2015 Exploration Program

The exploration program plan at KSM for 2015 was designed to improve the understanding of block cave

targets and support engineering/environmental aspects of development scenarios. The overall

objective is to enhance project economics by finding the best 2.3 billion tonnes - the mineable material

with the highest margins – which is the optimum resource size as determined by scoping studies. The

objectives for 2015 were:

Drilling at Deep Kerr to expand both the length and width of block cave shapes that confine the

current resource estimate. Geological projections of the mineralized zone indicate that the block

cave shapes are limited by drill data. Extending the footprint of the block cave shapes could

increase the potential mining rate for this higher grade material, thereby generating a significant

economic benefit to the project. This work will evaluate the performance of the inferred

resource block model and permit projections of drilling required to advance the Deep Kerr zone

to reserves.

Drilling the plunge projection of the Mitchell high-grade zone to test development scenarios

that include exploitation of a larger part of Mitchell as a block cave mine. These holes will also

provide additional information for the Lower Mitchell block cave shape included in the 2012

Preliminary Feasibility Study.

Complete the surface evaluation of sources for toxic metals that may impact infrastructure

planning, and define additional potential quarry sites for construction. A high-resolution

airborne magnetic survey will also enhance the sub-surface geological model and contribute to

exploration targeting and infrastructure area condemnation.

The intrusive complex at KSM demonstrates many features characteristic of giant, diorite or monzonite

hosted Au-Cu porphyry systems, such as Grasberg, Oyu Tolgoi, Bingham and Pebble. These systems

develop at tectonic boundaries where buoyant, hydrated magmas are forced to shallow depths up deep

penetrating faults. Near the surface, the metal rich hydrothermal fluids encounter drastic temperature

and pressure drops which result in precipitation of metals in an upward and outwardly zoned pattern

that characterizes a porphyry system.

Dating of the intrusions indicates an age of approximately 190,000,000 years, much older than most

known porphyry systems. Subsequent tectonic events have modified the original geologic positioning so

that mineral assemblages characteristic of deeper parts of a porphyry system are now at higher levels.

For example, at the southern end of Kerr, potassic altered diorite with magnetite veins and high Au-Cu

grades, typical of the roots of porphyry systems, are found at the surface near an elevation of about

1,600m. At the northern end, phyllic altered diorite cut by veins with advanced argillic assemblages,

which form at much shallower depths, have been intersected at elevations less than 0m. The modified

geometry of the porphyry systems at KSM has significant exploration implications, as higher grade deep

core zones may occur at exploitable depths.

Drill locations for the 2015 program are highlighted in the geology map below.

A plan of the airborne magnetic survey (total field) alongside the current geology model is shown at the

end of this year’s summary. A compilation of exploration targets outside of the resource areas with

significant mineralized drilled intercepts is also shown.

Mitchell

In order to drill test the deep projection of the central zone and maintain orientations as close as

possible at right angles to the interpreted mineralization trend, the holes were started well above and

outside of the Mitchell Deposit reserve (see cross sections below). Directional drilling techniques were

used down the hole to steer the holes to the target areas. The first two holes in this year's program

confirmed continuity of mineralization in the panel above the Mitchell Thrust Fault (MTF) which hosts

disseminated and veinlet chalcopyrite in magnetite skarn-style altered sediments and volcanics, a distal

component of the Mitchell porphyry system. Intersects up to 192 meters wide grading 0.34% copper

and 0.14 g/T gold support revisions of models that will enable conversion of waste to ore in Mitchell

open pit scenarios which are planned to precede underground block caving.

Below the Mitchell Thrust Fault, where the Mitchell reserves and resources are located, the holes

encountered identical sections of altered intrusive rocks that are recognized as host to parts of the

Mitchell Deposit. The intrusion is pervasively hydrothermally altered and contains abundant stock work

quartz veins. Alteration increases systematically down hole, progressing through intense quartz-sericite-

pyrite and into chlorite-magnetite-orthoclase alteration. The intervals encountered in holes M-15-130

and 131 pass through several phases of the Mitchell intrusive system, some of which contain gold and

copper grades above the Mitchell Deposit average. Variable but mostly lower grades were encountered

in a brecciated zone with abundant anhydrite, similar to the “Bornite Breccia” intersected several

hundred meters higher, but without bornite. This was intersected from 1232.3-1510 in M-15-130,

1357.5-1453.4 in M-15-131, and 1214.5-1353.6 in M-15-131A. The geometry is consistent with the

moderately northwest dipping orientation of the bornite breccia, however copper and gold grades tend

to be higher along the up-dip contact of the zone. This structure is interpreted as a late feature that

controlled flow of hydrothermal fluids with an advanced argillic chemistry characteristic of the late

stages of porphyry evolution. Bornite was confined mostly to shallower portions of the structure where

cooler conditions favoured precipitation.

Hole M-15-131A intersected a distinct medium to coarse grained, sub-porphyritic monzodiorite from

1376.8 to 1655m with grades below the Mitchell average. This intrusion is interpreted to be a later

phase, with primary k-feldspar phenocrysts, an alteration mineral assemblage dominated by secondary

k-feldspar, magnetite, epidote and traces of actinolite, and a poor development of stockwork quartz

veins and sulfides. This low grade intrusion has been intersected in several other holes, but over much

narrower widths suggesting the thickness in this hole reflects a local thickening or flexure and does not

reflect the true volume of displaced higher grade.

All three holes confirmed the presence of a roughly 50m thick, banded, mylonitic shear zone that may

offset the base of the Mitchell deposit (Basal Shear Zone, BSF), seen previously only in hole M-08-062.

The zone dips to the northwest and appears to parallel the MTF.

The following table summarizes the composited assay results for significant drill hole intersections from

Mitchell zone drilling in 2015. In drill hole M-15-130, the Mitchell Thrust Fault is located at 601 meters

and in M-15-131 it is at 691 meters. M-15-131A was wedged off of M-15-131 at 622.6m.

Hole ID Total Depth

(m)

From (m)

To (m) Thick-

ness (m)

Au g/T (un-

capped)

Cu % (un-

capped)

Ag g/T (un-

capped)

M-15-130

1581 334 441.55 107.55 0.11 0.39 1.7

601.75 638.4 36.65 0.65 0.05 7.3

1034.4 1076.4 42 0.59 0.12 5.8

1207.4 1381.8 174.4 0.55 0.28 3.3

Incl. 1217.4 1296.3 78.9 0.73 0.40 4.8

M-15-131

1674 253 444.5 191.5 0.14 0.34 1.6

1190.5 1357.5 167 0.81 0.25 5.0

Incl. 1248.5 1357.5 109 0.96 0.32 6.3

1449.5 1505 55.5 0.42 0.24 3.5

M-15-131A

1760.5 1043.5 1303.5 260 0.53 0.18 4.4

Incl. 1043.5 1070.5 27 0.80 0.17 9.8

Incl. 1108.5 1214.5 106 0.66 0.18 4.4

Incl. 1250.5 1299.9 49.4 0.48 0.29 3.9

1379.5 1579.5 200 0.43 0.16 2.9

Incl. 1433.5 1503.5 70 0.51 0.19 3.0

Photographs of polished drill core samples representative of mineralization styles encountered in 2015

are shown below. Width of the core samples (vertical axis) is approximately 2.5cm. Cross sections and a

level plan follow.

Mitchell – diorite porphyry, phyllic altered with D veins and Mo, no A or B veins with cp

HOLE-ID DEPTH Au g/t Cu % Mo % Ag g/t As ppm Pb ppm Zn ppm M-15-130 1037 0.32 0.19 0.0482 3 38 22 30

Mitchell – Breccia zone, altered P1B with anhy, py, cp but no bornite, average grade at this depth

HOLE-ID DEPTH Au g/t Cu % Mo % Ag g/t As ppm Pb ppm Zn ppm M-15-131A 1583.5 0.46 0.13 0.0008 1.8 5 6 50 Mitchell – monzodiorite porphyry, later, coarser grained, calcic-potassic altered, A+B veins, low grade, may indicate lower limits of mineralization

HOLE-ID DEPTH Au g/t Cu % Mo % Ag g/t As ppm Pb ppm Zn ppm M-15-130 1561.3 0.06 0.05 0.0002 1 8 47 38 Mitchell – Basal Shear Zone (BSZ): mylonitized rock, phyllic altered, low to nil grade

HOLE-ID DEPTH Au g/t Cu % Mo % Ag g/t As ppm Pb ppm Zn ppm M-15-130 1248.5 0.90 0.45 0.0036 4 3 10 23

Deep Kerr

The Kerr deposit is centered on a north-south trending, steep westerly dipping, tabular intrusive

complex that drilling demonstrates has a horizontal extent of 2,400 meters and vertical extent of at least

2,200 meters. The complex includes an east and west limb that may coalesce near the current surface.

The west limb is up to 500 meters thick, and the east limb up to 300 meters thick. There are several

distinct intrusive phases, the earliest of which are fine grained diorites with 5% to 60% quartz-sulfide

vein stockworks and these appear to contribute the majority of metals. Later phases envelope and

sometimes invade the earlier phase, and are characterized by coarser textures, less veining, and lower

metal contents. The intrusions are hosted by an Early Jurassic sequence of rhythmically bedded

siltstones, sandstones, conglomerates, and debris flows that have been altered adjacent to the

intrusions but generally contain marginal metal grades.

The holes in this year's Deep Kerr program were collared well outside the mineral deposit in order to

achieve the deep intersections that test the dip extension. Drill holes were designed to intercept the

mineralized target at right angles to the strike of the zone and downhole directional drilling tools were

used to steer the holes to target areas. These locations better defined the western limits of the

mineralized system, and demonstrate that a north-south trending normal fault places unaltered fine-

grained sedimentary rock against the outer weakly mineralized parts of the mineral system. As the drill

holes advance to the east, alteration and mineralization increase as a series of potassically-altered

intrusions are encountered. Drill hole K-15-49 passed out of the intensely altered and mineralized zone

into younger intrusions with lower concentrations of gold and copper. The drill hole was not extended

into the eastern high-grade zone encountered in previous shallower drilling because projected depths

would have been prohibitive. This eastern zone remains a high potential target.

The holes drilled this year confirmed a high degree of continuity of mineralization over very considerable

distances. Holes K-15-49 and K-15-49A confirmed down-dip extension of the strong mineralization in the

west limb intersected by hole K-14-45, an oblique hole that cut 503m grading 0.40g/t Au and 0.67% Cu.

This mineralization occurs mainly in the PAND1 diorite, the early mineralizing phase of the Kerr intrusive

complex. It is finer grained, exhibits a high chalcopyrite to pyrite ratio, has remnants of secondary

potassic alteration now mostly overprinted by retrograde chloritic alteration, and a mostly intact

stockwork of quartz-sulfide veinlets. Portions of the PAND1 intrusion are overprinted by phyllic

alteration characterized by sericitization of mafic minerals, higher pyrite content, and higher Au and Cu

grades. The later PAND2 diorite is coarser grained, with very few intact quartz veinlets, and a lower

metal content. Wall rock sediments are mineralized adjacent to the intrusions, but generally lower

grade. Currently the lithology model lumps moderately mineralized PAND2 dykes, breccias, and

sediment intervals in the hanging wall of the PAND1 body into the IBX domain, however definition

drilling is expected to enable resolution of this into finer components. A few meter-scale, late quartz-

carbonate-sulfide veins with strong Au and elevated Cu, Pb, Zn, and As levels cut the intrusions and wall

rocks, and indicate penetration of late advanced argillic fluids along steep fractures.

Holes K-15-50 and K-15-50A tested the west limb 200m on strike to the south of K-15-49 and K-15-49A.

Continuity of the mineralized PAND1 intrusion was confirmed, however on this section gold and copper

grades are lower. This is attributed to a higher proportion of lower grade PAND2 intrusion, as well as

weaker overprinting phyllic alteration. Hole K-15-49B tested the west limb 200m north of K-15-49, and

lower grades were also found to be due to a lower proportion of the PAND1 intrusion.

The following table summarizes the drill hole intersections for 2015.

Hole ID Total Depth

(m)

From (m)

To (m) Thick-

ness (m)

Au g/T (un-

capped)

Cu % (un-

capped)

Ag g/T (un-

capped)

K-15-49 1755.4 1272 1755.4 483.4 0.43 0.56 2.9

Incl. 1466.4 1716.4 250 0.49 0.70 3.7

K-15-49A

1710.4 1178.3 1244.15 65.85 0.41 0.36 2.1

1304.4 1644.2 339.8 0.53 0.60 3.1

Incl. 1358.2 1555 196.8 0.69 0.72 4.0

K-15-49B

1731.4 963.5 1020.1 56.6 0.67 0.12 7.0

1379 1461.6 82.6 0.43 0.55 3.3

1534.5 1668.85 134.4 0.20 0.45 1.4

Incl. 1574 1627.2 53.2 0.31 0.56 1.7

K-15-50

1764.4 1430.4 1764.4 334 0.41 0.30 2.4

Incl. 1433 1598.4 165.4 0.56 0.27 3.1

Incl. 1659.4 1713.8 54.4 0.29 0.41 2.0

K-15-50A

1718.5 1246.5 1369.5 123 0.44 0.30 2.1

1452.5 1704.5 252 0.38 0.31 2.2

Incl. 1559.3 1620.5 61.2 0.63 0.42 3.1

Photographs of polished drill core samples representative of mineralization styles encountered in 2015

are shown below. Width of the core samples (vertical axis) is approximately 2.5cm. Cross sections and a

level plan follow.

Kerr – PAND1 diorite intrusion: early, fine grained, potassic altered diorite with mostly intact stockwork qtz-cp-py veins

HOLE-ID DEPTH Au g/t Cu % Mo % Ag g/t As ppm Pb ppm Zn ppm K-15-49 1476.5 0.43 0.84 0.0006 3 4 2 49

HOLE-ID DEPTH Au g/t Cu % Mo % Ag g/t As ppm Pb ppm Zn ppm

K-15-49B 1605 0.39 1.08 0.0001 2 16 17 70 Kerr – PAND1 diorite intrusion: early, fine grained, potassic altered diorite with mostly intact stockwork qtz-cp-py veins

HOLE-ID DEPTH Au g/t Cu % Mo % Ag g/t As ppm Pb ppm Zn ppm

K-15-49 1616.9 0.85 1.16 0.0026 8 21 51 44 Kerr – PAND1 diorite intrusion(?): intense phyllic overprint with abundant py, addition of Au and Cu

HOLE-ID DEPTH Au g/t Cu % Mo % Ag g/t As ppm Pb ppm Zn ppm

K-15-49 1394.9 0.33 0.04 0.0001 0.6 1 1 10 Kerr – PAND2 diorite intrusion: later, slightly coarser grained, potassic altered diorite with no stockwork qtz-cp-py veins, a few orphaned vein fragments assimilated from PAND1

HOLE-ID DEPTH Au g/t Cu % Mo % Ag g/t As ppm Pb ppm Zn ppm

K-15-49B 1672.5 0.07 0.15 0.0020 0.9 33 13 113 Kerr – PAND2 diorite: later, coarser grained, potassic altered, no stockwork veins, a few orphaned vein fragments assimilated from PAND1

HOLE-ID DEPTH Au g/t Cu % Mo % Ag g/t As ppm Pb ppm Zn ppm

K-15-50 1538.9 0.17 0.22 0.0019 1.1 9 6 56 Kerr – PAND2 diorite: later, coarser grained, potassic altered, stockwork veins, a few orphaned vein fragments assimilated from PAND1

HOLE-ID DEPTH Au g/t Cu % Mo % Ag g/t As ppm Pb ppm Zn ppm

K-15-49 1721.5 0.18 0.42 0.0033 1 5 4 46 Kerr – Sediments: chloritic-hornfels altered wall rocks, mostly fracture or breccia controlled and disseminated, low-grade mineralization