Name and Location
Ollachea gold project, Peru.

Client
Minera Kuri Kullu, a subsidiary of Mineral IRL.

Project Description
The Ollachea project hosts a Canadian National Instrument 43-101-compliant indicated resource of 10.1-million tonnes, grading 4 g/t gold for 1.3-million ounces of gold. Probable mineral reserves are indicated at 9.2-million tonnes, grading 3.4 g/t gold for one-million ounces of gold.

An updated mine plan has resulted in an optimised ramp-up at the project, with the average yearly gold output increasing to 100 000 oz over the first two years, up from 70 500 oz in the Ollachea definitive feasibility study (DFS).

The average yearly output will top 100 000 oz over the nine years of mine life, almost identical to the Ollachea DFS.

Total gold output has also risen to 930 000 oz, up marginally from 921 000 oz.

A conventional metallurgical processing plant will extract 91% of the gold and will have a capacity of 1.1-million tonnes a year. Tailings will be filtered and split between underground cemented fill and dry stacking on the surface.

Value
The updated mine plan has also pegged the initial capital cost of the project at $164.7-million, down from $177.5-million.

Duration
Based on the updated mine plan, and assuming that financing is in place and project development can start in the third quarter of 2014, the latest schedule indicates that construction should be completed within 21 months, or the first quarter of 2016 [from late 2015], with a ramp-up to full production in the second quarter of 2016 [from the first quarter of 2016].

Latest Developments
Minera IRL has secured the final major government approval required to start construction of the Ollachea gold mine, with project financing still outstanding.

Following extensive technical due diligence, in accordance with a debt financing mandate, Minera IRL has received a committed letter of offer from Macquarie Bank for a senior project loan facility of $100-million.  Subsequent to the consolidation of the existing $30-million Macquarie finance facility, this will provide $70-million of new funds towards the construction of the Ollachea gold mine.

With respect to the existing $30-million Macquarie finance facility that was due to mature on June 30, Minera has negotiated with the bank to extend the term of the loan by one year to June 30, 2015. In addition to the existing terms, which will remain unchanged, there will be an upfront fee of $1.5-million and the company will issue 26-million options with an exercise price that will be priced in the context of the market to Macquarie Bank at a later date. The exercise price is subject to regulatory approval and final documentation. The existing 18.8-million options currently held by Macquarie Bank will be cancelled when the new options are issued.

As per Minera IRL's June 4 announcement, a recently completed optimisation of the 2012 Ollachea gold project definitive feasibility study (DFS) reported that the estimated initial capital cost to build the Ollachea project was $164.7-million, including a 12% contingency. The company will also need to fund an additional $12-million of working capital for general sales tax for total preproduction capital of about $177-million.

Minera IRL continues to advance discussions with various parties to obtain the balance of the funding required. Sources of additional financing may include, but are not limited to, the sale of a production royalty, a royalty stream, subordinated debt instruments and an interest in the project or equity financing.

Until such time as there is more certainty with respect to the sources of the remaining funding required, the company reports that it does not feel it is in a position to execute the committed letter of offer. Accordingly, Minera IRL is targeting the completion of financing negotiations by the end of the third quarter of 2014 and has extended its debt-financing mandate with Macquarie Bank.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Too early to state.

Contact Details for Project Information
Minera IRL VP: corporate relations, Trish Kent, tel +511 418 1230, fax + 511 4181270 or email minera@irl.com.pe.