Investor Q&A

QUINCHIA, COLOMBIA

What are the next steps at Miraflores?

The scoping study completed by SRK on 8 September 2016 was very positive. It confirmed the robust nature of the project using an underground mining only scenario, utilizing filtered tailings as backfill material and a dry stack tailing facility. The Board has approved the commencement of the Feasibility Study. The next steps are to conclude the Feasibility Study,expected in the first half of 2017, and to run in parallel social and environmental permitting activities, with full EIS permitting expected at the end of 2017. The Board expects to be in a position to make a development decision during the second half of 2017, subject to permitting and based on the outcome of the Feasibility Study.

What is the overall funding strategy for Miraflores?

The Feasibility Study has commenced following the November 2016 capital raising and it is anticipated that these funds will also be used to further the permitting and baseline environmental monitoring. The Company is committed to delivering key milestones during 2017 that will result in a development decision at the end of 2017.

In terms of development finance, the Company is looking at all options including debt,debt and equity and alternative funding strategies. The likely outcome will be a combination of debt and equity and/or introducing a minority funding partner. The focus is for the Company to develop Miraflores but it is open to all options. The Board and management have the experience and all the required technical skills to develop and operate a project of this scale. Management are also shareholders in Metminco, owning a combined 7% and are therefore aligned with shareholders when it comes to seeking the best possible deal.

Why was the original Miraflores Feasibility Study conducted by Minera Seafield not finished in September 2013?

From what the Company understands, Minera Seafield raised debt funds from RMB to complete the Feasibility Study. Minera Seafield drew down the debt facility in full prior to completing the Feasibility Study and was unable to raise further funds to complete the study leading to the appointment of a Receiver by RMB. Following the appointment of the Receiver, RMB funded further technical work, which resulted in the completion of a Technical Report that incorporated the results of the incomplete feasibility. The latter report was used solely for the receivership process. Many of the results included in the Technical Report were conducted at a Feasibility Study level meaning a lot of the heavy lifting has been done. This allowed the Company to concentrate on optimising the planned mining operation.

LOS CALATOS, PERU

How exactly is the arrangement with CD capital going to work?

The development prospects of Los Calatos have been significantly enhanced by the agreement with CD Capital Natural Resources Fund III LP (CD Capital), signed on 14 June 2016. CD Capital will provide the necessary equity to fund the completion of the Pre-feasibility and Feasibility Studies and acquire up to 70% of equity in Los Calatos Holdings Ltd (LCH), which indirectly owns 100% of the project, for an investment of up to US$45 million. LCH will administer the project and will be staffed by CD Capital and Metminco personnel.

Now that completion of the CD Capital transaction has taken place (24 October 2016), the Company will seek to distribute 90% of Metminco’s holding in LCH, held through Hampton Mining Pty Ltd, to shareholders within 6 months. The value add to shareholders will be realised through the completion of the planned Pre-Feasibility and Feasibility Studies with the potential outcomes including the listing of LCH as part of a development strategy and/or a sale of LCH returning capital to MNC’s shareholders.

See the Company announcement of 14 June 2016 for further details on the transaction.

Why give up 70% of the project?

Los Calatos is a world class, large scale project. As such, it was always likely Metminco was going to require partners for development. The Company has been exploring a range of options over the last 5 years to advance the project, made more difficult bythe depressed commodity market, and more specifically copper market. The CD Capital equity funding is the best deal for the Company at this moment in time and ensures shareholders retain a significant interest in the project that now has the potential to be developed in the early 2020’s when it is anticipated there will be a supply deficit in the global copper market.

Metminco shareholders are now fully carried on the project through to completion of Pre-Feasibility and Feasibility Studies. Looking at the value of each percentage point purchased by CD Capital, the last tranche of equity CD will purchase in LCH would value the project at US$290m or US$87m for the 30% interest held by Metminco shareholders.

MOLLACAS, CHILE

What is the current position with Mollacas?

The Company is evaluating the situation constantly, but for now the project is on care and maintenance and its efforts are concentrated on Colombia where the Company is well positioned to generate significant value. The Company continues towork on resolving the mining access issue and will update shareholders when it is in a position to do so.

COLOMBIA

What is the macro landscape like in Colombia?

Colombia has a strong democratic tradition, winning independence in 1819.President Santos, has been in office since 2010 and was previously Minister of Defence. The country is rich in mineral wealth with significant mining groups being active including AngloGold Ashanti, Continental Gold, B2 Gold and South32. There is an increasing belief that Colombia will in the next 10 years become one of the new and preeminent gold districts in the world.

The 24 August 2016 peace deal between the Colombia Government and FARC was the result of four years of formal negotiations. The objective is for it to lead to lower levels of violence, better security of infrastructure and an improved operating environment. The “No” vote to the agreement on the 2nd October 2016 was a bump in the road to country peace however more recently at the end of November 2016 Colombia’s Congress approved a revised peace accord with FARC. The important point here is that the opposition and Government remain united to formulate a sustainable peace agreement. The FARC ceasefire continues and the National Liberation Army (ELN) is now in formal peace talks. This does not impact Metminco in any way and the Quinchia Gold Portfolio is located in a secure location for mining.

GENERAL

What is the benefit of a share consolidation?

The share consolidation is a condition of part of the recent capital raising. Every 50 shares held will be consolidated into 1 share. The consolidation will reduce the number of shares outstanding and encourage further long term investors to invest in the Company.

The following is taken from the Company announcement of 22 November 2016:

Reasons for the consolidation

The Directors propose the Consolidation of Securities for the following reasons:

  1. The Company has a large number of Shares on issue due to historical equity-based capital raisings. For that reason, and in contemplation of probable future issues of Shares, the Board believes that the consolidation is necessary for the Company’s share capital to be comparable to its peers, in terms of similar sized companies in the same sector.
  2. The Consolidation of Securities will result in a more appropriate and effective capital structure for the Company and a share price more appealing to a wider range of investors, particularly institutional investors, globally.

The Board does not believe that any material disadvantage will arise for Shareholders as a result of the proposed consolidation of the Company’s share capital. While the Consolidation of Securities will have no effect on the underlying value of the Company, the effect on the Company’s share price at the time of conversion should (all things being equal) be to trade at 50 times the price at which the Shares previously traded. The Share price will continue to be influenced by other factors and there can be no assurances as to the level that the Company’s Shares will trade following the consolidation and re-quotation of the Company’s securities.

Can you explain the last financing and relationship with Lanstead Capital?

In November 2016, the Company raised A$4.85 million from institutions, sophisticated and professional investors to fund the Miraflores Feasibility Study. These investors represent long term investors in the Company and are investors with the capacity and commitment to follow their investment through to production.

Lanstead Capital is a specialist investment firm. Metminco has entered into a sharing agreement to raise A$3 million. The agreement enables the Company to secure much of the potential upside arising from advancing itsprojects and delivering on its near-term milestones. The agreement provides that the Company’s economic interest will be determined and payable in 18 monthly settlements as measured against a pre-consolidation benchmark price of A$0.0032/share.

What is Metminco’s primary focus and future plans?

The primary focus of the Company is to complete the Feasibility Study on the Miraflores Gold Project within the 100% owned Quinchia Gold Portfolio in Colombia and to advance the project towards gold production.

Los Calatos is fully funded by the Company’s partner CD Capital and work has commenced on the Pre-Feasibility Study.