms are appropriate representations of the spatial variability for presence of mineralization and metal grade. The tonnage factor for the domains is 12.75 ft3/ton. Most of the uncertainty in metal production within zones is due to the fluctuation of metal grades and not to variation in the presence or absence of the unit. The possible production rate is 52,000 stpd.

  

Confidence limits for copper metal production are shown in Figure 14-19. The curves show a graphical representation of how the uncertainty decreases with decreased drill hole spacing. PV Copper Est im at ion Uncer t aint y by Dr il Spacing Year ly Uncer t aint y

90% Relat ive Conf idence Lim it ( %)

30

20

10

0 1000

800

600

400

200

0

Spacing ( m )

FIGURE 14-19: RELATIVE CONFIDENCE LIMITS FOR THE 52,000 STPD PRODUCTION RATE

Indicator Variograms The uncertainty calculation results above are consistent with the indicator variogram results that accompany this report. The indicator variogram ranges show that most of the continuity in grades above 0.2% is lost when reaching 800 ft or somewhat beyond. This does not mean that the ultimate ranges have been achieved: it means that 80% to 90% of the total variation is reached at separation distances in this range. CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 14-21

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Classification of Resources Indicated resources are estimated using the following criteria: the uncertainty of yearly production must be no greater than ± 15% with 90% confidence, and Measured resources must be estimated so the uncertainty of quarterly production is no greater than ± 15% with 90% confidence. The results presented above indicate that usual reliability targets can be reached at a spacing of somewhere around 500 ft. This drill spacing produces sufficiently reliable estimates to classifying resources as Indicated. It should also be noted that the confidence limits only consider the variability of grade within the veins. There may be other aspects of deposit geology and geometry, such as geological contacts or the presence of faults or offsetting structures that may impact the drill spacing. These factors should not be discounted or ignored when making a final choice concerning the drill grid. The following details the grid spacing for each resource category to classify resources assuming the 52,000 stpd production rate and based on the other assumptions that were discussed above: Measured: Note that based on the CIM definitions, continuity must be demonstrated in the designation of Measured (and Indicated) resources; therefore, no Measured resources can be declared based on one hole. The uncertainty based on current information suggests a spacing of 150 ft may be required to classify Measured resources. Indicated: Resources in this category could be delineated from multiple drill holes located on a nominal 500 ft square grid pattern provided a yearly uncertainty of around 15% does not significantly impact the potential viability of the project. Inferred: Resources in this category include any material not falling in the categories above and within a maximum 1000 ft of one hole. The spacing distances are intended to define contiguous volumes and they should allow for some irregularities due to actual drill hole placement. The final classification volume results typically must be smoothed manually to come to a coherent classification scheme. Conclusions and Recommendations The study described above indicates a drill spacing of around 500 ft may be sufficient in delineating Indicated resources at 52,000 short tons per day. The calculation of uncertainty should be monitored as new drilling progresses. Estimation of confidence intervals for smaller volumes such as those for monthly or weekly production requires the geostatistical procedure of conditional simulation (Davis, B. M., Some Methods of Producing Interval Estimates for Global and Local Resources, SME Preprint 97-5, 4p.). The use of conditional simulation can help to assess uncertainty and risk in short term mine

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planning. Conditional simulation applications would typically not be appropriate until sometime in the future when more drilling is available. To further ensure confidence and continuity, the blocks were displayed at the chosen thresholds of 150 ft and 500 ft to the nearest composite, and a boundary was digitized to create a smooth surface and to reduce the “spotted dog” effect, as shown in Figure 14-20. A solid was then created and coded back into the model by majority code, and using > 50% partials to be classified as Measured or Indicated. The remainder that is greater than 500 ft, but not more than 100 ft from nearest composite, was classified as Inferred.

FIGURE 14-20: DIGITIZED BOUNDARY BASED ON DISTANCE TO NEAREST COMPOSITE (SHOWN AS DASHED GREEN POLYLINE)

14.11

MINERAL RESOURCES

The resources show reasonable prospects of economic extraction. CIM Definition Standards for Mineral Resources and Mineral Reserves (November 2010) define a mineral resource as: “[A] concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilized minerals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge.”

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The “reasonable prospects for economic extraction” requirement generally implies that quantity and grade estimates meet certain economic thresholds and that mineral resources are reported at an appropriate cut-off grade taking into account extraction scenarios and processing recovery. The “reasonable prospects for economic extraction” were tested using floating cone pit shells as shown in Figure 14-21 based on reasonable economic assumptions, shown in Figure 14-22. The economic assumptions include the following: $3.30/pound Cu, $10.00 per pound Mo, 88% Cu recovery, 50% Mo recovery, $1,50 per ton mining costs, $1.50 per ton G&A, $5.00 per ton milling costs, and a pit slope of 45 degrees. The pit optimization results are used solely for the purpose of testing the “reasonable prospects for economic extraction,” and do not represent an attempt to estimate mineral reserves. The optimization results are used to assist with the preparation of a Mineral Resource Statement and to select and appropriate reporting assumptions.

FIGURE 14-21: OPTIMIZED PIT WITH BLOCK MODEL

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FIGURE 14-22: PIT OPTIMIZATION FOR BLOCK MODEL

The mineral resources are listed in Table 14.5 for Cu% and Mo%. These mineral resources are listed at a base case cut-off grade of 0.25% Cu. Tables 14-6, 14-7 and 14-8 list the resources at varying cut-off grades for Measured, Indicated and Inferred, respectively. Note that Table 14.5 is reported in the imperial measure of short tons. TABLE 14.5: MINERAL RESOURCES TOTAL

CUT-OFF

ORE

Cu%

Mo%

Cu%

TONS

Measured

0.25

443,030,204

0.384

0.010

Indicated

0.25

623,458,863

0.331

0.008

Measured & Indicated

0.25

1,066,489,067

0.353

0.009

Inferred

0.25

49,285,298

0.326

0.009

As Capstone is a Canadian issuer and BHP (the seller) is an Australian company, the author is reporting the resources in metric units for tonnes and copper grade. However, molybdenum is reported in the most common unit of pounds as shown in Table 14.6.

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TABLE 14.6: MINERAL RESOURCES

Measured (M) Indicated (I) Total M&I Inferred

Metric Tonnes (M) 402 566 968 45

Copper (%)

Molybdenum (%)

0.38 0.33 0.35 0.33

0.01 0.008 0.009 0.009

Contained Copper (k tonnes) 1,544 1,870 3,414 146

Contained Molybdenum (M lbs) 89 99 188 9

Notes: Mineral Resource Estimate, February 28, 2013, at a 0.25% COG. Any discrepancies in the totals are related to rounding. This estimate has not been adjusted for the three months of mining from date of start-up to February 28, 2013.

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TABLE 14.7: MEASURED MINERAL RESOURCES (0.25% Cut-Off Grade is Base Case) MEASURE D

CUT-OFF

TONS

Cu%

Mo%

0.1

658,485,857

0.318

0.009

0.15

606,305,870

0.335

0.009

0.2

531,284,094

0.358

0.010

0.25

443,030,204

0.384

0.010

0.3

369,175,856

0.406

0.010

TABLE 14.8: INDICATED MINERAL RESOURCES (0.25% Cut-Off Grade is Base Case) INDICATE D

CUT-OFF

TONS

Cu%

Mo%

0.1

2,001,540,875

0.222

0.006

0.15

1,517,545,777

0.253

0.006

0.2

1,057,168,839

0.287

0.007

0.25

623,458,863

0.331

0.008

0.3

348,123,236

0.378

0.009

TABLE 14.9: INFERRED MINERAL RESOURCES (0.25% Cut-Off Grade is Base Case) INFERRED

CUT-OFF

TONS

Cu%

Mo%

0.1

228,538,299

0.196

0.005

0.15

146,690,970

0.238

0.006

0.2

88,161,913

0.281

0.007

0.25

49,285,298

0.326

0.009

0.3

26,548,094

0.374

0.011

Mineral resources are not mineral reserves until they have demonstrated economic viability. Mineral resource estimates do not account for a resource’s mineability, selectivity, mining loss, or dilution. These estimates include Inferred mineral resources that are normally considered too geologically speculative for the application of economic considerations; therefore, they are unable to be classified as mineral reserves. Also, there is no certainty that these Inferred mineral resources will someday be converted into Measured or Indicated resources as a result of future drilling or after applying economic considerations.

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14.12

DECEMBER 2013

MODEL VALIDATION

A graphical validation was done on the block model. The purpose of the graphical validation is to:      

Check the reasonableness of the estimated grades, based on the estimation plan and the nearby composites. Compare the general drift and the local grade trends of the block model to the drift and local grade trends of the composites. Ensure that all required blocks are filled in. Check that, within the model blocks, the topography has been properly accounted for. Check the manual ballpark estimates for tonnage to determine reasonableness. Inspect and explain, when necessary, the high-grade blocks created as a result of outliers.

A full set of cross-sections, long sections, and plans were used to check the block model on the computer screen, showing the block grades and the composite. There was no evidence that any blocks were wrongly estimated. It appears that every block grade can be explained as a function of the following: the surrounding composites, the correlogram models used, and the estimation plan applied. These validation techniques include, but are not limited to, the following:      

A visual inspection done on a section-by-section and plan-by-plan basis. The use of grade tonnage curves. Histograms of varying cut-off grades that demonstrate a relatively uniform, normal distribution. Swath Plots that compare the Ordinary Kriged blocks with the Inverse Distance and Nearest Neighbour estimates. Inspection of histograms to determine the distance of the first composite to the nearest block and the average distance to blocks for all composites used. An analysis of the Relative Variability Index that quantifies variability within the deposit. The Analysis of Relative Variability Index may be used to quantify risk and qualify resources for the purpose of classification in future studies.

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Model Checks for Change of Support The relative degree of smoothing in the block estimates was evaluated using the Hermitian Polynomial Change of Support model, also known as the Discrete Gaussian Correction. With this method, the distribution of the hypothetical block grades can be directly compared to the estimated ordinary kriging model through the use of pseudo-grade/tonnage curves. Adjustments are made to the block model interpolation parameters until an acceptable match is made with the Herco distribution. In general, the estimated model should be slightly higher in tonnage and slightly lower in grade when compared to the Herco distribution at the projected cut-off grade. These differences account for selectivity and other potential ore-handling issues which commonly occur during mining. The Herco distribution is derived from the declustered composite grades which have been adjusted to account for the change in support moving from smaller drill hole composite samples to the larger blocks in the model. The transformation results in a less skewed distribution, but with the same mean as the original declustered samples. Examples of Herco plots from some of the models are shown in Figure 14-23.

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Error! Reference source not found.FIGURE 14-23: HERCO PLOTS Overall, correspondence between models is relatively good.

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It should be noted that the change of support model is a theoretical tool intended to direct model estimation. There is uncertainty associated with the change of support model, and its results should not be viewed as a final or correct value. In cases where the model grades are greater than the change of support grades, the model is relatively insensitive to any changes to the modelling parameters. Any extraordinary measures to make the grade curves change are not warranted.

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Comparison of Interpolation Methods For comparison purposes, additional grade models were generated using the inverse distance weighted (ID2) and nearest neighbour (NN) interpolation methods. The nearest neighbour model was created using data composited to lengths equal to the short block axis. The results of these models are compared to the ordinary kriging (OK) models at various cut-off grades in a series of grade/tonnage graphs shown in Figure 14-24. There is good correlation between models. .

2

FIGURE 14-24: COMPARISON OF ORDINARY KRIGING (OK), INVERSE DISTANCE (ID ) AND NEAREST NEIGHBOUR (NN) MODELS

Swath Plots (Drift Analysis) A swath plot is a graphical display of the grade distribution derived from a series of bands, or swaths, generated in several directions throughout the deposit. Using the swath plot, grade variations from the ordinary kriging model are compared to the distribution derived from the declustered nearest neighbour grade model. On a local scale, the nearest neighbour model does not provide reliable estimations of grade, but, on a much larger scale, it represents an unbiased estimation of the grade distribution based on the underlying data. Therefore, if the ordinary kriging model is unbiased, the grade trends may show local fluctuations on a swath plot, but the overall trend should be similar to the nearest neighbour distribution of grade. Swath plots were generated in three orthogonal directions that compare the ordinary kriging and nearest neighbour estimates. Some examples of swath plots at various orientations are shown in Figures 14-25 to 14-27.

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FIGURE 14-25: SWATH PLOTS

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FIGURE 14-26: COPPER SWATCH PLOTS

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FIGURE 14-27: MOLYBDENUM SWATH PLOTS

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15 MINERAL RESERVE ESTIMATES The Pinto Valley Mine has no declared mineral reserve estimates as per CIM definitions. All previous mineral reserve estimates for Pinto Valley are considered to be historical in nature, as indicated in Section 6 of this report.

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16 MINING METHODS The following subsections describe the mining strategy, mine plan, mine design, and mining operations of the current Pinto Valley Operations during restart.

16.1

MINING STRATEGY

The objective of the proposed mining strategy is to deliver maximum value, with acceptable risk. The restart provides immediate access to more than a 4-year’s supply of available mineralization within the bottom of the current pit. Operations at Pinto Valley have been on care and maintenance since January 2009 when sulphide mining and milling was suspended due to depressed copper prices. The recent restart is aligned with the recently implemented directional planning strategy, referred to as the “Optimized Potential Plan” (OPP). The restart will provide a platform for additional development of Pinto Valley and an opportunity to assess the viability of accessing additional mineral resources, potentially beyond a projected 5-year mine plan.

16.2

MINE PLAN

The mine configuration, infrastructure, and site logistics required to mine the exposed ore in the pit are the same as they were under previous operations. The mine plan dependencies have not changed since operations were curtailed in January 2009. The mine plan is simple in scope: it only pertains to the available resources at the bottom of the existing open pit. All operations will take place on land tenured to Capstone. The land consists of patented mining claims and fee lands totaling 7,177 acres (~2,900 hectares). The Pinto Valley Mine is 100% owned by Capstone. There are no known issues with regard to tenure that will hinder or constrain the 5year mine plan. Operations at Pinto Valley are established; processing facilities, shops, fuel bays, and other support functions are all operational. Ramping-up capacities while further stabilizing these operations are both critical measures for the success of the mining operation. The main risks to the mine plan are related to pit slope stability, and these will be mitigated through ongoing and active observations with ground and radar monitoring applications.

16.3

MINE DESIGN

The Life of Asset (LOA) mine plan was developed and initiated in the mid-1990s and was well into execution when sulphide mining operations were curtailed in 1998. The LOA mine plan was updated for the 2007 restart and included the continued mining of the bottom of the current design, generally referred to as Slice 6. CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 16-1

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The Slice 6 design was created using a floating-cone algorithm and the 1996 resource model. Stripping of the pushback for the Slice 6 design was completed before mining operations were suspended. Therefore, the maximum pit limits were set using economic and physical parameters prevalent at that time. Current economic and physical parameters now indicate that additional resources could be mined; however, these resources are not considered part of the 2012 restart. These additional mineral resources will be assessed in the current Prefeasibility Study and will be advanced as quickly as technically feasible. The Slice 6 design continues to mine the existing pit footprint until the ultimate depth (2,690 ft elevation) is reached. The final pit walls in the Slice 6 design were established within the existing pit perimeter. The design assumptions with respect to inter-ramp angles and pit perimeter have not changed since the 1998 or 2007 restart. Consequently, the mine design associated with the proposed project is limited by the scope of the 2012 restart in that only the resources in the bottom of the current pit will be extracted. This requires continued excavation of the pit and the addition of approximately 15 benches at 45 ft each. During previous operations, minimal ore blending was required to achieve the designed mill throughput rates. During operations, blending was, and will continue to be, used when diabasehosted mineralization is encountered because this material is oxidized and includes high-clay content. This material is largely confined to the west wall of the pit in localized areas. 16.3.1

Pit Slope Angles

There are two areas of pit slope instability that developed during the 2007-2009 mining operations. Specifically, the North wall, named the “Bummer” fault, and another failure in the South pit area. The Bummer fault failure was an active area that was managed through radar monitoring during previous operations. The Southern area represents more of a nuisance failure that is slow-moving and manageable through conventional monitoring techniques, including prisms and extensometers. The pit slope angles used and monitored in the mine plan confirm the overall design parameters. In anticipation of a “worst case” scenario, the Slice 6 design and mine plan were modified by including safety berms below the two areas discussed; these are shown as the highlighted areas in Figure 16-1.

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FIGURE 16-1: SAFETY BERM DESIGN CHANGE

The current slope angle in the Whitetail Conglomerate is 35° over a slope height of 400 ft (120 m). The Gold Gulch fault is a 300-ft (100-m) zone of weak material immediately below Whitetail Conglomerate. If expansion is considered beyond the current mine plan, these zones will need to be reviewed again. This will require updating, based on additional drilling data since 2008 and an improved understanding of the geology of the area. A geotechnical drilling program is proposed to complete the evaluation for expansion.

16.4

MINING OPERATIONS

The mining is executed as an owner/operator operation with a truck/loader fleet. The overall dimensions of the mine’s mineral deposit, including already extracted ore, measures 7,500×3,500×1,600 ft (~2,300×1,050×500 m), elongating in an east-northeast direction. The ore body outcrops at the bottom of the current mine surface. The operational mining fleet will consist of the equipment shown in Table 16.1. TABLE 16.1: MINE EQUIPMENT FLEET Model 994H Cat 789D

Qty 3 15

Equipment Type Loader Haul Truck CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 16-3

KIRKHAM GEOSYSTEMS LTD. Cat D10 Cat 777 Cat 16M Cat 834H Cat MD6420 Cat MD5150

DECEMBER 2013 4 2 2 1 2 1

Track Dozer Water Truck Grader Tire Dozer Rotary Blast hole Drill Rotary Track Drill

The haulage fleet consists of 15 haul trucks. The waste dump design places material as close to the pit rim as possible, directly south of the leach dumps. Compared to previous operations, this change in dump location reduces the number of required trucks. The planned mine production rate for ore and waste is 20.4 million mtpy, and 18.5 million mtpy of ore to the concentrator. This aligns with the average concentrator production of 18.2 million mtpy before sulphide operations were suspended in 2009. Ore control is completed using assays from blast hole cuttings. Minimal waste mining is required because this phase, for the most part, will mine ore that is already exposed in the pit. The waste/ore strip ratio for the mine is low, 0.1:1. This mine plan generates approximately 4.5 million tonnes of material that is placed north of the pit in a catchment area that contains runoff; there is no impact on ore mining rates. An average tonnage factor (dry basis) of 2.5 tonnes per cubic metre is used for planning and reporting purposes, established through reconciliation of plant feed and confirmed by wet and dry weight analysis of whole core. The mill ore cut-off is variable, nominally set at 0.25% TCu. Stockpile (leach) material-grade cut-off ranges from 0.10% to 0.20% TCu. Material between 0.20% and 0.25% will be stockpiled for future processing.

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17 RECOVERY METHODS The following subsections discuss the processing strategy, feed characteristics, test work, process characteristics, and metallurgical performance of the process facilities at Pinto Valley.

17.1

PROCESSING STRATEGY

Pinto Valley processing strategy is described in the following subsections; a discussion regarding the restart of existing facilities is included, as well as an overview of the processing configuration. 17.1.1

Restart Existing Facilities

The plant configuration and process design pertains to the existing facility. The existing concentrator process equipment and instrumentation will be refurbished; therefore, no process flow sheet changes are anticipated. The sulphide process flow sheet schematic is shown in Figure 17-1. The flow process is conventional and consists of three crushing stages (primary, secondary, and tertiary), three copper flotation stages (rougher, cleaner, and scavenger), a molybdenum flotation circuit, and associated thickeners to control the density of concentrates and tailings. Fresh water is drawn from a number of wells, as noted in Section 18 Project Infrastructure of this report. As in all desert regions, water conservation is paramount. New makeup water at Pinto Valley averages about 400 litres per tonne, which is within the capacity of the existing water sources. Based on previous electrical load studies and utility billings, the average total load will be approximately 52.6 MVA. This is well within the delivery capacity of the existing electrical system. 17.1.2

Primary Crusher

Run-of-mine ore is delivered by haul truck to a Fuller Traylor 60×89 in. gyratory primary crusher (nominal capacity of 3,600 mtph). Haul trucks discharge directly into the crusher, set in a 250-tonne dump pocket. The crusher setting is adjusted hydraulically from the control room, nominally at 175 mm. Ore is withdrawn from the 300-tonne surge pocket under the crusher by an 84 in. × 20 ft, Stephens-Adamson apron feeder. The apron feeder discharges onto the primary conveyor and ore is conveyed to the coarse ore stockpile with a nominal live capacity of 30,000 tonnes. 17.1.3

Fine Crushing Plant

The coarse ore is reclaimed from the coarse ore pile using six, variable frequency drives (VFD) for 42 in. × 15 ft Stephens-Adamson apron feeders which feed three coarse ore reclaim belts. Each coarse ore reclaim belt discharges onto a 7×16 ft Simplicity double-deck, vibrating screen. Each screen oversize feeds a secondary 7-ft Nordberg standard crusher. Open-circuit secondary crushing of primary crusher product yields a -50-mm secondary crusher product. Product from all three secondary crushers is forwarded via conveyors to the tertiary feed bin ahead of the tertiary crushers.

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Ore is withdrawn for the tertiary crushers by six, hydraulically powered feeder belts and sent to six, 8×20 ft Simplicity double-deck vibrating screens. Screen oversize is fed to 7-ft Nordberg shorthead crushers. Screened, undersized ore from the secondary and the tertiary screens is sent to fine ore storage, with a nominal live capacity of 39,000 tonnes.

FIGURE 17-1: SULPHIDE PROCESS FLOW SHEET

17.1.4

Grinding Circuit

Fine ore is reclaimed by hydraulically driven feeder conveyor belts that discharge onto ball mill feed belts, which, in turn, feed one of six primary ball mills. The primary grinding circuit consists of six, 18×21 ft Allis Chalmers overflow ball mills driven by a 4,000-hp motor through an air clutch. Each mill is in closed-circuit with three, 33-in. Kreb cyclones. The cyclone feed pumps on all mills are 16×14 in. Warman-type pumps. The circulating load is approximately 350%, and the feed rate is between 370 and 400 mtph. The approximate ore residence time in the mill is 10 minutes. Each mill circuit has an on-stream particle size analyzer.

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DECEMBER 2013

Copper-Moly Flotation/Regrind

In the copper-moly flotation circuit, xanthate, dithiophosphates (DTP) collectors, frothers, and fuel oil are added to the pulp slurry to prepare it for flotation. The rougher flotation circuit consists of sixty-five, 1,000-ft3 Wemco cells configured in three circuits with two ball mills feeding each circuit. The rougher concentrate is cycloned. The cyclone underflow is divided between two Fuller Traylor regrind mills. The cyclone overflow feeds the four 8×40 ft column cells. The column cell concentrate, the final Cu/Mo concentrate, contains 27% to 29% Cu and 0.35% to 0.7% Mo. A bank of fifteen, 300-ft3 Wemco cleaner scavenger cells processes the column cell tails. 17.1.6

Moly Plant

The thickened copper-moly slurry is sent to four banks of Agitair rougher cells of six, 50-ft3 cells each. Sodium hydrogensulphide (NaSH) is added to the slurry to depress the copper and iron sulphides, which enables molybdenum to float. Fuel oil is added as a moly promoter. The moly rougher concentrate is upgraded by three stages of cleaning using column cells. The rougher tailing is the final copper concentrate reporting to two, 90-ft copper thickeners. The final molybdenum product is thickened in a 26-ft moly thickener, dewatered on a disk filter, dried, and bagged for shipment. 17.1.7

Concentrate Handling

The final copper concentrate is thickened to 60% solids and flows by gravity from the copper thickeners to either of two, 900,000-litre copper slurry storage tanks. The slurry is pumped from the storage tanks to the filter plant. 17.1.8

Tailings Disposal / Water Reclaim

Tailings from the copper-moly flotation feed three, 350-ft tailings thickeners, where water is reclaimed, and the tails are thickened and sent onto the tailings dams. The No. 4 Tailings Dam is the primary location for the disposal of tailings from the Pinto Valley Mill. The No. 3 Tailings Dam is used only as an emergency disposal area if a problem arises with the No. 4 Tailings Dam delivery system. It was also used for initial start-up. A booster station at the No. 4 Tailings Dam is required to boost the tailings to the top of No. 4 Tailings Dam. This booster station consists of two trains of two Warman 14/12 slurry pumps in series. The first stage pump has a 600-hp fixed-speed motor and the second stage pump, with a 400-hp motor, is run through a VFD. In addition, there is a single Warman pump in parallel with the two trains. This pump has a 400-hp motor run through a VFD. At the tailings dam, the tailings will be cycloned to separate coarse material which will be used to build the berm. To support the 1,350 L/s of water that is required to operate the mill, water is reclaimed from each tailings dam through pumps located on barges.

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17.2

DECEMBER 2013

FEED CHARACTERISTICS

Feed characteristics, such as predicted ore and ore blends, as well as the impact of ore variability and blending, are discussed in the following subsections. 17.2.1

Predicted Ore and Ore Blends

The primary ore type produced at Pinto Valley is quartz monzonite with minor amounts of diabase. The primary copper mineral is chalcopyrite which occurs in veins or is finely disseminated throughout the ore. The ore feed grade and mineral type is fairly constant, with chalcopyrite mineral at 0.35% to 0.42% Cu. 17.2.2

Impact of Ore Variability and Blending

Ore blends with more than 15% to 20% diabase will negatively impact copper recovery. Excessive diabase can also cause the transfer points to get plugged throughout the crushing and milling circuits. Blending occurs at the primary crusher by managing the frequency and ratio of diabase ore to the quartz monzonite ore placed in the dump pocket. Primary crusher operators are trained to recognize diabase and have been given the authority to turn away material from the mine if the 15% to 20% blend is exceeded. The process has been further optimized by installing air cannons at the major transfer points in the fine crushing plant to mitigate the impacts of clay contained in the diabase.

17.3

TEST WORK

The following subsections discuss the processing test work for Pinto Valley, including a summary of the extent of test work and an overview of the 2006 test work. 17.3.1

Extent of Test Work

The existing concentrator facility will be restarted, and no changes are planned in the flowsheet. Also, no new test work was conducted for this restart. Sufficient test work was conducted to support the 2006 restart and that data remains valid for the 2012 restart. In 2006, the ore had remained undisturbed for more than eight years. The tests indicated that plant recovery would suffer initially due to the oxidation of the sulphide minerals near the surface. Actual plant experience subsequently confirmed this. With the 2012 restart, the ore has remained undisturbed for considerably less time and should have significantly less oxidation than the initial ore processed during the 2006 restart. 17.3.2

Overview of 2006 Test Work

In 2006, two sets of samples were submitted to METCON Research, a metallurgical test laboratory located in Tucson, Arizona. The first set consisted of samples taken from the broken ore available from the bottom of the pit. The second set was taken from drill core samples which were stored on site in a core shed since before the operations were suspended.

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Samples from the Pit Bottom and Core Shed

Samples from the bottom of the pit were tested: the objective was to measure the extent of oxidation and its effect on metallurgical response. All samples, except one, were from backhoe pits with depths ranging from 2 ft to 9 ft. The samples were predominantly mineralized quartz monzonite; one sample was mineralized diabase. Detailed sample descriptions as well as photographs were completed at each sample site. Based on visual observations, the samples which had the most oxide most likely represented the worst-case scenario for near-surface chalcopyrite oxidation. These samples were described as “chalcopyrite-pyrite (~1:1) in potassically-altered Oracle granite.” Assay results provided by METCON Research indicate that these surface samples indicate a high degree of oxidation. In some cases, the acid soluble content was as high as 18%, averaging 8.4%. These tests represent open-cycle flotation tests. This means that the recovery would increase by 2% to 4% when conducting a locked cycle test or operating in a plant environment. Also, the laboratory tests did not include column cleaning. From the results, it was possible to draw the following conclusions:  

For an average head grade of 0.4% copper, Pinto Valley should be able to produce the final target concentrate grade of 28% Cu. Samples of broken ore taken from the pit bottom show inferior copper recoveries to an expected average of between 86% and 87% in the final concentrate; these broken ore samples, however, that consist of competent quartz monzonite, have generated final copper recoveries in open-cycle tests of more than 65%, and up to 82%.

In contrast, metallurgical results from core samples that were stored in the core shed for more than 10 years indicated a copper acid solubility of 0.01% or less. Metallurgical results were consistent in the +90% for copper recovery at target final concentrate grades. The implication of these tests, in 2006 and still today, is that by slightly modifying the operating conditions, any effect of oxidation of the ore at the bottom of the pit can be largely mitigated. Because almost all of the partially oxidized ore was processed during the ramp-up period when production was lower, changing the operating conditions to improve the recovery as indicated is not an issue.

17.4

PROCESS PLANT DESIGN CRITERIA

The Pinto Valley concentrator is an existing facility that will be refurbished and restarted without any substantial modifications to the design criteria. The original plant design was for 36,300 mtpd. Because of past modifications to increase throughput, the current target throughput is 50,800 mtpd (dry) post ramp-up. The target concentrate grade is 28% with a total copper recovery of 87.5%.

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18 PROJECT INFRASTRUCTURE 18.1

LOCATION

The proposed project involves restarting the existing facility located at Pinto Valley, Arizona. All environmental permits are in place; there is adequate tailings disposal capacity, electric power, and water. The facility is located on a State highway which provides easy in-and-out access for people, materials, and products. Technical reviews of the existing infrastructure, including tailings facilities, processing plant, pipelines, and utilities, consistently demonstrate that restarting the existing facility is the most economic method of processing the five-year resource delineated for the project. Extending mine life beyond project parameters also presents an opportunity to improve mechanisms of operation, including semi-autogenous grinding milling and configuration optimization. Consequently, changing the location would substantially diminish the project’s rate of return within the scope of the current, planned operational life of the facility. 18.1.1

Battery Limits

The infrastructure battery limits are contained within the existing Pinto Valley Operations. Copper Cities Unit and the Old Dominion sites are still owned by BHP Billiton, and Capstone has service agreements for water from these respective sites. Logistical transport of product is covered in another section of this report, but will be briefly described herein. Infrastructure for Pinto Valley includes the existing maintenance shops, administration offices, environmental facilities, water and electric distribution systems, and other miscellaneous facilities. Off-site infrastructure includes the incoming electric power generation and transmission capacity provided by the Salt River Project (SRP), the local highway system provided by state and federal governments, the local transportation services provided by various contractors, and the telephone and data communications systems.

18.2

OVERVIEW OF EXISTING INFRASTRUCTURE

The following subsections provide an overview of existing infrastructure, including electrical power, water, sewage, fuels, storm water control, tailings disposal, buildings and support facilities, maintenance support and shop, communications, and security. 18.2.1

Electric Power

The electric power for Pinto Valley is supplied by the existing SRP utility grid to the Pinto Valley substation. The SRP 115-kV primary transmission line is connected to three 25-MVA transformers which step down to 13.8 kV for site distribution at the substation. The existing contract with SRP for electric power to operate the facility is limited to a maximum 50,000 kW, which is sufficient for planned operation levels. CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 18-1

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Water

There are several types of water services provided at Pinto Valley which vary by water quality and source. No changes are anticipated to any of these existing facilities. These water services, and related infrastructure facilities, are discussed in this section. Potable Water The potable water supply for Pinto Valley is provided by four existing groundwater wells with a combined capacity of approximately 6 L/s. The system facilities include water storage tanks, pumps, distribution pipelines, valves, and control system. Water treatment facilities, which are licensed by the State of Arizona and operated by licensed operators, include a reverse osmosis system and secondary chlorination. To resume operations, an additional potable water supply well is available and the water treatment facilities have been refurbished. Service Water High quality, non-potable service water is used throughout Pinto Valley for mill makeup water, fire water, SX/EW makeup water, and pump gland water. Water for this system is supplied primarily via the Peak Well system which delivers an average flow of 125 L/s during concentrator operation. Service water system facilities include two, 3.8-million litre storage tanks located at the mill, three service water pumps, distribution pipelines, and peripheral controls, valves, etc. Process Water Process water is lower quality than service water and is generally only used for mill makeup. Process water consists of water supplied via the Old Dominion and East Side Wells, Pinal Creek remedial water, and the Pinto Valley Pit. As noted, Capstone has a water service agreement with BHPB as the Old Dominion is currently owned by BHPB. This water is stored in the mill water tanks or Cottonwood Reservoir. During previous operations, the process water system delivered an average of 190 l/s into the Pinto Valley concentrator. . Reclaim Water Reclaim water consists of process water that is recovered from Tailings Dams No. 3 and No. 4 after the deposition of tailings. It is returned to the mill circuit as makeup water. This water is pumped from Tailings Dams No. 3 and No. 4 and is also stored in the mill water tanks or Cottonwood Reservoir. Fire Water The fire water distribution main lines and hydrants were upgraded and/or repaired during the 2006 restart effort. 18.2.3

Sewage

Sewage from Pinto Valley permanent facilities (offices, concentrator, lab, etc.) is processed through the existing, licensed septic treatment facility. The existing chlorination system was designed for 95,000 litres per day. The existing septic facilities continue to service the SX/EW facility and the North Barn area and are pumped on an as-needed basis by local, contracted service providers. CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 18-2

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Fuels

Diesel fuel and unleaded gasoline are delivered to existing fuel storage tanks by local fuel providers from Phoenix and Tucson. Pinto Valley has no natural gas service. Propane gas continues to be used as a means to heat cathode wash water at the existing SX/EW facility. 18.2.5

Storm Water Control

Storm water continues to be managed according to the existing Storm Water Pollution Prevention Plan (SWPPP) and National Pollution Discharge Elimination System (NPDES) permits. These permits were in place during previous operations and were maintained through the curtailment period. No changes to the existing facilities are required to remain compliant with the existing SWPPP and NPDES permits. 18.2.6

Tailings Disposal

Tailings are deposited in existing permitted tailings storage facilities using the same practices from previous operations. The majority of the tailings are placed in Tailings Dam No. 4; Tailings Dam No. 3 is used for tailings placement during maintenance activities at Tailings Dam No. 4. There is no indication from the resource model that ore characteristics will change substantially during the proposed completion of the Slice 6 design mine plan. The tailings that are currently deposited into Tailings Dams No. 3 and No. 4 are not significantly different from the tailings during previous operations. Therefore, closure plans completed to date are not significantly different. Tailings Dams No. 3 and No. 4 have been continually monitored and inspected since the January 2009 suspension. The annual inspection reports indicate no stability issues with the dams; however, the inspection report recommends additional instrumentation for the dams prior to the addition of more tailings. 18.2.7

Tailings Dam No. 4

The available capacity was checked as part of the 2006 restart and was re-checked during the 2012 restart. Tailings Dam No. 4 was reviewed using existing topography from a November 2004 aerial survey that estimated available volume. Tailings Dam No. 4 is bounded on the east by the property boundary between Pinto Valley and the United States Forest Service (USFS). Pinto Valley has unpatented mining claims east of this property boundary, but no operations plan currently exists with the USFS for tailings deposition on USFS property. Therefore, the property boundary sets the limit of tailings deposition at Tailings Dam No. 4. Digital terrain models were constructed using both the 2004 topography and the tailings design. AutoCAD software was used to calculate the volume between the different topographic surfaces in cubic yards. The available volume was calculated as 76,910,000 m3. Cubic metres were then converted to tonnes. From the calculations, an estimated capacity of 105,000,000 tonnes of tailings is available in Tailings Dam No. 4 without encroaching on the property boundary. The Slice 6 design mine plan projects that 87,300,000 tonnes of ore will be processed; therefore, Tailings Dam No. 4 will have an additional 17,700,000 tonnes of available capacity after the Slice 6 design mine plan is complete.

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Tailings Dam No. 3

Tailings Dam No. 3 is used only when Tailings Dam No. 4 is taken off-line for maintenance activities. The available capacity of Tailings Dam No. 4 has historically been about 95%. Therefore, Tailings Dam No. 3 must currently contain only 5% of the planned tailings production, or approximately 4.5-million tonnes of tailings. Tailings Dam No. 3 is bounded on the west by the property boundary between Pinto Valley and the USFS. Pinto Valley has unpatented mining claims west of this property boundary, but no operations plan currently exists with the USFS for tailings deposition on USFS property. 18.2.9

Buildings and Support Facilities

Existing buildings will be used during the proposed restart. Existing on-site structures will service construction and site operations for the life of the project. The following new buildings are planned for Pinto Valley:     

Core Storage Building (under construction) Hazardous Waste Storage Building Depot Office Building at San Manual Locomotive Depot at San Manual Shade over the Locomotive Inspection Pit

When operations were suspended, various buildings at the Pinto Valley site were placed in nonoperational status. Minor modifications to the entry points at the North Barn and Lower Truck Shop Maintenance facilities are anticipated to accommodate large trucks to facilitate a more economic mining operation. During refurbishment, the following components required some repairs: heating, ventilation, air conditioning (HVAC) units, boilers, and piping. 18.2.10

Maintenance Support and Shop

All required maintenance support and shop infrastructure already exists. No additions are planned as part of the proposed restart. 18.2.11

Communications

Existing communication systems will be used to an extent that is practical. The local area SAP and document data transfer and storage processes will be upgraded to meet existing requirements so they are able to provide adequate bandwidth for the operating facility; this includes a backup satellite system if the primary fibre-optic system fails. 18.2.12

Security

Existing security facilities and procedures are adequate for the proposed restart. Additional security staff and support vehicles will be incrementally introduced to meet the needs of the increased on-site workforce. CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 18-4

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DECEMBER 2013

LOGISTICS AND TRANSPORT

Pinto Valley concentrate is loaded into highway trucks and transported 85 miles to the existing Capstone storage/trans-load facility at San Manuel, Arizona. Up to fourteen, 24-ton trucks are contracted to make three complete round trips per day each, Monday through Friday, with two overlapping shifts per day. Concentrate can also be trucked directly from the Pinto Valley site to local smelters. San Manuel has a designed storage capacity of 36,000 tonnes. The Capstone-owned San Manuel Arizona Railroad Company (SMARRCO) coordinates concentrate shipments and truck/transload/rail-to-vessel loading in Guaymas, Mexico. Approximately 200 bottom-dump hopper railcars are required for concentrate rail shipments from San Manuel to Guaymas: a fleet of 75 cars will be required for the initial ramp-up, and then an additional 125 cars will be required to meet future, increased production.

18.4

CONSIDERATIONS FOR INFRASTRUCTURE

Core drilling under the existing ore processing facility is recommended to fully exploit ore potential before any significant infrastructure is built on site. Conceptual pit extensions in future studies could compromise the southern water facility pipeline and pump stations, as well as the primary 13.8-kV mine feed electrical loop infrastructure. The primary crusher could also be located within a future pit setback. Historic tailings dams to the west of the pit may be encroached by setback at some date beyond the current Slice 6 Mine Plan. The SX/EW Pregnant Leach Solution pipeline and Gold Gulch 1A currently obstruct additional tailings infill capacity in the Gold Gulch watershed, and future re-routing may be required. Existing springs and seeps in the Gold Gulch watershed underlie future infill sites and must be managed to enhance tailings deposition on the property. An extension of Tailings Dam No. 3 may impose Best Available Demonstrated Control Technology (BADCT) lining requirements under a new footprint of the dam. Reclamation of the face of Tailings Dam No. 3 reduces operating costs and environmental exposures; a “reclaim as you go” approach will be used to build tailings dams.

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19 MARKET STUDIES AND CONTRACTS Capstone will perform all marketing and sales administration. Based on the economic growth, port location on the Pacific Ocean and the related-industry demand from Asia, it is expected that the copper concentrates will be sold under long-term frame contracts to smelters in Asia. The expected copper concentrate price is based on the published London Metals Exchange prices for the payable metals, less treatment charges (TC) and refining charges (RC) incurred by the Pinto Valley Mine to smelt and refine the sulphide concentrate to copper cathode. The TCs and RCs fluctuate with market conditions. The molybdenum concentrate is pressure leached on site to reduce the residual copper and then sold to roasters and merchants who currently ship it to Europe, North America and South America. The concentrate price is based on the published price for molybdenum oxide, minus a discount incurred by THVC to roast the sulphide concentrate to oxide. This discount fluctuates with market conditions. It is anticipated that the copper cathode will be sold under annual contracts to traders or refineries located in the United States at the prices published on the London Metals Exchange. The prices for the resultant payable metals are published on the New York Mercantile Exchange’s Commodity Exchange for payable metals, and be subject to a market premium. It is expected that the majority of the copper concentrates will be sold under long-term contracts that are considered within industry norms. Credits from the gold and silver are realized if the grades of each metal in the copper concentrate exceed normal industry levels. Copper concentrates are transported to the Port of Guaymas by rail using Capstone’s San Manuel Railroad and rolling fleet, Union Pacific Railroad and Ferromex Railroad. The Pinto Valley Mine currently contracts out the transportation of concentrate from the mine to the San Manuel Railroad. Before the concentrate is loaded onto ocean-going vessels, it is unloaded from the railcars and stored in a warehouse in the Port of Guaymas under a long-term port usage agreement with the Administración Portuaria Integral de Guaymas. Ocean shipping to the smelting complexes is arranged by Capstone's mining marketing group.

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20 ENVIRONMENTAL STUDIES AND SOCIAL OR COMMUNITY IMPACT No additional environmental or social impact assessments are required, other than those already in place as a result of past operations. The Pinto Valley project consists of restarting a previously operating facility, in the same location, and using the same processes.

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21 CAPITAL AND OPERATING COSTS Capstone has invested a total of $650 million toward the purchase of the Pinto Valley Operation from BHP Copper. In addition, BHP Copper has invested approximately $192 million in capital improvements in preparation for start-up. At the closing of the acquisition by Capstone on October 11, 2013, the Pinto Valley Operations was approximately 10 months into its re-commissioning by BHP Copper after the January 20, 2009 shutdown, as discussed in Section 6 of this report. As part of the re-start of operations, BHP Copper had completed a refurbishment program to prepare for the restart of operations. The capital expenditure for the refurbishment program amounted to approximately $192 million in total and included: • approximately $60 million for a 28 vehicle mobile fleet, including loaders, haul trucks, drills, dozers and graders; • approximately $40 million to upgrade the processing operations, including the plant distributed control systems and ball mill switch gear; • approximately $10 million for a new 132 vehicle railcar fleet for SMARRCO; and • the balance attributable to infrastructure, engineering and owners costs. As at December 6, 2013, there are no contractual commitments for material capital expenditure amounts at the Pinto Valley Operations. Pre-stripping has been completed for the five year mine plan described in Subsection 16.2, and as a result it is not expected that significant sustaining or expansion capital will be required over the coming five year period. The forward looking capital plans for the mine as developed by BHP Copper and used by Capstone in its financial analysis, included sustaining and mine development capital of approximately $150 million over the five year period following the restart of operations. Capstone anticipates that this amount can easily be sustained by anticipated operating cash flows. As at December 6, 2013, Capstone has owned the operation for approximately eight weeks and has not yet completed the first full monthly close of the financial statements for the Pinto Valley Operations under its ownership. As such, Capstone does not yet have information that it can report on operating expenses. Additionally, the company does not have access to cost or operating data predating its ownership. Even if that information were available, throughout 2013, the Pinto Valley Operation has been in a start-up phase, with costs affected by transitional administrative support arrangements with the former owner, production levels and efficiencies below name-plate levels, and normal commissioning-related contractor costs. As a result, actual operating costs realized to date are either not available or are not representative of the sustainable performance of the operations.

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Capstone is currently in the process of compiling accurate and reliable cost estimates and sustaining capital estimates in preparation for the completion of a current feasibility study.

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22 ECONOMIC ANALYSIS National Instrument 43-101 Standards of Disclosure for Mineral Projects, Item 22 Instruction (1), states the following: Producing issuers may exclude the information required under Item 22 for technical reports on properties currently in production unless the technical report includes a material expansion of current production. As the Pinto Valley Mine is in production and this report does not include a material expansion of the project, information in this section has been excluded.

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23 ADJACENT PROPERTIES The Pinto Valley Mine is adjacent to the Carlota Mine and near the Freeport-McMoRan Miami Mine; Figure 15-1 shows the immediate mine location in relation to other operations/properties within the Globe-Miami region. The author has not been able to verify the information in this section and it should be noted that this information is not necessarily indicative of mineralization at Pinto Valley. The sources of the information are from company websites and publically disclosed by KGHM and Freeport McMorran.

Freeport

Carlota

FIGURE 23-1: PINTO VALLEY MINE AND ADJACENT PROPERTIES

23.1

CARLOTA MINE

The Carlota Mine is nearing closure and is currently in reclamation. Carlota was discovered in the 1990s and came to be one of the first copper mines designated and permitted under modern environmental legislation. Owned entirely by KGHM International Ltd., the mine was commissioned in late-2008 and has produced an average of 25 million pounds of cathode copper annually for the last four years. Carlota has been implementing a mine closure plan which optimizes cash flow while advancing activities related to the winding down of operations. This plan is consistent with the life of mine objectives as described in the Carlota permits which call for a staged closure plan during the last years of mining. The mine’s timeline for closure is in accordance with current permits and Arizona environmental regulations. Time, attention and money are spent on detailed closure plans to ensure the mined land can be reclaimed and used for other purposes.

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MIAMI MINE

The Miami Mine is a porphyry copper deposit that has leachable oxide and secondary sulphide mineralization. The predominant oxide copper minerals are chrysocolla, copper-bearing clays, malachite, and azurite. Chalcocite and covellite are the most important secondary copper sulphide minerals. Since about 1915, the Miami mining operation had processed copper ore using both flotation and leaching technologies. Current operations include leaching by the solution extraction and electrowinning (SX/EW) process. The design capacity of Miami's SX/EW plant is 200 million pounds of copper per year. The first prospecting expeditions visited the area in the 1860s. Copper was mined underground until after World War II when the first open-pit mining began. Miami was among the first to employ “vat leaching” (1926) and precipitation plants to recover oxide minerals. It did this in conjunction with its flotation concentrator, which processed sulphide minerals. The plant’s smelter was modernized in 1974 to meet Clean Air Act standards and was further modernized and expanded in 1992. The success of an SX/EW plant commissioned in 1979 led to the demise of vat leaching by the mid-1980s, and ultimately the concentrator in 1986. The rod mill was commissioned in 1966 and the refinery in 1993; the refinery was permanently closed in 2005.

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24 OTHER RELEVANT DATA AND INFORMATION The author of this report is not aware of any other information that is relevant to this Technical Report.

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25 INTERPRETATION AND CONCLUSIONS The Pinto Valley Mine and Concentrator are located at the west end of the Globe-Miami district, approximately six miles west of the town of Miami in Gila County, Arizona at an elevation of approximately 4,000 ft. The Pinto Valley Mine, located within the Globe-Miami mining district of central Arizona, which possesses other significant porphyry copper deposits associated with Paleocene granodiorite to Granite Porphyry stocks. The Pinto Valley porphyry copper deposit has been dismembered by faults and affected by later erosion and minor oxidation. BHP is a large, well respected organization with well documented procedures which appear to be adhered to although there may be room for increased confidence and continuous improvement. BHP Copper denied the author certain information relating to its business matters that were deemed confidential and industry-sensitive. BHP Copper, through legal counsel, determined what material was sensitive and unavailable for release. Although it is believed that all information relevant to the creation of this Technical Report has been disclosed, unrestricted and free access was not given to the author due to constraints under the previously stated U.S. laws. The author is confident that all necessary information and data was given so as not to be incorrect or misleading. A total of 1,031 drill holes were supplied for the Pinto Valley Project; however, the assays for 62 of those holes, as of the effective date of this report, were pending and unavailable. The drill hole database was supplied by BHP in an electronic format. This data included drill hole collars, down hole surveys, lithology data, and assay data with downhole from and downhole to intervals in imperial units. The assay data included total Cu% and Mo%. The purpose of this Technical Report was to present the resource estimate for the Pinto Valley Deposit. Therefore, the primary interpretations and conclusions of this report are related to the data, analysis and methods related to the calculation of the resource estimate. In addition, this Technical Report serves as an update on the activities carried out in 2012-2013. Based on a 0.25% Cu cut-off grade, Measured resources are 402 Mt at a grade of 0.38% Cu and 0.009% Mo, Indicated resources are 566 Mt tonnes at a grade of 0.33% Cu and 0.009% Mo, while Inferred resources are 45 Mt at a grade of 0.33% Cu and 0.009% Mo. This resource is relatively large, of significant grade, has favourable metallurgy, is near surface and is close to infrastructure. In addition, the project area has further potential in the way of identified targets that warrant further exploration.

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26 RECOMMENDATIONS In order to further evaluate the resource potential of the Pinto Valley Project and advance the project by evaluating its economic viability, the following recommendations should be considered in 2013:  Incorporate remaining assay data from 2012-2013 drilling campaign.  To increase confidence and upgrade resource classification.  Continue with the QA/QC of the master database.  Continue density measurements and analysis.  Revise solids based on the most current assay data.  Documentation and project map of all drill data.  Improve documentation of procedures and protocols.  Continue with advanced metallurgical studies.  Continue environmental studies.  Continue with activities related to and completion of Pre-feasibility Study. Note that a budget for the above activities was not available due to on-going activities and information being of a proprietary nature. BHP and Capstone are cooperating with respect to the advancement of the mine and in particular the development of the advanced studies targeted for completion in mid 2014.

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27 REFERENCES Arancibia, O.N. and Clark, A.H., 1996, Early magnetite-amphibolite-plagioclase alterationmineralization in the Island Copper porphyry copper-gold-molybdenum deposit, British Columbia: Economic Geology, v. 91, p. 402-438. Baird, B. and Preece, R., June 2012 Mineral Resource & Ore Reserve Competent Persons Report: Pinto Valley. BHP Annual Report, June 30, 2013 Breitrick, R.A., and Lenzi, G.W., 1987, Pinto Valley copper deposit, Arizona Geological Survey Special Paper 5. CIM Standing Committee on Reserve Definitions, 2010. CIM Definition Standards – For Mineral Resources and Mineral Reserves. Retrieved from http://web.cim.org/UserFiles/File/CIM_DEFINITON_STANDARDS_Nov_2010.pdf, 10p. Creasey, S. C., “Chronology of intrusion and deposition of porphyry copper ores, Globe-Miami district, Arizona,” Economic Geology 75 (1980): 830–44. Davis, B.M., 1997, Some methods of producing interval estimates for global and local resources; Society for Mining, Metallurgy, and Exploration Preprint 97-5, 5p. Deutsch, C.V., Journel, A.G. 1998 GSLIB: Geostatistical Software Library and User’s Guide. Oxford University Press, Oxford, New York. Hedenquist, J.W., Arribas, A., Jr., and Gonzalez-Urien, E., 2000, Exploration for epithermal gold deposits: Reviews in Economic Geology, v. 13, p. 245-277. Houlding, S.W. 1999 Practical Geostatistics, Modeling and Spatial Analysis. Springer-Verlag, Berlin Heidelberg. Isaaks, E.H. 2001 SAGE: Geostatistical A Spatial and Geostatistical Environment for Variography, Isaaks&Co., San Mateo, California. Isaaks, E.H., Srivistava, R.M. 1989 An Introduction to Applied Geostatistics, Oxford University Press, Oxford, New York. Journel, A., Huijbregts, C.J., 1978, Mining Geostatics. London: Academic Press. 600p. Meinert, L.D., 2000, Gold in skarns related to epizonal intrusions: Reviews in Economic Geology, v. 13, p. 347-375. Mintec, Inc. 2003 MineSight 3D System Software and Documentation. Mintec, inc., Tucson, Arizona.

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Olmstead H W, Johnson D. W. 1966 - Inspiration geology: in Titley S R, Hicks C L 1966 Geology of the Porphyry Copper Deposits, Southwestern North America University of Arizona Press, Tucson pp 143-150 Peterson, N. P., “Geology and Ore Deposits of the Globe-Miami District, Arizona” U. S. Geological Survey Prof. Paper 342, 151 p. (1962). Peterson, N. P., Gilbert, C. M. and Quick, G. L., “Geology and Ore Deposits of the Castle Dome Area, Gila County, Arizona” U. S. Geological Survey Bulletin 971 (1951). Sillitoe, R.H., 2010, Porphyry Copper Systems: Economic Geology, v. 105, p. 3-41. Wellmer, F.-W. 1998 Statistical Evaluations in Exploration for Mineral Deposits. SpringerVerlag, Berlin Heidelberg. Winant, A. R. and Seedorff, E., 2010, Sericitic and Advanced Argillic Mineral Assemblages and Their Relationship to Copper Mineralization, Resolution Porphyry Cu - (Mo) Deposit, Superior District , Pinal County, Arizona

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KIRKHAM GEOSYSTEMS LTD.

DECEMBER 2013

28 DATE AND SIGNATURES I, Garth David Kirkham, P.Geo., do hereby certify that: I am a consulting geoscientist with an office at 6331 Palace Place, Burnaby, British Columbia. 1) This certificate applies to the entitled “Resource Estimate for the Pinto Valley Deposit NI 43-101 Technical Report” with amended date of 11th of December, 2013 (“Technical Report”) prepared for Capstone Mining Corp., Vancouver, B.C . 2) I am a graduate of the University of Alberta in 1983 with a BSc. I have continuously practiced my profession since 1988. I have worked on and been involved with NI43-101 studies on the Mineral Park, Halilağa, Ajax and Tres Chorreras porphyry deposits. 3) I am a member in good standing of the Association of Professional Engineers and Geoscientists of BC (APEGBC) in addition to Ontario (APGO), Alberta (APEGGA), Manitoba (APEGM), and the Northwest Territories and Nunavut (NAPEGG). 4) I have visited the property on May 14th, 2013. 5) In the independent report titled entitled “Resource Estimate for the Pinto Valley Deposit NI 43-101 Technical Report” with amended date of 11th of December, 2013, I am responsible for all Sections on the Technical Report. I am also responsible for overall study management and compilation. 6) I have not had prior had involvement with the property. 7) I am independent of Capstone Mining Corporation as defined in Section 1.5 of National Instrument 43-101. 8) I have read the definition of “qualified person” set out in National Instrument 43-101 and certify that by reason of education, experience, independence and affiliation with a professional association, I meet the requirements of an Independent Qualified Person as defined in National Instrument 43-101. 9) I am not aware of any material fact or material change with respect to the subject matter of the technical report that is not reflected in the Technical Report and that, at the effective date of the Technical Report, to the best of my knowledge, information and belief, this technical report contains all scientific and technical information that is required to be disclosed to make the technical report not misleading. 10) I have read National Instrument 43-101, Standards for Disclosure of Mineral Projects and Form 43-101F1. This technical report has been prepared in compliance with that instrument and form. Dated this 11th day of December, 2013 in Burnaby, British Columbia “Garth Kirkham” {signed and sealed} Garth Kirkham, P.Geo. Kirkham Geosystems Ltd. CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE 28-1

KIRKHAM GEOSYSTEMS LTD.

APPENDIX A:

DECEMBER 2013

PERMITS

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE B-1

KIRKHAM GEOSYSTEMS LTD.

DECEMBER 2013

Permits, licenses and authorizations for the Pinto Valley Project

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-1

KIRKHAM GEOSYSTEMS LTD.

APPENDIX B:

DECEMBER 2013

CLAIMS AND TENURE

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-2

KIRKHAM GEOSYSTEMS LTD.

DECEMBER 2013

Unpatented Mining Claims and Mill Sites BLM Serial Number

Name of Claim

Docket

Book or Document No.

Page

1

AMC 7735

Mary 1

426

246

2

AMC 7736

Mary 2

426

247

3

AMC 7737

Mary 3

426

248

4

AMC 7738

Mary 4

426

249

5

AMC 7739

Mary 5

426

250

6

AMC 7740

Mary 6

426

251

7

AMC 27738

Cowboy No. 1 amended

42

127

8

AMC 27739

Cowboy No. 2 amended

42

128

9

AMC 27740

Cowboy No. 3 amended

42

129

10

AMC 27741

Rita

47

150

11

AMC 27742

Copper Site amended

42

124

12

AMC 27743

Pine Tree amended

42

126

13

AMC 384552

BOB #1

2007-011669

14

AMC 384553

BOB #2

2007-011670

15

AMC 384554

BOB #3

2007-011671

16

AMC 384555

BOB #4

2007-011672

17

AMC 384556

BOB #5

2007-011673

18

AMC 384557

BOB #6

2007-011674

19

AMC 27747

Hammer

47

147

20

AMC 27748

Joan

47

148

21

AMC 27749

Southern Cross

47

151

22

AMC 27750

Midnight Test amended

42

125 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-2

KIRKHAM GEOSYSTEMS LTD.

DECEMBER 2013

23

AMC 27751

Copper Bottom No. 1

amended

42

195

24

AMC 27752

Copper Bottom No. 6

amended

42

194

25

AMC 27753

Copper Bottom No. 8

47

385

26

AMC 27754

Copper Bottom No. 9

47

386

27

AMC 27755

Copper Bottom No. 10

47

387

28

AMC 27757

Hill No. 2

280

10

29

AMC 27758

Hill No. 3

280

11

30

AMC 27759

Hill No. 4

280

12

31

AMC 27760

Hill No. 5

280

13

32

AMC 27761

Hill No. 6

280

14

33

AMC 27762

Hill No. 7

280

15

34

AMC 27763

Hill No. 8

280

16

35

AMC 27764

Hill No. 9

280

17

36

AMC 27765

Hill No. 10

280

18

37

AMC 27994

Tunnel

10

502

38

AMC 28023

Peak No. 3

333

331

39

AMC 28025

Peak No. 7

333

333

40

AMC 28026

Peak No. 8

333

334

41

AMC 28027

Peak No. 9

335

703

42

AMC 28028

Peak No. 10

335

704

43

AMC 28031

Peak No. 14

367

606

44

AMC 28032

Peak No. 15

367

607

45

AMC 28033

Peak No. 17

367

608

46

AMC 28036

Peak No. 22

390

9

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-3

KIRKHAM GEOSYSTEMS LTD.

DECEMBER 2013

47

AMC 28037

Peak No. 24

402

700

48

AMC 28038

Peak 25

405

974

49

AMC 28040

Peak 28

414

719

50

AMC 28059

Zee No. 2

284

855

51

AMC 35792

Quartz Site (A)

466

191

52

AMC 35793

Quartz Site No. 2 (A)

466

190

53

AMC 35794

Quartz Site No. 3 (A)

466

189

54

AMC 35800

Quartz Site No. 9 (A)

466

183

55

AMC 35801

Quartz Site No. 10 (A)

466

182

56

AMC 35806

Quartz Site No. 15 (A)

466

177

57

AMC 35807

Quartz Site No. 16 (A)

466

176

58

AMC 35808

Quartz Site No. 17 (A)

466

175

59

AMC 35809

Quartz Site No. 18 (A)

466

174

60

AMC 35810

Quartz Site No. 19 (A)

466

173

61

AMC 35811

Quartz Site No. 20 (A)

466

172

62

AMC 35812

Quartz Site No. 21 (A)

466

171

63

AMC 35813

Quartz Site No. 22 (A)

466

170

64

AMC 35814

Quartz Site No. 23 (A)

466

169

65

AMC 35815

Quartz Site No. 24 (A)

466

168

66

AMC 35816

Quartz Site No. 25 (A)

466

167

67

AMC 35820

Quartz Site #28 (A)

466

165

68

AMC 35821

Silver Bell (A)

466

192

69

AMC 35824

Janie No. 1 (A)

466

194

70

AMC 35825

Janie No. 2 (A)

466

195

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-4

KIRKHAM GEOSYSTEMS LTD.

DECEMBER 2013

71

AMC 35830

Copper Bottom #2 (A)

466

202

72

AMC 35831

Copper Bottom #5 (A)

466

215

73

AMC 35832

Copper Bottom #7 (A)

466

201

74

AMC 35833

Copper Bottom #11 (A)

466

216

75

AMC 35834

Copper Bottom #12 (A)

466

217

76

AMC 35835

Copper Bottom #13 (A)

466

218

77

AMC 40744

East Water

469

458

78

AMC 97644

Peak 34

493

567

79

AMC 129535

Peak 94

534

775

80

AMC 138512

K1

542

700

81

AMC 138513

K2

542

702

82

AMC 138514

K3

542

704

83

AMC 138515

K4

542

706

84

AMC 138516

K5

542

708

85

AMC 138517

K6

542

710

86

AMC 138518

K7

542

712

87

AMC 138519

K8

542

714

88

AMC 138520

K9

542

716

89

AMC 138521

K10

542

718

90

AMC 138522

K11

542

720

91

AMC 138523

K12

542

722

92

AMC 138524

K13

542

724

93

AMC 138525

K14

542

726

94

AMC 138526

K15

542

728

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-5

KIRKHAM GEOSYSTEMS LTD.

DECEMBER 2013

95

AMC 138527

K16

542

730

96

AMC 138528

K17

542

732

97

AMC 138529

K18

542

734

98

AMC 138530

K19

542

736

99

AMC 138531

K20

542

738

100 AMC 138532

K21

542

740

101 AMC 138533

K22

542

742

102 AMC 138534

K23

542

744

103 AMC 138535

K24

542

746

104 AMC 138536

K25

542

748

105 AMC 138537

K26

542

750

106 AMC 138538

K27

542

752

107 AMC 138539

K28

542

754

108 AMC 138540

K29

542

756

109 AMC 138541

K30

542

758

110 AMC 138542

K31

542

760

111 AMC 138543

K32

542

762

112 AMC 138544

K33

542

764

113 AMC 138545

K34

542

766

114 AMC 138546

K35

542

768

115 AMC 142565

M1

549

363

116 AMC 215329

D1

606

157

117 AMC 215330

D2

606

159

118 AMC 215331

D3

606

161

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-6

KIRKHAM GEOSYSTEMS LTD.

DECEMBER 2013

119 AMC 215332

D4

606

163

120 AMC 215333

D5

606

165

121 AMC 215334

D6

606

167

122 AMC 215335

D7

606

169

123 AMC 215336

D8

606

171

124 AMC 215337

D9

606

173

125 AMC 215338

D10

606

175

126 AMC 215339

D11

606

177

127 AMC 215340

D12

606

179

128 AMC 215341

D13

606

181

129 AMC 215344

D16

606

187

130 AMC 215345

D17

606

189

131 AMC 319065

Hill No. 11

855

828

132 AMC 319066

Hill No. 12

855

830

133 AMC 319067

Hill No. 13

855

832

134 AMC 327204

P1

93

634671

135 AMC 327205

P2

93

634672

136 AMC 327206

P3

93

634673

137 AMC 327207

P4

93

634674

138 AMC 327208

P5

93

634675

139 AMC 327209

P6

93

634676

140 AMC 327210

P7

93

634677

141 AMC 327211

P8

93

634678

142 AMC 327212

P9

93

634679

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-7

KIRKHAM GEOSYSTEMS LTD.

DECEMBER 2013

143 AMC 327213

P10

93

634680

144 AMC 327214

P11

93

634681

145 AMC 327215

P12

93

634682

146 AMC 327216

P13

93

634683

147 AMC 327217

P14

93

634684

148 AMC 327218

P15

93

634685

149 AMC 327219

P16

93

634686

150 AMC 327220

P17

93

634687

151 AMC 327221

P18

93

634688

152 AMC 364145

E-1

2005

510

153 AMC 364146

E-2

2005

511

154 AMC 364147

E-3

2005

512

155 AMC 364148

E-4

2005

513

156 AMC 370110

RJ #1

2006

3905

157 AMC 370111

RJ #2

2006

3906

158 AMC 370112

RJ #3

2006

3907

159 AMC 370113

RJ #4

2006

3908

160 AMC 370114

RJ #5

2006

3909

161 AMC 370115

RJ #6

2006

3910

162 AMC 370116

RJ #7

2006

3911

163 AMC 370117

RJ #8

2006

3912

164 AMC 370118

RJ #9

2006

3913

165 AMC 370119

RJ #10

2006

3914

166 AMC 370120

RJ #11

2006

3915

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-8

KIRKHAM GEOSYSTEMS LTD.

DECEMBER 2013

167 AMC 370121

RJ #12

2006

3916

168 AMC 370122

RJ #13

2006

3917

169 AMC 370123

RJ #14

2006

3918

170 AMC 370124

RJ #15

2006

3919

171 AMC 370125

RJ #16

2006

3920

172 AMC 370126

RJ #17

2006

3921

173 AMC 370127

RJ #18

2006

3922

174 AMC 370128

RJ #19

2006

3923

175 AMC 370129

RJ #20

2006

3924

176 AMC 370130

RJ #21

2006

3925

177 AMC 370131

RJ #22

2006

3926

178 AMC 370132

RJ #23

2006

3927

179 AMC 370133

RJ #24

2006

3928

180 AMC 370134

RJ #25

2006

3929

181 AMC 370135

RJ #26

2006

3930

182 AMC 370136

RJ #27

2006

3931

183 AMC 370137

RJ #28

2006

3932

184 AMC 370138

RJ #29

2006

3933

185 AMC 370139

RJ #30

2006

3934

186 AMC 370140

RJ #31

2006

3935

187 AMC 370141

RJ #32

2006

3936

188 AMC 370142

RJ #33

2006

3937

189 AMC 370143

RJ #34

2006

3938

190 AMC 370144

RJ #35

2006

3939

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-9

KIRKHAM GEOSYSTEMS LTD.

DECEMBER 2013

191 AMC 370145

RJ #36

2006

3940

192 AMC 370146

RJ #37

2006

3941

193 AMC 370147

RJ #38

2006

3942

194 AMC 370148

RJ #39

2006

3943

195 AMC 370149

RJ #40

2006

3944

196 AMC 370150

RJ #41

2006

3945

197 AMC 370151

RJ #42

2006

3946

198 AMC 370152

RJ #43

2006

3947

199 AMC 370153

RJ #44

2006

3948

200 AMC 370154

RJ #45

2006

3949

201 AMC 370155

RJ #46

2006

3950

202 AMC 370156

RJ #47

2006

3951

203 AMC 370157

RJ #48

2006

3952

204 AMC 370158

RJ #49

2006

3953

205 AMC 370159

RJ #50

2006

3954

206 AMC 370160

RJ #51

2006

3955

207 AMC 370161

RJ #52

2006

3956

208 AMC 370162

RJ #53

2006

3957

209 AMC 370163

RJ #54

2006

3958

210 AMC 370164

RJ #55

2006

3959

211 AMC 370165

RJ #56

2006

3960

212 AMC 370166

RJ #57

2006

3961

213 AMC 370167

RJ #58

2006

3962

214 AMC 370168

RJ #59

2006

3963

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-10

KIRKHAM GEOSYSTEMS LTD.

DECEMBER 2013

215 AMC 370169

RJ #60

2006

3964

216 AMC 370170

RJ #61

2006

3965

217 AMC 370171

RJ #62

2006

3966

218 AMC 370172

RJ #63

2006

3967

219 AMC 370173

RJ #64

2006

3968

220 AMC 384697

RJ #65

2007

12073

221 AMC 384698

RJ #66

2007

12074

222 AMC 384699

RJ #67

2007

12075

223 AMC 384700

RJ #68

2007

12076

224 AMC 384701

RJ #69

2007

12077

225 AMC 384702

RJ #70

2007

12078

226 AMC 384703

RJ #71

2007

12079

227 AMC 384704

RJ #72

2007

12080

228 AMC 393547

TOE 20

2008

9417

229 AMC 422569

CWL 1

2013

3544

230 AMC 422570

CWL 2

2013

3545

231 AMC 422571

CWL 3

2013

3546

232 AMC 422572

CWL 4

2013

3547

233 AMC 422573

CWL 5

2013

3548

234 AMC 422574

CWL 6

2013

3549

235 AMC 422575

CWL 7

2013

3550

236 AMC 422576

CWL 8

2013

3551

237 AMC 422577

CWL 9

2013

3552

238 AMC 422578

CWL 10

2013

3553

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-11

KIRKHAM GEOSYSTEMS LTD.

DECEMBER 2013

239 AMC 422579

CWL 11

2013

3554

240 AMC 422580

CWL 12

2013

3555

241 AMC 422581

CWL 13

2013

3556

242 AMC 422582

CWL 14

2013

3557

243 AMC 422583

CWL 15

2013

3558

244 AMC 422584

CWL 16

2013

3559

245 AMC 422585

CWL 17

2013

3560

246 AMC 422586

CWL 18

2013

3561

247 AMC 422587

CWL 19

2013

3562

248 AMC 422588

CWL 20

2013

3563

249 AMC 422589

CWL 21

2013

3564

250 AMC 422590

CWM 1

2013

3565

251 AMC 422591

CWM 2

2013

3566

252 AMC 422592

CWM 3

2013

3567

253 AMC 422593

CWM 4

2013

3568

254 AMC 422594

CWM 5

2013

3569

255 AMC 422595

CWM 6

2013

3570

256 AMC 422596

CWM 7

2013

3571

257 AMC 422597

CWM 8

2013

3572

258 AMC 422598

CWM 9

2013

3573

259 AMC 422599

CWM 10

2013

3574

260 AMC 422600

CWM 11

2013

3575

261 AMC 422601

CWM 12

2013

3576

262 AMC 422602

CWM 13

2013

3577

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-12

KIRKHAM GEOSYSTEMS LTD.

DECEMBER 2013

263 AMC 422603

CWM 14

2013

3578

264 AMC 422604

CWM 15

2013

3579

265 AMC 422605

CWM 16

2013

3580

266 AMC 422606

CWM 17

2013

3581

267 AMC 422607

CWM 18

2013

3582

268 AMC 422608

CWM 19

2013

3583

269 AMC 422609

CWM 20

2013

3584

270 AMC 422610

CWM 21

2013

3585

271 AMC 422611

CWM 22

2013

3586

272 AMC 422612

CWM 23

2013

3587

273 AMC 422613

CWM 24

2013

3588

274 AMC 422614

CWM 25

2013

3589

275 AMC 422615

CWM 26

2013

3590

276 AMC 422616

CWM 27

2013

3591

277 AMC 422617

CWM 28

2013

3592

278 AMC 422618

CWM 29

2013

3593

279 AMC 422619

CWM 30

2013

3594

280 AMC 422620

CWM 31

2013

3595

281 AMC 422621

CWM 32

2013

3596

282 AMC 422622

CWM 33

2013

3597

283 AMC 422623

CWM 34

2013

3598

284 AMC 422624

CWM 35

2013

3599

285 AMC 422625

CWM 36

2013

3600

286 AMC 422626

CWM 37

2013

3601

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-13

KIRKHAM GEOSYSTEMS LTD.

DECEMBER 2013

287 AMC 422627

CWM 38

2013

3602

288 AMC 422628

CWM 39

2013

3603

289 AMC 422629

CWM 40

2013

3604

290 AMC 422630

CWM 41

2013

3605

291 AMC 422631

CWM 42

2013

3606

292 AMC 422632

CWM 43

2013

3607

293 AMC 422633

CWM 44

2013

3608

294 AMC 422634

CWM 45

2013

3609

295 AMC 422635

CWM 46

2013

3610

296 AMC 422636

CWM 47

2013

3611

297 AMC 422637

CWM 48

2013

3612

298 AMC 422638

CWM 49

2013

3613

299 AMC 422639

CWM 50

2013

3614

300 AMC 422640

CWM 51

2013

3615

301 AMC 422641

CWM 52

2013

3616

302 AMC 422642

CWM 53

2013

3617

303 AMC 422643

CWM 54

2013

3618

304 AMC 422644

CWM 55

2013

3619

305 AMC 422645

CWM 56

2013

3620

306 AMC 422646

CWM 57

2013

3621

307 AMC 422647

CWM 58

2013

3622

308 AMC 422648

CWM 59

2013

3623

309 AMC 422649

CWM 60

2013

3624

310 AMC 422650

CWM 61

2013

3625

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-14

KIRKHAM GEOSYSTEMS LTD.

DECEMBER 2013

311 AMC 422651

CWM 62

2013

3626

312 AMC 422652

CWM 63

2013

3627

313 AMC 422653

CWM 64

2013

3628

314 AMC 422654

CWM 65

2013

3629

315 AMC 422655

CWM 66

2013

3630

316 AMC 422656

CWM 67

2013

3631

317 AMC 422657

CWM 68

2013

3632

318 AMC 422658

CWM 69

2013

3633

319 AMC 422659

CWM 70

2013

3634

320 AMC 422660

CWM 71

2013

3635

321 AMC 422661

CWM 72

2013

3636

322 AMC 422662

CWM 73

2013

3637

323 AMC 422663

CWM 74

2013

3638

324 AMC 422664

CWM 75

2013

3639

325 AMC 422665

CWM 76

2013

3640

326 AMC 422666

CWM 77

2013

3641

327 AMC 422667

CWM 78

2013

3642

328 AMC 422668

CWM 79

2013

3643

329 AMC 422669

CWM 80

2013

3644

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-15

KIRKHAM GEOSYSTEMS LTD.

DECEMBER 2013

Patented and Fee Properties (Including Tract and Homestead Entry Surveys) No.

Tax Parcel No.

Description/Location

204-10-007E

Tract 40, according to Map 474, Gila County, Arizona

204 10 007A

Part of Tract 40, according to Map #474, Gila County, Arizona

204 10 007B

A parcel of land within Tract 40 according to Map #474, Gila County, Arizona

204 10 004

Tract 41, according to Map #474, Gila County, Arizona

204-10-006

A portion of Homestead Entry Survey No. 71, as shown on plat on file in the B.L.M. as granted by Patent recorded in Book 21, Page 465 , Gila County, Arizona

204-10-005

Layton Ranch consisting of 27.570 acres, being part of Homestead Entry Survey No. 71, as shown on plat on file in the B.L.M. as granted by Patent recorded in Dkt 57, Page 314, Gila County, Arizona

204-10-002

Homestead Entry Survey 441, as shown on plat on file in the B.L.M. as granted by Patent recorded in Dkt 57, Page 314, Gila County, Arizona

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-16

KIRKHAM GEOSYSTEMS LTD.

DECEMBER 2013

Patented Mining Claims NO

NAME

MINERAL SURVEY NO. (on file with BLM)

BOOK

PAGE

(Mining Deeds)

Lime Bluff

3667

14

341

Kahn Spring

3667

14

341

King of Gold Gulch

3667

14

341

White Eagle

3667

14

341

Arizona

3667

14

341

East End

3667

14

341

Anna

3667

14

341

Anna No. 2

3667

14

341

Katy

3667

14

341

Proxy

3609

14

322

Bingo

3570

14

272

Blind Tiger No. 1

3570

14

272

Blind Tiger No. 2

3570

14

272

Blind Tiger No. 3

3570

14

272

North Star

3570

14

272

Brunton

3570

14

272

Pick

3570

14

272

Axe

3570

14

272

Wedge

3570

14

272

Oversight

3570

14

272

Little Annie

3570

14

272

Glory

3570

14

272

Czar

3570

14

272

Owl

3570

14

272

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-17

KIRKHAM GEOSYSTEMS LTD. NO

NAME

DECEMBER 2013 MINERAL SURVEY NO. (on file with BLM)

BOOK

PAGE

(Mining Deeds)

Grey Eagle

3570

14

272

Laurel

3570

14

272

Forgotten

3570

14

272

Bell

3570

14

272

Castle Dome

3570

14

272

Peerless

3570

14

272

Gladiator

3570

14

272

Turquois No. 1

3570

14

272

Turquois No. 2

3570

14

272

Belle of the Brambles

3570

14

272

Humbolt

3570

14

272

Emma

3570

14

272

Virginia

3570

14

272

First Choice

3570

14

272

Monastic

3570

14

272

Little Doris

3821

14

455

Alice

3821

14

455

Copper Belt No. 2

3821

14

455

Central Pacific

2806

11

141

South Pacific

2806

11

141

Railroad

2806

11

141

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-18

KIRKHAM GEOSYSTEMS LTD. NO

NAME

DECEMBER 2013

MINERAL SURVEY NO. (on file with BLM)

BOOK

PAGE

(Mining Deeds)

Tunnel

2756

11

173

Badger

2756

11

173

Dewey

2756

11

173

North Pacific

2756

11

173

Hobo

2756

11

173

96

2756

11

173

Baltimore

2756

11

173

Summit

2756

11

173

Bear

2756

11

173

Bull

2756

11

173

Boston

2756

11

173

Argus

2756

11

173

Standard

2756

11

173

Director

2756

11

173

Selby

2756

11

173

United States Fraction

2756

11

173

Indicator

3563

14

260

Sulphide

3561

14

262

Central Star Lode

3561

14

262

Copper Queen

2767

14

143

Copper Prince

2767

14

143

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-19

KIRKHAM GEOSYSTEMS LTD.

NO

NAME

DECEMBER 2013

MINERAL SURVEY NO. (on file with BLM)

BOOK

PAGE

(Mining Deeds)

Copper Cave Lode

2767

14

143

Scorpion

3562

14

263

Continental (Lot 37A)

General No. 110

1

507

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-20

KIRKHAM GEOSYSTEMS LTD.

DECEMBER 2013

Patented Mill Sites

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21.

Tax Parcel

NAME

PATENT NO.

MINERAL SURVEY NO.

BOOK

PAGE

RECORDING DATE

204-08-003

Peak No.1

2860024

4831

669

858

4/15/86

204-08-004

Peak No. 2

2860025

4832

669

862

4/15/86

204-08-005

Peak No. 6

2860026

4833

669

866

4/15/86

204-08-006

Peak No. 11

2860027

4834

669

870

4/15/86

204-08-007

Peak No.13

2860028

4835

669

874

4/15/86

204-08-008

Peak No. 18

2860029

4836

669

878

4/15/86

204-08-009

Peak No. 21

2860030

4837

669

882

4/15/86

204-08-009

Peak No. 26

2860031

4838

669

886

4/15/86

204-08-010

Peak No. 70

2860032

4840

669

890

4/15/86

204-08-010

Peak No. 74

2860033

4841

669

894

4/15/86

204-10-011

Peak No. 75

2860034

4842

669

898

4/15/86

204-10-012

Peak No. 77

2860035

4843

669

902

4/15/86

204-10-007D

Pinto Valley No. 1

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 2

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 3

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 4

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 5

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 6

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 7

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 8

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 9

02-77-0009

4686

427

419

6/2/77

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-21

KIRKHAM GEOSYSTEMS LTD.

22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43.

DECEMBER 2013

Tax Parcel

NAME

PATENT NO.

MINERAL SURVEY NO.

BOOK

PAGE

RECORDING DATE

204-10-007D

Pinto Valley No. 10

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 11

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 12

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 13

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 14

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 15

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 16

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 17

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 18

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 19

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 20

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 21

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 22

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 23

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 24

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 25

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 26

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 229

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 231

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 232

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 233

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 234

02-77-0009

4686

427

419

6/2/77

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-22

KIRKHAM GEOSYSTEMS LTD.

44. 45. 46. 47. 48. 49. 50. 51. 52. 53.

DECEMBER 2013

Tax Parcel

NAME

PATENT NO.

MINERAL SURVEY NO.

BOOK

PAGE

RECORDING DATE

204-10-007D

Pinto Valley No. 235

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 236

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 237

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 238

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 239

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 240

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 241

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 242

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 243

02-77-0009

4686

427

419

6/2/77

204-10-007D

Pinto Valley No. 244

02-77-0009

4686

427

419

6/2/77

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE A-23

KIRKHAM GEOSYSTEMS LTD.

APPENDIX C:

DECEMBER 2013

DRILL HOLE COLLARS

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-1

KIRKHAM GEOSYSTEMS LTD.

HOLE # 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37

DECEMBER 2013

EAST NORTH ELEV AZ DIP DEPTH -10128 7326 4378 0 -90 608 -10042 6935 4378 0 -90 1193 -9892 6520 4368 0 -90 823 -15146 4502 4083 0 -90 2293 -10193 6461 4369 0 -90 851 -9541 6643 4412 0 -90 950 -9679 6206 4302 0 -90 670 -10192 7530 4379 0 -90 1710 -8937 6730 4506 0 -90 1083 -9644 5609 4172 0 -90 1011 -10532 5349 4105 0 -90 1230 -10879 6328 4337 0 -90 985 -11189 7236 4357 0 -90 1666 -8661 5809 4254 0 -90 444 -12130 7131 4365 0 -90 1592 -11392 8226 4415 0 -90 1842 -10491 8472 4543 0 -90 1669 -8972 7957 4713 0 -90 940 -8051 7065 4526 0 -90 1624 -7710 6121 4442 0 -90 798 -15003 5629 4230 0 -90 1542 -14408 3689 3872 0 -90 818 -14582 4757 4063 0 -90 1463 -12230 5507 4060 0 -90 845 -13113 4164 3993 0 -90 1075 -14353 3420 3878 0 -90 1435 -14211 3702 3844 0 -90 40 -14325 3838 3888 0 -90 1314 -14365 3215 3839 0 -90 1210 -15948 7610 3762 0 -90 1137 -15125 3081 3950 0 -90 1032 -14525 8832 4161 0 -90 1200 -11323 6066 4149 0 -90 500 -11174 5899 4152 0 -90 500 -11130 6119 4249 0 -90 600 -15130 3089 3950 0 -90 2136 -11279 6285 4262 0 -90 632 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-2

KIRKHAM GEOSYSTEMS LTD. 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77

-10937 -11455 -11648 -18006 -11835 -12034 -12198 -12420 -12603 -12832 -11087 -12665 -13051 -12472 -11166 -10973 -10587 -10394 -10201 -10780 -9815 -9622 -11218 -10674 -11060 -11007 -10481 -11271 -9710 -9324 -11324 -9131 -13344 -11990 -12766 -12043 -13533 -12815 -15077 -12096

DECEMBER 2013 6171 6548 6495 6859 6445 6390 6345 6284 6234 6275 6338 6424 6319 6477 6627 6680 6786 6838 6891 6733 6997 7049 6820 6347 6241 6049 6400 7013 6611 6716 7206 6769 6252 6609 6397 6802 6187 6591 5765 6995

4307 4312 4282 3680 4321 4388 4469 4513 4554 4635 4330 4548 4710 4494 4358 4363 4277 4290 4298 4350 4451 4507 4358 4336 4311 4250 4331 4358 4383 4490 4359 4528 4751 4357 4594 4371 4715 4552 4213 4375

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

-90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90

660 802 1091 2170 1130 1006 912 1013 1009 1360 830 1543 1840 1669 1173 1358 1272 1240 1113 1390 1356 1322 1443 1061 1216 840 1011 1443 928 1125 1489 1118 1926 1442 1679 1411 1935 1547 1793 1325 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-3

KIRKHAM GEOSYSTEMS LTD. 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117

-12867 -12201 -13741 -14884 -12920 -10447 -14691 -13890 -10343 -12973 -14498 -10236 -14112 -10429 -14305 -13595 -10622 -14744 -14358 -13657 -10814 -14799 -13692 -14411 -10043 -14463 -9850 -9657 -14849 -13972 -13761 -14025 -12372 -13708 -13134 -12419 -13200 -12481 -13249 -12534

DECEMBER 2013 6784 7381 6130 5817 6977 7031 5870 6089 6650 7170 5923 6260 6029 6207 5976 6377 6154 6063 6169 6568 6101 6259 6766 6362 6312 6555 6365 6418 6449 6274 5503 6467 6505 5310 5483 6699 6485 6889 6675 7082

4512 4443 4599 4251 4511 4317 4260 4512 4278 4502 4313 4404 4430 4339 4392 4674 4328 4264 4379 4674 4310 4275 4646 4379 4383 4418 4327 4357 4313 4490 4129 4505 4463 4130 4130 4431 4672 4427 4625 4455

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

-90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90

1552 1393 1639 1291 1551 1357 1300 1552 1183 1317 1353 1039 1470 974 1432 1714 963 1304 1329 1714 945 1315 1686 1419 1018 1458 872 902 947 1395 1169 1455 1502 765 540 1156 1396 1152 1350 1180 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-4

KIRKHAM GEOSYSTEMS LTD. 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157

-13296 -14078 -14638 -14995 -14922 -14866 -15266 -15190 -13217 -13603 -15093 -15637 -15532 -15640 -14041 -15658 -13024 -15748 -11604 -14418 -14621 -11657 -13936 -11710 -13901 -15185 -10833 -13410 -10885 -13159 -13359 -13812 -13413 -13653 -13706 -14092 -13869 -13425 -13288 -14033

DECEMBER 2013 6874 6660 5677 5372 5198 4993 4884 4697 5029 4924 4309 4782 4396 4750 5011 5191 5082 5581 6715 4493 5060 6908 4625 7100 5257 5527 6926 4977 7119 4817 7064 3415 3317 2841 3029 2924 3651 3516 3144 2709

4594 4513 4265 4225 4175 4036 4121 4116 4127 4129 4071 3877 3866 3877 4128 3868 4120 3827 4320 4090 4037 4324 4224 4353 4130 4213 4297 4128 4358 4133 4573 3844 3843 3871 3841 3842 3880 3935 4023 3974

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

-90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90

1319 1238 990 950 900 761 846 841 852 539 796 332 591 602 853 593 530 552 1045 500 762 1049 634 1078 540 938 1022 538 1083 543 1253 569 748 281 746 1062 1100 1155 388 834 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-5

KIRKHAM GEOSYSTEMS LTD. 158 301 302 303 304 305 306 307 308 309 310 311 312 313 314 315 316 317 318 319 320 321 322 323 324 325 326 327 328 329 330 331 332 333 334 335 336 337 338 339

-13986 -12772 -12719 -12825 -12561 -13403 -14096 -14412 -13952 -14150 -13698 -14110 -13812 -14005 -14055 -13859 -14140 -13846 -13873 -14092 -14338 -14198 -13373 -14250 -14039 -14054 -13619 -14212 -13706 -14191 -14258 -13513 -14303 -14443 -13665 -14136 -14165 -13461 -13425 -13180

DECEMBER 2013 2535 7950 7757 8143 7179 7985 8242 8642 3169 3892 3757 3748 3415 3362 3547 3614 3118 2784 2880 2924 3064 3310 3328 3503 2731 2830 3468 3098 3029 2864 3086 3082 3695 3450 2879 2704 2800 2889 3497 3381

4060 4358 4285 4375 4453 4197 4099 4037 4048 3907 3874 3870 4034 4003 3993 3947 3975 4122 4099 3998 3895 3921 4039 3922 4029 4038 4027 3945 4181 3948 3926 4205 3842 3839 4180 3976 3975 4167 3998 4007

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

-90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90

380 453 290 470 458 382 419 357 773 272 194 190 309 323 313 267 295 397 419 318 260 241 359 242 349 358 302 265 501 268 291 525 162 159 500 296 295 352 318 552 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-6

KIRKHAM GEOSYSTEMS LTD. 340 341 342 343 344 345 346 347 348 349 350 501 502 503 504 505 506 507 508 509 510 511 512 513 514 515 516 517 518 519 520 521 522 523 524 525 526 527 528 529

-13321 -13270 -13233 -13479 -13202 -13036 -12698 -14531 -11661 -12169 -12847 -12105 -12131 -12156 -12187 -12172 -12218 -12257 -12297 -11946 -11972 -11753 -11779 -11805 -11832 -11481 -11507 -11533 -11560 -11585 -11586 -11612 -11639 -11665 -11692 -11744 -11409 -11147 -11200 -11253

DECEMBER 2013 3135 2949 3573 3714 3167 3420 3513 3011 5026 4610 4434 5514 5607 5698 5812 5930 5925 6069 6214 5688 5785 5741 5837 5934 6030 5504 5601 5697 5794 5885 5890 5987 6083 6180 6276 6469 5939 5803 5996 6189

4131 4174 3978 3928 4065 4069 4195 3868 4060 4010 4027 3622 4269 4313 4382 4452 4455 4558 4590 4265 4265 4265 4265 4310 4310 4126 4163 4208 4240 4275 4274 4290 4282 4260 4234 4260 4169 4130 4150 4220

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

-90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90

451 134 298 248 250 209 560 548 470 500 500 191 274 408 297 727 325 518 190 180 225 225 225 270 270 176 213 258 290 280 279 295 287 265 194 355 219 180 200 180 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-7

KIRKHAM GEOSYSTEMS LTD. 530 531 532 533 534 535 536 537 538 539 540 541 542 543 544 545 546 547 548 549 550 551 552 553 554 555 556 557 558 559 560 561 562 563 564 565 566 567 568 569

-11306 -10819 -10077 -10130 -10168 -10262 -14899 -15009 -15029 -15090 -14627 -14667 -14828 -14721 -14779 -14251 -14313 -14351 -14389 -14429 -14453 -14495 -14547 -14234 -14260 -14313 -14359 -14366 -14392 -14073 -14176 -14178 -14223 -14309 -14424 -14043 -14091 -13895 -13935 -14010

DECEMBER 2013 6382 6119 5681 5874 6050 6356 4569 4815 5073 5295 4739 4894 5472 5090 5302 4565 4794 4931 5069 5216 5315 5457 5647 4958 5055 5248 5349 5441 5537 4899 5069 5285 5449 5703 6182 5402 5572 5235 5382 5409

4280 4155 4225 4360 4458 4275 4229 4214 4190 4191 4318 4384 4300 4331 4322 4157 4285 4367 4426 4453 4310 4343 4265 4310 4310 4310 4435 4310 4311 4357 4470 4537 4452 4320 4266 4390 4430 4487 4559 4583

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

-90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90

195 160 185 230 373 235 459 444 510 466 503 569 215 516 417 387 335 327 566 368 270 393 270 270 270 270 665 270 271 452 610 677 502 235 226 305 345 357 609 588 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-8

KIRKHAM GEOSYSTEMS LTD. 570 571 572 573 574 575 576 577 578 579 580 581 582 583 584 585 586 587 588 589 590 591 592 593 594 595 596 597 598 599 600 601 602 603 604 605 606 607 608 609

-13661 -13784 -13835 -14113 -14014 -14089 -13495 -13547 -13554 -13625 -13678 -13197 -13243 -13284 -13319 -13349 -13388 -13099 -13150 -12863 -12805 -12929 -12937 -12979 -13019 -13074 -12983 -12981 -12558 -12585 -12611 -12641 -12654 -12727 -12760 -12867 -13594 -13805 -13875 -14481

DECEMBER 2013 4746 4962 5016 5566 5672 5932 4919 5097 5220 5384 5577 4957 5126 5276 5404 5512 5656 5432 5618 5082 5038 5322 5313 5506 5654 5851 5907 6442 5313 5410 5506 5615 5778 5933 6052 6784 3288 3222 3009 3628

4253 4358 4310 4470 4487 4481 4238 4310 4420 4551 4607 4217 4307 4402 4480 4552 4630 4380 4502 4193 4175 4287 4287 4389 4485 4611 4605 4648 4236 4266 4299 4345 4415 4523 4602 4492 4102 4098 4098 3851

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-90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90

258 633 225 610 627 261 288 180 470 511 342 402 492 497 530 287 545 340 642 243 135 382 337 439 535 661 700 428 196 271 259 305 510 618 202 317 422 283 373 126 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-9

KIRKHAM GEOSYSTEMS LTD. 610 611 612 613 614 615 616 617 618 619 620 116A 143A 155-6 16-X 21-6 26-6 27A 52-6 53-6 71-6 85-6 90-6 97-01 97-02 97-03 97-04 97-05 97-06 97-07 97-08 97-09 97-10 97-11 97-12 97-13 97-14 97-16 99A A08-1

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DECEMBER 2013 3134 3663 3629 3229 3267 3302 3288 3252 7011 6475 3037 6675 5531 3516 8826 5629 3420 3702 6627 6680 6609 6089 6029 6092 5922 5933 6040 5822 5702 5773 6026 6129 5731 6459 6678 6090 5785 6771 6259 1240

3869 3851 3844 3876 3872 3870 3880 3872 4489 4279 3878 4624 4213 3935 4415 4222 3878 3844 4356 4358 4357 4512 4430 4323 4284 4263 4266 4172 4086 3319 3321 3317 4213 3322 3321 3319 4173 3319 4275 3897

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-90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90

54 36 74 61 57 55 65 57 314 239 108 1350 938 646 383 400 1338 1221 1135 1205 870 1354 1227 400 310 520 540 300 460 250 250 250 300 360 320 490 500 80 1315 72 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-10

KIRKHAM GEOSYSTEMS LTD. A08-2 A08-3 A08-4 AD-001 AD-002 AD-003 AD-004 AD-005 AD-006 AD-007 AD-008 AD-009 AD-010 AD-012 AD-013 AD-014 AD-016 AD-017 AD-018 AD-018B AD-020 AD-021 AD-023 AD-024 AD-026 AD-028 AD-029 AD-030 AD-030B AD-031 AD-032 AD-051 AD-053 AD-054 AD-055 AD-060 AD-061 AD-062 AD-063 AD-064

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DECEMBER 2013 1809 4926 4856 6282 6202 6098 6280 5890 6124 5738 5949 6000 6504 6175 6107 6674 6631 5930 6580 6579 5811 6357 5834 6224 4916 5273 5570 6039 6039 5397 5934 5681 6815 4812 6948 5319 5189 4500 5300 5296

3898 3896 3888 4370 4334 4415 4405 4267 4275 4171 3778 3776 4431 3496 3452 3372 3373 3455 3374 3374 3453 3324 3452 3321 3655 3449 3452 3286 3286 3222 3263 3455 3435 4000 3494 3135 3138 3140 3139 3099

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-90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90

49 127 120 640 750 785 800 800 700 300 360 500 800 410 430 620 600 540 380 730 530 670 560 760 859 910 700 130 950 500 710 620 540 1050 750 500 650 550 750 710 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-11

KIRKHAM GEOSYSTEMS LTD. AD-065 AD-103 AD-105 AD-106 AD-107 AD-108 AD-109 AD-110 AH04T1211P AH04T1213P AH04T3-15P AH04T3-17P APP-4 APP-5A APP-5B APP-6 B08-01 B08-02 B08-02A B08-03 B08-04 B08-05 B08-06 B08-07 B08-08 B08-09 B08-10 B08-10A B08-11 B08-12 B08-13 B08-14 B08-15 B08-16 B08-17 B08-18 B08-19 B08-20 B08-21 B08-22

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DECEMBER 2013 4765 3662 4131 4201 4609 5027 5611 5945 1958 3442 7075 7952 9869 -15 -18 -787 2259 3157 3168 5364 6696 7369 8686 8181 9520 9504 5065 5062 2743 1885 1258 3877 1885 2746 4473 5332 1240 1809 4933 4861

3096 3894 3778 3820 3818 3772 3686 3642 3914 3850 3716 3718 3256 3468 3472 3516 3989 3997 3997 4068 4053 4094 4196 4074 4193 4249 3880 3880 3908 3910 3916 3902 3910 3962 4017 4003 3896 3897 3897 3888

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-90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90

750 720 600 700 840 800 900 800 80 63 160 220 153 35 200 135 99 89 118 91 238 96 46 121 180 177 6 4 6 14 6 70 60 37 153 204 69 99 59 59 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-12

KIRKHAM GEOSYSTEMS LTD. BMW-07 CC-AMW-12 CC-AMW-13 CC-AMW-14 CC-BMW-02 CC-BMW-05 CC-MW-02 CDX-02 CDX-03 CDX-04 CDX-05 CDX-06 CDX-07 CDX-08 CDX-09 CDX-10 CDX-11 CDX-13 COWBOY01 COWBOY02 COWBOY05 COWBOY06 COWBOY07 COWBOY08 COWBOY09 COWBOY10 COWBOY11 COWBOY12 DH04T1207P DH04T1209P DH04T1210P DH04T1214P DH08-10 DH08-11 DH08-12 DH08-31 DOMESTIC1 DOMESTIC3 DOMESTIC3A DOMESTIC4

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DECEMBER 2013 7519 4437 -1861 -1069 -1900 -1838 -1750 8880 3856 755 9399 7900 7552 6047 2270 8000 7842 3663 2250 6415 5839 5977 6046 6350 6373 3042 625 922 231 890 1484 4426 5114 2756 1848 1800 -469 -205 -200 7113

3417 3603 3471 3465 3703 3471 3703 4650 4540 3770 4192 3497 3520 3618 3861 3440 3475 3868 4725 4397 4255 4271 4276 4395 4390 4538 4615 4625 3756 3842 3893 3896 3878 3908 3909 4139 3615 4260 4260 4561

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-90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90

49 19 25 28 300 185 300 2852 1110 632 1065 1139 970 200 393 138 1135 1100 231 550 950 440 460 540 21 460 410 510 180 289 225 276 300 300 299 301 300 420 485 547 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-13

KIRKHAM GEOSYSTEMS LTD. DOMESTIC5 DOMESTIC6 DW-08-02 DW-1 DW-2 DW-3 DW-4 E-01 E-02 E-03 E-04 E-05 E-06 E-07 E-08 E-09 E-10 E-11 E-12 E-13 E-14 E-15 E-16 E-17 E-18 E-19 E-20 E-21 E-22 E-23 E-24 E-25 E-26 E-27 E-28 E-29 E2F E-30 E-31 E-32

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DECEMBER 2013 -500 4500 6226 5671 6241 5579 4465 5070 5119 4359 5491 4070 4256 5968 6140 5878 5793 5614 5700 5619 8180 5800 4507 5394 5274 5197 6295 4225 3980 4925 4120 5310 4058 5000 4610 4370 5760 4383 3990 3590

3687 4753 3870 3865 3866 4241 3770 4130 4130 4079 4178 4005 3995 4085 4085 4040 4040 3995 4040 4040 4337 3951 3924 3907 3907 3907 4133 4001 4002 3743 3961 3776 3968 3860 3910 3884 4181 4003 4003 3842

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-90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -60 -60 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -60 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90

520 640 1338 200 200 840 160 430 480 600 600 800 411 628 434 379 200 500 200 250 1091 1092 952 300 300 900 566 1692 1900 1412 1711 1684 769 1659 1620 1760 140 1617 1635 1565 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-14

KIRKHAM GEOSYSTEMS LTD. E-33 E-34 E-35 E-36 E-37 E-38 E-39 E-40 E-41 E-42 E-43 E-44 E-45 E-46 E-47 E-48 E-49 E-50 E-51 E-52 E-53 E-54 E-55 E-56 E-57 E-58 E-59 E-59A E-60 E-61 EAST30 G-01 G-03 G-04 GG-80-P7A GG-80-P7B GG-80-P8A GG-80-P8B GTI-MW-1 GTI-MW-2

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DECEMBER 2013 7179 4887 5820 4040 7346 5851 6855 6963 7366 7276 5963 6911 3033 6340 5273 5429 3277 6316 5338 5742 6529 3722 3622 4883 3565 3522 3850 3850 3333 3705 6098 2190 2335 2243 8005 8005 7730 7730 -879 -554

4226 3817 3998 4002 4227 3954 4091 4089 4231 4178 3907 4102 3855 3996 3775 3776 3839 4001 3607 3422 3423 3724 3723 3751 3869 3866 3822 3822 3818 3831 4415 4008 4004 4004 3528 3528 3527 3527 3942 3892

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-90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -87 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90

813 1605 1017 1265 1033 1450 1000 1080 986 1249 1512 400 1375 1310 1421 1500 734 435 992 974 514 279 714 1102 248 908 214 105 514 605 144 402 324 291 25 47 40 75 199 98 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-15

KIRKHAM GEOSYSTEMS LTD. GTI-MW-3 GTI-MW-4 GTI-MW-5 GTI-MW-6 GTI-MW-7 GTI-MW-8 HORIZWELL1 HORIZWELL2 HORIZWELL3 HORIZWELL4 HORIZWELL5 HW-07-01 HW-07-02 HW-07-03 HW-07-04 HW-07-05 HW-07-06 HW-07-07 HW-07-08 HW-07-09 HW-07-10 HW-07-11 JH-1 JH-2 JH-3 JH-3(DOM) JH-4 JH-5 JH-6 JH-7 JH-8 JM-1 JM-2 JM-3 MILLERSPR1 MILLSITE-1 MILLSITE-2 MILLSITE-3 MW-04-03 MW-04-04

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DECEMBER 2013 126 -1022 139 -1529 -600 -665 3161 4322 4646 3156 5895 3379 3262 3173 3074 3028 3028 3030 3214 3213 3212 3209 7719 7477 7416 8642 7400 7685 7680 7800 7730 6745 6977 6980 -303 -505 221 -703 -584 1038

3879 3886 3947 3896 3884 3887 3538 3168 3168 3468 3297 3550 3550 3550 3550 3550 3550 3550 3440 3440 3440 3440 4855 4870 4957 4553 4870 4690 4690 4000 4825 4495 4642 4647 3809 4038 4027 3886 3582 3484

0 0 0 0 0 0 135 247 245 136 153 235 223 203 199 203 180 140 228 213 200 183 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

-90 -90 -90 -90 -90 -90 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90

79 79 100 90 62 101 400 400 400 400 400 180 240 410 490 420 390 210 370 400 250 400 350 60 400 588 360 75 460 360 500 234 155 189 1150 1450 1640 1881 90 153 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-16

KIRKHAM GEOSYSTEMS LTD. MW-04-05 MW-04-06 MW-04-07 MW-04-09 MW-04-13 NO.1 NO.2 NO.3 NO.4 NO.5 NO.6 NO.7 NO.8 NORTHEA28A NORTHEA28B NORTHEAS26 NORTHEAS27 NORTHEAS29 NORTHWES23 NORTHWES24 NORTHWES25 NORTHWES31 NR-1 NR-2 NR-3 P11-93 P12 P13-93 PEAK-27 PEAK-29 PEAK-36 PEAK-37 PZ-08-01 PZ-08-02 PZ-08-03 PZ-08-04 PZ-08-05 PZ-08-06 PZ-08-06A PZ-08-07

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DECEMBER 2013 3297 4136 5309 8476 7453 556 475 350 275 206 350 475 500 7954 7973 8172 8021 7829 6630 7044 7585 6824 6207 6724 6811 7792 8209 7757 1650 9425 5442 1089 2393 1763 3327 4334 5459 6280 6291 5881

3976 3883 4004 3442 4035 3750 3750 3740 3750 3750 3760 3760 3770 4358 4358 4352 4344 4359 3866 4043 4218 3904 3547 3699 3668 3724 3736 3722 3903 3299 3883 3475 3990 4101 3500 3840 3786 4038 4038 3275

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-90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90

210 100 400 400 513 100 100 105 100 100 100 100 49 600 800 800 800 110 800 805 800 1000 600 640 550 100 100 100 1590 950 1000 775 1200 1301 1500 1210 1100 1410 1250 617 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-17

KIRKHAM GEOSYSTEMS LTD. PZ-08-08 PZ-08-09 PZ-08-10 PZ-08-10A PZ-08-11 PZ-08-13 PZ-08-14 PZ-08-15 PZ-08-16 R-01 R-02 R-03 R-04 R-05 R-06 R-07 R-08 R-09 R-10 R-11 R-12 R-13 R-14 R-15 R-16 R-17 R-18 R-19 R-20 R-21 R-22 R-23 R-24 R-25 R-26 R-27 R-28 R-29 R-30 R-31

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DECEMBER 2013 8630 5020 6889 8204 9693 5067 2825 1911 5264 5990 6100 5948 6116 6015 6140 5871 6513 6165 6268 6108 5987 5748 5568 6071 5804 5711 5614 6040 4130 5940 6125 5800 6090 4389 4009 3911 5978 4738 6314 5896

4192 4090 4543 4555 3376 3879 3906 3909 3319 4510 4510 4416 4396 4328 4508 4344 4399 4349 4405 4418 4355 4133 4131 4359 4136 4135 4135 4430 4002 4430 4390 4430 4390 4117 3999 3998 4347 4176 4399 4348

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1517 1440 560 1617 1017 1520 1520 1500 520 640 530 590 715 600 700 250 500 450 400 300 200 200 330 680 250 300 150 800 430 800 500 780 600 430 550 280 600 405 600 600 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-18

KIRKHAM GEOSYSTEMS LTD. R-32 R-33 R-34 R-35 R-36 R-37 R-38 R-39 R-40 R-41 R-42 R-43 R-44 R-45 R-46 R-47 R-48 R-49 R-50 R-51 R-52 R-53 R-54 R-55 R-56 R-57 R-58 R-59 R-60 R-61 R-62 R-63 R-64 R-65 R-66 R-67 R-68 R-69 R-70 R-71

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DECEMBER 2013 5864 4815 5226 4611 4731 5895 5737 5965 4172 4961 5722 5412 5355 5238 4285 4845 4166 3783 4442 4625 3128 4236 5160 4954 5834 4565 4273 5061 6123 6313 5648 5285 4659 5102 5207 4781 6043 5475 5620 5598

4198 4172 4032 4117 4112 4346 4347 4225 4017 4031 4206 4127 4128 4147 4048 4129 4001 3972 4100 4119 3883 4031 4176 4175 4220 4084 4063 4037 4222 4220 4126 4095 4004 4108 4167 4126 4177 4128 4130 4179

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-90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90

300 400 400 450 450 600 600 400 400 355 350 250 250 250 400 400 280 600 450 400 400 65 530 600 500 760 730 480 630 860 650 900 810 800 400 400 800 530 600 400 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-19

KIRKHAM GEOSYSTEMS LTD. R-72 R-73 R-74 R-75 R-76 R-77 R-78 R-79 RC-62 RC-63 RC-64 RFMW RMW-1 RMW-2 RMW-3 S08-01 S08-02 S08-03 S08-04 S08-05 S08-06 S08-07 S08-08 S08-09 S08-09A S08-10 S08-11 S08-12 S08-19 S08-20 S08-21 S08-22 S4(IN) S5(IN) SC-1 SH-1 SH-2 SH-3 SH-4 SH-5

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DECEMBER 2013 5683 5761 6190 5256 4857 5465 5830 5110 3868 4085 4542 4572 4681 4391 4835 2278 3410 5386 6703 7379 8684 8166 9517 9524 9523 5060 2745 1877 1296 1797 4922 4861 2242 2807 -115 2567 3800 3900 3545 3320

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-90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -89 -90 -90 -90 -90

350 400 520 300 450 600 600 500 600 600 400 84 127 84 116 107 113 425 515 300 50 515 475 230 428 18 68 70 130 128 95 120 400 400 100 1861 500 500 500 500 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-20

KIRKHAM GEOSYSTEMS LTD. SHOPSITE1 SHOPSITE2 SOUTH04 SOUTH05B SOUTH06 SOUTH08 SOUTH09 SOUTH10 SOUTH34 SOUTH37 SOUTH38 SOUTHEAS1A SOUTHEAS1B SOUTHEAST2 T1-01 T1-10 T1-13 T1-15 T1-16 T1-17 T1-18 T1-21 T1-23A T1-23B T1-80-P1 T1-AH94-01 T1-AH94-02 T1-AH94-03 T1-AH94-08 T1-AH94-09 T1-AH94-10 T1-AH94-11 T1-AH94-12 T1-AH94-14 T1-B80-5 T1-B80-6 T1-B80-7 T1-B80-8 T1-B80-9 T1-I-01

-14451 -14137 -13850 -13026 -14169 -14007 -14480 -15730 -14263 -14850 -14208 -11601 -12585 -13000 -17427 -18902 -17794 -18891 -17501 -17326 -17635 -19035 -19097 -19054 -18890 -17510 -19330 -19550 -18590 -18593 -17722 -18953 -18944 -17710 -17794 -17426 -17498 -17320 -17633 -18722

DECEMBER 2013 -322 -622 2110 2863 2142 1694 2180 2340 1977 2004 1711 5121 4343 4829 455 171 204 465 468 627 477 69 17 47 446 478 -50 1910 635 665 773 256 248 1715 206 456 472 533 451 825

3888 3942 4172 3996 4006 4099 3980 3994 4070 4016 4093 4085 4023 4000 3735 3673 3762 3758 3761 3761 3793 3599 3577 3580 3756 3765 3485 3795 3851 3848 3854 3674 3672 3850 3762 3735 3761 3732 3785 3845

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

-90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90

100 1510 360 340 550 600 800 200 970 520 530 500 200 800 20 126 21 113 47 48 75 59 31 53 190 77 23 12 152 248 152 122 122 27 27 60 51 47 84 248 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-21

KIRKHAM GEOSYSTEMS LTD. T1-I-02 T1-I-04 T1-P01 T1-P02 T1-P03 T1-P04 T1-P05 T1-P06 T1-P07 T1-P08 T1-P10 T1-PP1 T1-PP2 T1-PP3 T1-PP4 T1-PP7 T2.5-09 T2.5-11 T2.5-12 T2.5-85-5 T2.5-B80-1 T2.5-B80-2 T2.5-B80-3 T2.5-B80-4 T2.5-I-13 T2.5-P5-93 T2.5-P6-93 T2.5-P7-93 T2.5-P8-93 T2.5-P9-93 T2-80-P2 T2-80-P3 T2-AH94-04 T2-AH94-05 T2-AH9405A T2-AH94-07 T2-AH95-13 T2-B-1 T2-I-03 T2-P9

-19012 -19482 -19002 -19155 -19345 -17723 -18467 -18742 -18515 -19577 -19715 -17768 -17605 -18678 -19036 -19482 -20682 -20784 -21118 -20746 -20227 -20379 -20195 -20073 -20776 -20308 -20429 -20608 -20750 -19896 -20036 -19870 -19694 -19957 -19950 -19729 -18700 -19514 -19780 -19441

DECEMBER 2013 321 2570 3460 3609 3699 1161 2679 1906 1016 3124 2786 708 552 780 353 2551 8183 7833 7535 8667 8204 8246 8265 8447 7808 8389 8168 7972 7870 7692 6357 6019 5457 5945 5975 5464 4200 5356 5465 4941

3670 3853 3902 3898 3895 3895 3906 3897 3894 3850 3830 3760 3799 3848 3669 3853 3606 3695 3721 3545 3523 3523 3501 3409 3696 3504 3564 3617 3688 3692 3619 3781 3854 3787 3775 3857 3846 3851 3853 3896

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

-90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90

120 132 170 183 220 214 154 138 220 110 64 75 149 149 120 97 110 156 220 61 81 73 53 10 225 42 135 171 70 190 59 192 252 42 100 100 22 241 248 271 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-22

KIRKHAM GEOSYSTEMS LTD. T2-PP5 T2-PP6 T3-10 T3-13 T3-14 T3-15 T3-80-P4 T3-80-P5 T3-80-P6 T3-85-4 T3-I-12 T3-P1-93 T3-P2-93 T3-P3-93 T3-P4-93 UNKNOEXPL1 UNKNOEXPL2 UNKNOEXPL3 UNKNOWNA UNKNOWNB UNKNOWNC UNKNOWND UNKNOWNF W11C&21 W19E W19F W19G W20E W20F W22C W22E W22F W22H W23C W23F W23G W24C W2D W31J W6D

-19984 -19832 -22833 -23161 -22999 -22685 -22572 -23038 -23338 -22756 -22798 -23354 -23286 -23073 -22847 -13025 -10770 -9830 -8039 -9908 -9207 -9436 -9513 -12548 -13446 -13393 -13419 -13542 -13489 -13603 -13735 -13682 -13735 -13700 -13779 -13805 -13796 -11700 -14656 -12086

DECEMBER 2013 5917 5478 8391 8834 8615 8252 9351 9062 8874 9032 8411 9224 9086 8714 8418 4800 5610 5680 6416 6686 6280 6250 5496 5237 5195 5292 5338 5169 5266 4923 5116 5213 5406 4897 5186 5283 4871 5548 5361 5442

3782 3853 3695 3510 3601 3742 3472 3474 3473 3546 3694 3349 3413 3570 3689 3950 4085 4225 4403 4370 4395 4406 4230 4173 4175 4175 4220 4175 4175 4175 4175 4175 4220 4175 4175 4220 4175 4178 4265 4174

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

-90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90

100 100 182 150 200 300 120 100 109 80 280 40 100 220 80 500 500 100 500 500 1050 500 1083 133 90 135 135 135 135 90 90 90 135 90 70 90 90 138 229 134 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-23

KIRKHAM GEOSYSTEMS LTD. WEST11 WEST11B WEST12 WEST12B WEST13 WEST13T WEST14A WEST14B WEST14T WEST15 WEST16 WEST17 WEST18 WEST19 WEST20 WEST21 WEST22 WEST32 WEST33 WEST35 WEST36 WEST39 WW-1 WW-2 WW-3 G-2 G-5 G-5A G-6 G-7 G-8 G-9 DDH-10-1 DDH-10-10 DDH-10-2 DDH-10-3 DDH-10-4 DDH-10-5 DDH-10-6 DDH-10-7

-15373 -15400 -15560 -15425 -16563 -16563 -16007 -15560 -16695 -16069 -16325 -15846 -15875 -16067 -16200 -16142 -16500 -15900 -16544 -16168 -16507 -16464 -15825 -16028 -16045 -14816 -15179 -15179 -15272 -15770 -15879 -16049 -17669 -15812 -18990 -8588 -19108 -16137 -15493 -11263

DECEMBER 2013 2920 2960 3370 3275 3682 3682 3162 2961 4020 3986 4150 4127 4175 4491 4850 5447 5775 2625 4478 3036 5010 5946 4964 5490 5484 3303 3677 3677 3625 4500 5536 5531 2798 5842 3760 8153 1487 4604 4166 5057

3898 3680 3903 3504 3956 3592 3940 3948 4036 3862 3827 3778 3595 3774 3665 3701 3742 3986 3825 3955 3771 3727 3645 3696 3695 3513 3547 3547 3547 3548 3548 3548 3908 3320 3902 4599 3856 3632 3433 4090

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 75 75 75 65 62 62 249 62 97 89 49 249 0 320 335 102 231 92

-90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -55 -55 -55 -65 -65 -65 -60 -60 -89 -65 -79 -81 -90 -90 -73 -77 -54 -89

800 800 800 800 260 170 200 200 250 800 800 800 800 800 800 900 800 690 800 700 810 1130 1220 620 790 916 903 153 500 998 800 406 5000 2433 5282 4500 5865 2481 1076 2112 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-24

KIRKHAM GEOSYSTEMS LTD. DDH-10-8 DDH-10-9 DDH-11-11 DDH-11-12 DDH-11-13 DDH-11-14 DDH-11-15 DDH-11-16 DDH-11-17 DDH-11-18 DDH-11-19 DDH-11-20 DDH-11-21 DDH-11-22 DDH-11-23 DDH-11-24 DDH-11-25 DDH-11-26 DDH-11-27 DDH-11-28A DDH-11-29 DDH-11-30 DDH-11-31 DDH-11-32 DDH-11-33 DDH-11-34 DDH-11-35 DDH-11-36 DDH-11-37 DDH-11-38 DDH-11-39 DDH-11-40 DDH-11-41 DDH-11-42 DDH-11-43 DDH-11-44 DDH-11-45 DDH-11-46 DDH-11-47 DDH-11-48

-12581 -10160 -12434 -15655 -14951 -14701 -13865 -15109 -14970 -10766 -16714 -12478 -17107 -13727 -14089 -15664 -11578 -12919 -9970 -13160 -12859 -9894 -11706 -11847 -10596 -14986 -15387 -15843 -15265 -15096 -15200 -15716 -14511 -15554 -14420 -15498 -14097 -14638 -13425 -13246

DECEMBER 2013 4635 5736 6617 6037 5801 7512 7902 15192 3970 4645 6330 6649 3811 5766 4785 5178 5941 5665 5230 3766 8217 6749 8258 4492 7884 3923 4643 5555 4272 4319 4592 5574 4488 5351 4873 5027 4335 5669 5904 5956

4040 4174 3318 3319 3188 4210 4261 3875 3320 4184 3906 3319 3950 3250 3274 3320 3778 3556 4203 3779 4313 4378 4403 4062 4512 3320 3320 3320 3320 3322 3321 3318 3141 3280 3190 3303 3315 3187 3280 3298

255 322 172 351 292 165 164 262 246 347 67 234 242 207 312 259 228 71 325 340 159 355 177 341 153 144 19 72 305 216 141 298 44 53 60 229 148 5 318 355

-89 -90 -60 -51 -90 -59 -64 -89 -66 -63 -89 -90 -81 -90 -90 -74 -90 -89 -60 -60 -68 -90 -61 -61 -89 -90 -89 -89 -90 -90 -90 -89 -89 -90 -89 -89 -89 -89 -90 -89

2108 2002 2471 1674 2920 3491 3308 2229 1566 2483 3049 3386 5287 2909 2005 2214 2012 1952 2437 1816 2524 2549 3010 2206 1862 1666 1655 1584 1584 1526 1746 1680 1200 1746 1456 1696 1206 1805 1456 1597 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-25

KIRKHAM GEOSYSTEMS LTD. DDH-11-49 DDH-11-50 DDH-12-102 DDH-12-105 DDH-12-109 DDH-12-111 DDH-12-113 DDH-12-114 DDH-12-115 DDH-12-118 DDH-12-120 DDH-12-122 DDH-12-123 DDH-12-124 DDH-12-125 DDH-12-126 DDH-12-127 DDH-12-128 DDH-12-129 DDH-12-130 DDH-12-131 DDH-12-132 DDH-12-133 DDH-12-134 DDH-12-135 DDH-12-136 DDH-12-139 DDH-12-140 DDH-12-145 DDH-12-146 DDH-12-147 DDH-12-148 DDH-12-149 DDH-12-150 DDH-12-153 DDH-12-154 DDH-12-155 DDH-12-157 DDH-12-158 DDH-12-160

-14691 -13051 -11320 -11593 -13096 -11303 -11302 -11548 -12956 -12308 -12307 -12503 -13280 -13383 -13278 -13385 -13090 -12005 -13089 -13489 -12312 -13131 -13294 -12116 -13133 -11698 -12940 -12859 -12587 -13473 -12407 -13475 -12008 -13159 -13260 -9589 -13167 -13223 -13230 -13144

DECEMBER 2013 5934 6042 5942 5977 5042 5608 5604 5420 4841 5259 5254 5044 5482 5367 5479 5369 5576 6301 5575 5192 6030 5547 5430 6170 5549 6475 5630 5681 5864 4155 5978 4153 6904 3951 3948 6149 3928 4369 3960 4303

3173 3319 3781 3777 3911 3958 3958 3984 4001 3999 3999 4007 3594 3604 3594 3604 3576 3448 3576 3622 3482 3576 3595 3462 3576 3412 3558 3550 3518 3733 3496 3733 3370 3760 3759 4280 3761 3913 3759 3914

261 296 178 344 347 343 156 347 142 350 118 83 317 167 229 315 320 4 185 313 241 317 18 235 314 341 103 68 172 241 179 230 27 45 19 94 234 2 231 67

-90 -90 -90 -70 -73 -59 -90 -66 -90 -60 -90 -89 -73 -89 -90 -74 -74 -90 -89 -74 -89 -89 -89 -89 -73 -70 -89 -89 -90 -89 -89 -64 -74 -89 -89 -90 -75 -89 -70 -90

1676 1614 636 676 840 676 600 776 686 906 856 715 614 803 736 933 716 456 764 703 596 646 606 486 606 377 626 755 618 706 466 824 506 517 720 866 504 635 637 501 CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-26

KIRKHAM GEOSYSTEMS LTD. DDH-12-161 DDH-12-162 DDH-12-165 DDH-12-166 DDH-12-167 DDH-12-168 DDH-12-169 DDH-12-51 DDH-12-52 DDH-12-53 DDH-12-54 DDH-12-55 DDH-12-56 DDH-12-58 DDH-12-59 DDH-12-60 DDH-12-61 DDH-12-62 DDH-12-63 DDH-12-64 DDH-12-65 DDH-12-67 DDH-12-68 DDH-12-69 DDH-12-96 DDH-12-99 G-02 G-05 G-05A G-06 G-07 G-08 G-09 G-10

-9849 -10278 -13556 -13878 -13988 -14033 -13956 -12678 -13826 -14182 -12490 -12195 -11943 -12293 -12229 -12230 -12643 -11510 -13581 -22900 -14390 -15724 -13363 -15262 -12905 -12698 -14816 -15179 -15179 -15272 -15770 -15879 -16049 -13999

DECEMBER 2013 6361 7117 5337 3786 4043 4115 3944 6181 3602 5213 6248 6433 6403 6096 6741 6675 5842 6613 4735 10176 5574 5200 4059 3378 5142 5229 3303 3677 3677 3625 4500 5536 5531 3301

4293 4341 3595 3367 3339 3337 3346 3355 3381 3236 3373 3364 3438 3479 3324 3322 3522 3400 3673 3344 3196 3321 3738 3500 3910 3912 3513 3547 3547 3547 3548 3548 3548 3424

131 229 51 207 348 264 109 41 219 301 338 2 299 120 336 143 172 76 34 242 61 239 18 271 342 344 65 62 62 249 62 97 89 245

-89 -59 -89 -89 -90 -90 -89 -89 -89 -90 -90 -90 -90 -90 -60 -90 -90 -90 -90 -89 -89 -89 -89 -90 -61 -59 -65 -65 -65 -60 -60 -89 -65 -46

852 843 630 750 590 800 800 1756 1196 1802 1756 1666 1906 1754 1866 1707 1726 1866 1276 3167 1726 1588 1212 1484 864 821 916 903 153 500 998 800 406 881

CAPSTONE MINING CORP. NI 43-101 TECHNICAL REPORT PINTO VALLEY PROPERTY PAGE C-27