Juan B Alberdi 431 Piso 4 of. 404 - B1636DSR – Olivos – Provincia de Buenos Aires República Argentina

Argentinean Mining Potential Why Invest Now

Argentina (8th country in the world in size) has significant mineral exploration/exploitation potential in most of its territory, which traditionally has been underdeveloped for mining purposes.

Neighbor to traditional mining countries (Chile, Bolivia and close to Peru), most of its geological potential is in direct investment needed provinces, without relevant farming industry (the traditional Argentinean growth engine). There has been significant mining investment during the Commodities Super-cycle, although not even close to the country potential. Examples of mining investment driven growth in some Argentinean provinces, notably San Juan (with 58% of its GDP coming from mining) have made mining an attractive industry for many other Argentinean provinces. Other provinces are analyzing to take the lead of San Juan in order to diversify its economy Such is the case in the Provinces of Catamarca, La Rioja, Río Negro, in addition to more traditional mining provinces as Salta, Jujuy and Santa Cruz. The certain necessity of investment is such that even provinces with traditional mining restrictions (Chubut/Mendoza), are openly trying to allow specific districts to start developing mining resources. Argentinean mining sector is still incipient, with ten relevant mines and about ninety exploration projects in different stages of development. The reduction of capital access in the Canadian and Australian capital markets, generated by our recent history and the drop of the commodities prices, had dramatically reduced the ability of several of those young exploration companies to cope with their investment plans, generating a sizeable room for opportunities. Gold, Silver, Lithium, Copper, Iron and other metals are currently being developed by foreign entities in several Argentinean Provinces. Current operators are, Barrick Gold, Yamana Gold, Troy Resources, AngloGold, Glencore and FMC Lithium among others.

Juan B Alberdi 431 Piso 4 of. 404 - B1636DSR – Olivos – Provincia de Buenos Aires

República Argentina

Argentinean general mining legal framework strongly recognizes private ownership of mineral projects and has several tax advantages focus both in exploration (Advance VAT refunds – Minimum Income Tax waiver) and development (30-yrs Tax Stability as from Feasibility Study filing to new projects). Furthermore, mining companies have had difficulties in bullish markets to adapt to Argentinean business and social situations –basically applying Chilean or Peruvian models to a country with not a strong mining national understanding. Albeit it potential, it is important to have sufficient time not only for scouting projects, but also test and develop social, tax, legal, corporate planning in order to maximize capital investment. Dependency of Argentine economy to the agro commodities sector, will also push this new administration to diversify the matrix, and they are aware of what mining can generate to Argentina. Despite its frontier status in equity indexes, Argentina is the 2-largest economy in South America and the 3-largest in Latam. It has the largest GDP per capita in the region, and has historically had a larger middle class and a more educated population than its neighbors. Last December the change has started. The new President, Mr. Mauricio Macri, has already showed from the beginning of his term, to have an investment attractive economic policy. After government initial actions, 2016 forecasts includes an slowdown in inflation, a reduction in fiscal deficit plus a recovery in reserves, FDI and industrial production indexes. S&P have just upgraded Argentina’s debt to B- with a positive perspective. The Holdout saga is reaching to an end and US Treasury Department is supporting Argentina in the multilateral entities to easy the access to credit. This year Argentina is expected to regain “emerging” market status, which will allow large investors to have investments in Argentina again. Mr. Macri is showing a more market friendly approach plenty of pro-business policies:

Juan B Alberdi 431 Piso 4 of. 404 - B1636DSR – Olivos – Provincia de Buenos Aires

República Argentina

o Capital controls: lifted. Typically affected dividends and royalties payment, import payments, etc.; o Foreign Exchange Rate: after a 50% devaluation there is now a unified -floating- foreign exchange rate, which allows the economy to recover competitiveness; o Import controls: lifted. Typically affected the import of equipment and machinery; o Export taxes: taxes on mining exports were removed; o Holdouts: started a dynamic process to negotiate and pay to the unpaid debt which swaps weren´t originally accepted by the holdouts. This process is expected to be closed in March. Then Argentina will regain the access to the international debt market as well as to the sovereign credit agencies. After fifteen years ´drought, financial and commercial credit will flow again. o Ministry of Energy & Mining: named a new team of seasoned and qualified technicians to run the Secretary of Mining, which was also promoted to a Ministerial status (Ministry of Energy & Mining), confirming the relevance that mining has for the new administration.

Juan B Alberdi 431 Piso 4 of. 404 - B1636DSR – Olivos – Provincia de Buenos Aires

República Argentina

Daniel Meilán, a geologist, returned as the new National Mining Secretary. Formerly Deputy‑Secretary of Mining (1994) and then National Mining Secretary until 1999, he participated in the bilateral agreement with Chile to develop mining projects across the border. “This government has shown a willingness to allow market forces to play more freely,” says Alfredo Coutiño, Moody’s Analytics’ West Chester, Pennsylvania–-based director for Latin America. “And that’s exactly the road that investors believe Argentina should follow.” Macri has empowered his liberal economic team, led by Finance Minister Alfonso Prat-Gay -a former JPMorgan Chase & Co. economist in New York and London, who previously was Central Bank President who in 2004 was named by Euromoney as the best Central Bank Governor of the year- and central bank president Federico Sturzenegger, PhD. in economics from MIT. This team has begun dismantling regulations that have stifled banking activity and suppressed credit. The new President is also moving to spur agriculture, Argentina’s largest generator of foreign currency, by reducing or eliminating export taxes on farm products and benefitting farmers with the peso devaluation, which suddenly increased their earnings worth in 50%. Farmers responded by increasing their foreign crop sales by USD2 billion in the last three weeks of 2015, or nearly double the amount of sales for the month of November. Argentinean farmers are among the most competitive in the world in terms of soil fertility, mechanization and financial savvy. They sound confident even though the price for a ton of soybeans has tumbled, from a record high of $623 (Aug 2012) to $325 (Feb 2016). Argentina is reentering to the world. Prime leaders are showing their support and interest to restart business relations: Italy’s Prime Minister (Matteo Renzi) and French President (François Hollande) have recently visited Argentina and US President (Barack Obama) will visit Argentina in March, right after visiting Cuba. The economic and politic slump down of Brazil –which weakens its regional leader position - jointly with the initial shift showed by Argentina´s new administration in international politics –i.e. loosing ties with Iran and Venezuela regimes- is creating a new space for a latam leadership, where Mr. Macri is trying to step in.

Juan B Alberdi 431 Piso 4 of. 404 - B1636DSR – Olivos – Provincia de Buenos Aires

República Argentina

Our view, which is broadly shared within the investment banking community, is to expect a very quick recovery of Argentina in 2017. New government is using 2016 to implement the required measures and pass specific laws to stabilize the economy and welcome the FDI. Foreign investors have been evaluating potential acquisitions since elections, which reflect a change in midterm Argentine perspective. From majors –resuming approved projects- to juniors and private equity funds looking for special opportunities (Please refer to Annex-I for a list of investment-grade opportunities in the mining sector in Argentina and Uruguay). 2016 is a convenient year to scout in order to invest in Argentine. For instance, Posco, the giant Korean conglomerate, have just announced a USD700MM investment in the Lithea Lithium project located in the Province of Salta – more announcements are expected after PDAC. In a recent interview, Mr. Daniel Meilán stated: " We want the mining industry to transform the productive reality of the Cordillera provinces as the agriculture did to the Pampa provinces. The potential of this activity can make any Argentine province viable. Mining can be a major player to boost the economy in the incoming years, so we want to develop the business under a federal concept that settle clear areas, concessions and rules. "

Although there are several projects and operating mines, that due to the current market situation and previous Argentinean policies, are looking for partners/buyers, below we have selected some copper, gold, and lithium projects in Argentina which we deem are particularly attractive due to their characteristics and location. We have exclusively relied on public available information at this time, of which we have not conducted any additional investigation so far. SOURCE: Balanz Capital; Institutional Investor